On that topic, someone (I forgot who) posted a misconception of sentiment during bear markets saying that once the sentiment swings bearish, a bear market is necessarily over.
Even though there can be brief and sharp capitulations where that is true, during a very prolonged bear market you'd expect the majority to become bearish sometime in the latter half. Generally a good deal of people enter a trend in the mid or toward the end, then start betting heavily and feel vindicated for a while. A good analogy for that is oversold/overbought indicators where if the indicator bounces off this area, it is bullish, but if it stays embedded, it's bearish until it leaves it. Historically for Bitcoin, most people were bearish months before the December 2011 low happened, and several price multiples higher.
Yeah, this seems about right.
I think basing a top on sentiment is easier than basing a bottom. There is so much built in enthusiasm in bitcoin that the bearish lows can't naturally be as bearish and the bullish highs.
Most people, including myself, want the market to go up. Its natural to want it so.
I do not feel "vindicated" by being correct these last 6 weeks. These recovery from 340 to 550 in a few days was impressive.
But I feel like the towel is not rung out yet.
If I saw new money and investors coming in, if I didn't see miners extending their credit in hopes of not having to sell, if I saw new markets emerging
right now, if I didn't see so much hopefullness that assumptions that 2014 is just playing out like 2013, then I would not be bear.
Its possible that the optimism of margin traders and the doubling down philosophy of bitcoin enthusiasts might be enough to keep us afloat until fundamentals can lift us upwards.
So I will trade lightly in this area. But there is the possibility that this could get ugly fast.
)
