Mark, I understand 3 or your 4 crypto patterns. How does number 4 work?
"4. Once prices go down long enough for people to think prices will keep going down, new sellers come into the market. Prices go down more. The cycle continues." Please help me understand why new sellers would come into the market when prices "go down long enough that people think prices will keep going down." That seems to be the opposite of supply and demand. Why would supply go up when prices are going down? Thanks for your help.
As best I understand, experts attribute this to fear. The idea that people think that because prices went down, prices will keep going down. This is a reason a lot of people sell when the price goes down.
One example: on the way up, "buy the dip" and as the dip keeps dipping, people who'd been buying switch from buyers to sellers.
I think most people attribute this to survival instincts. Cut your losses, live another day, etc. I'll defer to psychologists and behavioral economists, but it's a very noticeable phenomenon. It's counterintuitive but well established.
Mark, I understand 3 or your 4 crypto patterns. How does number 4 work?
"4. Once prices go down long enough for people to think prices will keep going down, new sellers come into the market. Prices go down more. The cycle continues." Please help me understand why new sellers would come into the market when prices "go down long enough that people think prices will keep going down." That seems to be the opposite of supply and demand. Why would supply go up when prices are going down? Thanks for your help.
Hi Andy.
As best I understand, experts attribute this to fear. The idea that people think that because prices went down, prices will keep going down. This is a reason a lot of people sell when the price goes down.
One example: on the way up, "buy the dip" and as the dip keeps dipping, people who'd been buying switch from buyers to sellers.
I think most people attribute this to survival instincts. Cut your losses, live another day, etc. I'll defer to psychologists and behavioral economists, but it's a very noticeable phenomenon. It's counterintuitive but well established.