You may have heard that every reply guy on Twitter has bids down at $24k waiting for the dreaded Capitulation Event ‘that will surely show the bull how very wrong they are!‘
Maybe. But since when has the consensus of reply guys been correct?
For those who have not heard this term before, a Capitulation Event is a phenomena in markets where absolutely everyone who was going to sell, pukes out their assets, price plunges to levels nobody ever though were possible, and we have an almighty doom candle that scares everyone.
November 2018 and March 2020 were prime examples of this. Pure pain, and after which there is not a single seller left.
When there are no sellers left, there are only buyers, ans thus this usually spawns the next bull run.
Now the primary question right now is do we have a doom candle on the horizon? There is only ONE honest answer to this questions…I have no idea.
But that isn’t what we are here for is it…so here are my primary thoughts in relation to this:
- We have already flushed out sooooo many weak hands. Whether via 2x 50% corrections, 4x major realised loss events, a rate hiking Fed, a war, all within the last 12 months…I mean what else needs to happen to embolden the bears to set a new low?
- A capitulation doom candle will likely be a CORRELATION 1.0 moment – similar to March 2020, some serious macro disruption sets all assets into a tailspin and liquidity dries up everywhere. It could be China entering the war, a bank going insolvent, or a major dislocation in the bond market. We simply don’t know but this is likely WHY such an event will happen.
- If we do get a flush out, I expect the Realised Price at $24k to catch us – in a way, this can limit your downside, and I also expect institutions to front run this by some unknown margin. Realised price is widely known in those circles.
- The after effect of such a liquidity crunch is 99.99% likely to be money printer go brrrrrrrrr – Thus if you survive the event, BTC will probably run higher. Therefore, for most HODLers, just sit tight.
To manage this risk, let me set you all some homework:
- Plan what you will do if you wake up to a BTC price of $28k, AND a price of $54k. Write the plan down, and stick to it.
- Write down your time horizon. Are you in this market as a trader, or a HODLer. If you are both, KNOW the split between your trading and HODLing portfolio.
- Read Arthur Hayes latest piece for a beautifully articulated view on what is to come (I agree almost 100%), and listen to Luke Gromen and Grant williams hash out what has now changed in the world.
Not a soul on earth knows what is about to happen in the world. But planning for both Moon and Doom right now, is a wise play.
Your future self will thank you for it.