When Cab Drivers Start Asking About Bitcoin...
See a 1929 precedent – and learn how to apply “Magazine Cover Indicator” to cryptocurrencies
by Bob Stokes
Updated: April 22, 2021
There's the famous story of a market speculator who sold shortly before the 1929 top after the person who shined his shoes offered him a stock market tip.
Of course, the implication is that when almost everyone is in the market, there's hardly anyone left to buy. Hence, the uptrend is due for a reversal.
The CEO of Swedish fintech giant Klarna is expressing concern that the same psychology is at play with bitcoin.
The CEO is quoted in an April 20 CNBC article:
"There's a lot of promise in cryptocurrencies," [the CEO said on April 20]. "But at the same time, I'm deeply worried that the big risk is like when my cab driver is asking me if he should invest in bitcoin. That's when I get nervous that a lot of people will come late into the party and lose a lot of money."
As you may know, bitcoin recently climbed to near $64,000 and then over the weekend of April 17-18, declined as much as 15%. Of course, the King of Cryptos has had other significant pullbacks since its skyrocketing ascent during the past year or so, but bitcoin has managed to keep climbing higher.
Is the bitcoin inquiry by the cab driver a sign that the digital currency is at the threshold of a big crash?
Well, our April Global Market Perspective provided this angle, one you won't see in the mainstream press. Here's the chart and excerpt:
The Magazine Cover indicator, formulated by Paul Macrae Montgomery, postulates that when a financial trend is established enough to reach the cover of a general interest news magazine, which is rare, that trend is near exhaustion.
Bitcoin's susceptibility to such a signal is clear from the "Rhymes with Bitcoin" BusinessWeek cover at the bottom of the chart. As The Elliott Wave Theorist noted on December 21, 2018, the negative appraisal appeared a few days from bitcoin's December 14, 2018 low. The chart also shows a Time cover image dated March 29-April 5. If Time is asking, "Is Fiat Dead?", referring to traditional currencies, history's answer is, "not by a long shot."
Of course, sentiment is not everything. Markets can stay overbought or oversold for a long time. In order to pinpoint a reversal with more accuracy, it helps to look at a market's pattern of mass psychology reflected in Elliott wave patterns.
So what does the Elliott wave model suggest for bitcoin next?
On that, you can get clear, well-researched answers inside the current, April issue of our monthly Global Market Perspective.
Follow the link below to get started instantly.
Read 100 Market Opinions … Or See a Price Chart?
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Most market opinions are based on events outside the market. In other words, "fundamentalists" believe the notion that news drives stock trends.
But EWI has compiled decades of evidence to show that this is simply incorrect.
On the other hand, EWI's analysts have observed that all widely traded financial markets unfold in recognizable patterns at all degrees of trend, thus making markets predictable!
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