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The Bitcoin Bubble Is Popping. Here's How To Play It.

CryptoWhale
CryptoWhale
The last two weeks have been very eventful as the crypto markets plunged over $1.3 trillion, which was an unexpected move to many market participants.
This crash was anything but unexpected to those who held a skeptical perspective on the current state of the markets. In my opinion, we’ve been in a mania bubble for the last several months, which is evident in the rise of many cryptocurrency memes, which provide no value, and are worthless.
It’s clear that most people in crypto right now are desperate to make quick gains, rather than do research, and invest in long-term projects that will succeed. This reckless gamble addiction, often seen in young traders, is a common occurrence in all market bubbles and is a concerning red flag to many level-headed and realistic investors.
The Bitcoin Bull Run is Over? 📊
In my opinion, that was the blow-off top that we’ve been expecting.
The recent market crash was unlike anything we’ve seen in years. We dropped -$29,500 in 2 weeks, which was the largest price correction in Bitcoin’s entire history.
What especially stood out to me the most was the reaction we saw immediately after. Usually, after normal 20-30% drops during bull markets, we see lots of uncertainty. With this drop, it did the opposite. We saw a huge increase in retail investors buying more bags, and prepping for a continued bull market.
This only happened one other time, which was in 2017. The one time everyone was “buying the dip”, was the time we plunged -85% in 12 months and entered a long and bloody bear market.
On April 18th, 2021, at the peak of the bubble, I tweeted a warning to investors about a potential bear market. I shared a visual chart that showed Bitcoin’s bull run timeframe aligning exactly with the previous bull run.
This pattern, along with CoinBase’s NASDAQ listing, Elon Musk’s tweets, China and Iran cracking down on Bitcoin mining, and Tether’s settlement and recent audits, are all reasons for this price correction.
Mr. Whale
With Institutional demand fading, Tether's upcoming audits, and meme coins taking over, It's clear the bull run is faltering.

This rally topped out in exactly 854 days, the same length of time the last bull market lasted. Another "coincidence" in a purely organic crypto market. https://t.co/8Ospo5l4x0
What is a Dead Cat Bounce? 🐱
The question is, are investors (perhaps the HODLers who are the most enthusiastic evangelists for crypto) buying on the low to send their crypto of choice higher? Or is this a dead cat bounce?
The term dead cat bounce, used to describe a short-lived recovery from a prolonged decline, always pops up when you see a small rally after a downward trend. And all major cryptos have seen them at one point or another. Bitcoin, for example, saw several in 2018, as prices fell from $13,434 at the start of the year to just over $3,800 at the end. And Ethereum saw a big one in April of that same year, with prices nearly doubling from $383 to $687 before falling to $139 by Dec. 31
Since Bitcoin’s temporary bottom at 30K, we’ve already bounced roughly 37%. While this has conveniently resurrected many bullish influencers who went silent over the weekend, It’s likely going to result in even more losses for those who fail to take profit on this dead cat bounce, or as I like to call it “everyone’s second chance to take profit”
Mr. Whale
The #Bitcoin Bear Market has a long way to go.

We're currently in the "Bull Trap" phase, and will likely see some sideways/green price action as people buy the dip.

Once enough buyers are suckered in again, we will continue crashing. My targets are under $7K by 2022. https://t.co/PH7l13KFKV
Chinese Cryptocurrency Regulations
With digital assets dominating global headlines and filling the portfolios of investors throughout the world, we are seeing many agencies put a spotlight on this unregulated sector.
China has recently announced they will be tightening crypto regulations for institutional investors. The IRS also just announced they will be focusing on taxing crypto transactions, and finally, the US Treasury, Federal Reserve, and European financial watchdogs have given plenty of hints for future crypto regulations.
Once new regulations are officially announced, we will likely see a price drop in the short term. However, I strongly believe that regulations are in fact a positive development for the crypto industry.
With the number of fraudulent projects popping up every day, having a watchdog or regulatory framework could definitely support tackling fraud, price manipulation, money laundering, and tax evasion.
Potential Alt Season This Summer
Having traded many crypto market cycles in the past, I’ve noticed that after we’ve peaked, we often see a flight to quality or a flight to greed.
With the record amounts of retail investors heavily exposed to the markets, I’m suspecting that we see a flight to greed, which is characterized by a sudden surge in altcoin prices.
In 2017, we had a similar phenomenon. It wasn’t until Bitcoin plummeted that billions of dollars were dumped into cryptocurrencies like XRP, NEO, ADA, DOGE, LTC, XLM, and many more.
In the chart below, I’ve pointed an arrow to where XRP was trading during the day Bitcoin topped out in December 2017. We went from 65 cents to $3.3 dollars in only a few weeks, which is a 400%+ pump.
While I’m certainly not recommending anyone to gamble into altcoins that have already surged thousands of percent, and are already extremely high, I’m simply highlighting the possibility that we see lots of green in undervalued, utility-based coins.
The danger with trading altcoins during a BTC bear market is how quickly they rise and fall. Many who bought into altcoins during the alt-season of 2017 still ended up with massive losses after they failed to take profit.
REMEMBER: Unrealized gains aren’t gains.
Don’t ever feel bad about taking profits.
Thanks for reading!
As always, no one’s predictions, analysis, or outlooks are going to be 100% accurate. With this being said, I highly recommend everyone to carefully manage their risks and make profits as we bounce higher.
If you didn’t listen to my previous warning signs and got burned badly during the recent market correction, make sure that you’ve at least learned an important lesson about how risky and speculative the markets are.
There is an extreme level of value in hearing both sides of the argument so you can make up your own mind, and not rely solely on someone else.
If you want to read my previous articles, you can do so by going to www.whalestreet.ca! More newsletters coming very soon!
Have a great day everyone! 🐳
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CryptoWhale @cryptowhale

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