I had another look at bitcoin today. The low of the day hit 11121 so far, so the price has collapsed 43% since the 17th of December.
That’s a hell of a decline for the so-called ‘asset’ that was on its way to the moon!
And all those folks who bought into the sure thing of the century the new shiny object in the shop window are now licking their wounds and wondering how they could ever do such a stupid thing as buy at the top.
Why did nobody see this collapse coming??
Mmm, am I speaking about the stock market or bitcoin here! I have said it before and I will say it again, Bitcoin is a harbinger for the economy and the financial markets as a whole. Its monumental rally over the last year, was a indication of the extreme appetite for speculation in the general public. And now, the monumental crash that it is undergoing, is a signal of the shift in the mood of that very same public, away from speculation and towards a more frugal outlook.
Bitcoin is at the fringe of all things speculative, and so it is collapsing first. The dominoes will fall inwards towards the center of the financial world. Just as they did in 2007. And that center consists of the sovereign bond markets and the prominent stock indices.
The next domino to fall will be high yield credit, Which has been sitting at or near all time lows lately.
As for the stock market: Last week saw another extreme in bullishness within the professional finance world. 64.4% of investment advisors were bullish and just 13.5% bearish. This is the largest divergence in over 30 years! Maybe stocks will be the next domino to fall after all!
DOW JONES INDUSTRIALS
30 min
4 Hours
Daily
My Bias: market topping process completing
Wave Structure: Impulsive 5 wave structure, topping in an all time high.
Long term wave count: topping in wave (5)
