For the record, at the 2021 edition of the Surfin Bitcoin conference (where I hope to meet up with The Big Whale team 🐳 and aficionados of the sector at the end of August), I met an investor who had been involved in cryptos for at least five years and was a big fan of studying investor psychology. He explained to me that he was invested in Dollar Cost Averaging (DCA, an investment method that involves investing regularly to smooth out volatility) over the long term. He was hoping and anticipating a possible rise in the coming months, before a clean-up took place. In his view, all crypto bull phases are born out of an excess of pessimism, when the sector is on the brink, when people lose 80% on their portfolios, brokers close down and the media have a field day bashing this new asset class that is once again "doomed"...

He said that this phenomenon was missing to go close to $100,000 or more. He didn't know when, or how long this phase of depression would last, but it was bound to happen. And that's exactly what's happening right now. I hope I'll see him again to congratulate him.

In other words, all is not lost. Quite the contrary! The current "bear market" phase is an essential stage in the sector's maturation, a purging phase through which the market must pass before experiencing a possible revival, a new phase of adoption and a new bull market.

In order to spare you a novel, here are a few questions I've answered over the last few days. I hope they will help you refine what I have just explained.

Are we at the beginning or the end of the decline?

I think we are close to the end of the decline. In any case, we can no longer lose more than $20,000. 😁

Will prices recover quickly?

After the fall, comes neutrality, not necessarily the rise. We'll have to give it time. Instead, I see a long and painful lateralisation, which will test the pugnacity of investors in position. A period of depression, sometimes followed by a final capitulation, a phase of discouragement, before hope is reborn.

Is the current fall an opportunity?

If we refer to the historical averages of crypto declines, of course. Bitcoin's worst corrections have seen declines of 82% to 86%, and here we're already down 75%. There may still be a way to go, because it's far too early to say that we've bottomed.

What has changed compared to other bull and bear markets?

In contrast to the 2009-2021 period, liquidity is drying up. Yet they are the fuel that allows the crypto market capitalisation engine to rise. For that we will have to wait.

What makes me think that we can perhaps go another notch lower?

The players have not suffered enough. The decline was rapid, the lean period short, too short. We still see too many YouTube videos where they talk about a low point before returning to $45,000. These people need to disappear so that a healthy, long-term rise can take place. Secondly, the equity markets, whose correlation with bitcoin is at an all-time high, are going through a major correction that has yet to capitulate. The risk of a summer slide is therefore high, and I prefer to remain cautious across all asset classes.

A piece of good news in all this?

Jean-Michel 'DCA' is a happy man! He who wanted to invest for the very long term with programmed purchases, because he is confident of a 10-year horizon, is going to be able to do so for much less than he was three or six months ago. What more could you ask for?

‍