As the debate continues regarding the continued decline in the crypto market, Qiao Wang, co-founder of Alliance, shared some noteworthy thoughts.
According to Wang, the main factors determining Bitcoin’s price are primarily technical analysis and investor sentiment, rather than macroeconomic trends or external shocks.
In a statement on social media, Wang noted that investors have been searching for a reason for Bitcoin’s bear market for months. He said a number of factors were cited in the process, including large market makers like Jane Street, the risks of quantum computing and the decline in software stocks. But Wang says most of these explanations are based solely on correlation, not causation.
Wang argued that because Bitcoin is not a cash-producing asset, its valuation is not based on classical financial models, and its price fluctuations are mainly shaped by the dynamics of technical analysis. He said herd psychology is at the heart of technical analysis, noting that more people in the market believe in the four-year cycle story than the five-year cycle story, so when the trend breaks, investors start exiting the market through profit taking and stop orders.
According to Wang, what needs to be done in the current process is to wait patiently until the market sentiment fully reaches the “surrender” level. For now, the trend could reverse on its own once selling pressure eases, he said, adding that an external catalyst is not necessarily needed for this to occur.
*This is not investment advice.
