As discussions continue regarding the ongoing decline in cryptocurrency markets, Qiao Wang, co-founder of Alliance, shared a noteworthy opinion.
According to Wang, the primary factor determining Bitcoin prices is not macroeconomic developments or external shocks, but largely technical analysis and investor psychology.
In a statement made on social media, Wang noted that investors have been trying to find the reasons for the bear market in Bitcoin for months. During this process, he said, various factors have been blamed, such as major market makers like Jane Street, quantum computing risks, or a sell-off in software stocks. However, according to Wang, most of these explanations are based only on correlation, not causality.
Wang argued that Bitcoin’s valuation is not based on classical financial models because it is not a cash-generating asset, and that its price movements are primarily shaped by technical analysis dynamics. He stated that herd mentality is at the heart of technical analysis, noting that more people in the market believe in a four-year cycle narrative than a five-year cycle, and therefore, when a trend breaks, investors begin to exit the market through profit taking or stop-loss orders.
According to Wang, what needs to be done in the current process is to patiently wait for market sentiment to reach a completely “capitulation” level. He stated that at this point, once selling pressure subsides, the trend could naturally reverse, adding that an external catalyst is not necessarily needed for this to happen.
*This is not investment advice.
