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Slightly Than Being Exactly Fallacious
Warren Buffett, arguably one of the best investor to have ever lived, as soon as stated that so as to obtain long-term success, buyers ought to concentrate on being “roughly proper somewhat than exactly incorrect.” He largely invests in shares and buys whole companies, however his maxim rings true whatever the particular funding asset. In different phrases, it is much better to purchase issues with promising long-term potential, as a substitute of pursuing short-term positive factors from a questionable asset. That’s the reason we determined to not be a part of the bulls again in August, 2021.
We printed the chart above over a yr in the past, in the summertime of 2021. Solana was hovering close to $73 after a relentless rally from beneath a greenback in Could, 2020. Crypto was all the fad again then and a excessive tide lifts all boats. The issue was that the logarithmic chart revealed an virtually full five-wave impulse. We labeled it (1)-(2)-(3)-(4)-(5), the place the 5 sub-waves of wave (3) had been additionally seen and wave (4) was a transparent triangle correction.
In accordance with the Elliott Wave concept, a correction follows each impulse. Normally, it erases all of the positive factors achieved by the fifth wave. So, we thought {that a} main bearish reversal may be anticipated as quickly as wave (5) is over. We anticipated a prime someplace close to the $100 mark to be adopted by a crash to beneath $20.
Solana and the Case for Recognizing and Avoiding Bubbles Altogether
Seems we had been solely roughly proper concerning the first half, since Solana’s bubble saved inflating till it reached $260 in November, 2021. Alternatively, most crypto buyers thought Solana was going “to the moon”. For them, no worth was too excessive. Sadly, to cite Buffett once more, “it’s solely when the tide goes out that you simply uncover who’s been swimming bare.” In the long run, Solana buyers had been exactly incorrect.
Solana presently trades beneath $17, which suggests everybody who purchased after March, 2021, and nonetheless holds is now beneath water. That’s the difficulty with bubbles. They really feel nice and unstoppable whereas they final, however finally virtually everybody losses all their cash after they burst. And no-one is aware of how far a bubble can go, nor when it’ll burst. Due to this fact we predict it’s significantly better to learn to acknowledge a bubble after which resist the temptation and easily keep away from it. One thing everybody now wished they did with Solana.
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