Fellow humans,
Narratives are very important. Religion, health, relationships, education, business, and finance are major areas of our lives where narratives are not only important, but also can be fundamental. We utilize narratives to help guide our perceptions, and ultimately our decisions. Narratives can be great tools, but are only words and ideas at the end of the day. For example — the most important narrative in Christianity is love. Jesus Christ is the driving force behind Christianity, and His most expressed narrative was to love God and love others, no matter what! However, since narratives are only words and ideas, we have a responsibility to act on said narratives.
The most important narrative for most investors contain a hint of bullishness. If an investor has been following a bullish narrative, and is convinced that an asset is going to break out and up soon, that investor is most likely going to aggressively purchase that asset. If we’re convinced Horse ₿ is going to win the race, we’re going to bet on Horse ₿. It’s no secret to me that narratives are a driving force behind financial markets. As I’ve explained in the previous letter, Bitcoin’s network is fine, but the market has cut in half since April. Sometimes the asset fundamentals don’t matter as much as market narratives. We are living through one of those times.
Let me be clear — narratives are not the only driving force behind the movement of financial markets, but they do significantly contribute. The only factor that directly controls price movements are buys and sells. More buyers than sellers = price goes up. More sellers than buyers = price goes down.
Bitcoin FUD has been lingering for nearly three months — with attacks from Elon Musk, China, and has led to many others joining the verbal/written attack. As a result, we’ve been living through bearish and sideways price movements ever since. Bearish narratives can lead to bearish markets, and vise versa. I believe we are beginning to see a strong reversal in narratives, from bearish to bullish, which could lead to a significant reversal in price action. I’ve been witnessing a strong narrative brewing in the Bitcoin community about an upcoming breakout. Confidence levels feel high, and FUD seems to be dissipating. If this is true, we might experience an explosion upwards in Bitcoin’s price within the next week or two, followed by intense FOMO in the market. Nothing we haven’t witnessed before!
For the record, I don’t follow TikTok influencers, YouTubers, or any other BitClowns who create click-bait content. The strong narrative I’m referring to is coming from people within the Bitcoin community who are much smarter than me, and have much more experience in the market. Let me leave you with a piece of my favorite advice. Always verify information by doing research — whether this means reading directly from religious text, confronting somebody rather than believing rumors, or verifying Bitcoin transactions on a blockchain explorer (some day I’ll set up my node). Humans are not perfect, so we should be careful which narratives we buy into, including our own!
Until next time,
Salvatore Norge