People often talk about fundamentals then try to apply them to markets. This is a flaw viewpoint and one that causes people to lose money.

You have to ask yourself why are the masses always wrong?

Markets dictate that the majority lose. This is true throughout history. Why?

The answer lies in the fact that we are not dealing with a logical being. Therefore, fundamentals means nothing to the markets. Sure, over time, sound assets (or companies) can perform very well. That said, markets are emotional.

They are driven by fear and greed. This is the essence of it. Ultimately, they are a metric on human psychology at a particular time about a given asset. We even see Fear-Greed indexes relating to certain markets.

It all comes down to the herd. Unfortunately, most end up as sheep.

Markets Are Herd Mentality

This has nothing to do with mental intelligence. Some very smart people get caught up in this. It is always the same.

We can talk about tulips, bitcoin, AI stocks, or the dotcom bubble. The asset really doesn't matter.

The Great Financial Crisis was caused by the greed of Wall Street banks who were overleveraged on assets that were tied to real estate. They mistakenly believed that prices would continue to go up.

Does this strike you as something novel?

Obviously it is not.

Bitcoin, as an asset, has some strong fundamentals. The token number is capped, which provides a degree of scarcity. From a supply-demand standpoint, this can limit the supply available.

Couple this with HODLers and we can see how a long-term price go up situation results.

The key is long-term. We know Bitcoin can have huge swings, both up and down. It has volatility like few other assets, due in part to its fixed nature. That will always provide a degree of volatility not seen in other assets.

Bitcoin lacks any stability. This means its fundamentals are worthless. The market is going to push it higher, or lower.

Are we near a Bitcoin top? We see a lot of leverage buying, a sign that people "buy" into the idea it is going to keep going up. History is filled with carnage from this mistaken belief.

Could there be more upside in the near to medium term? Of course. But that has nothing to do with the number of units of BTC available. It also has little to do with the legislation that is being passed.

We have seen many instances where the sentiment changes and sellers found bids drying up.

The herd rushes in before it floods to the exits.

Short Term Focused

One thing we know is the herd tends to be short term focused. This appears to be getting worse as time passes.

Decades back, most involved in the stock market were looking over the time frame of 3-5 years. What did a CEO say about the plans over the next few years?

Today, earnings calls talk about the next 90 days. In the rare instance, we see some stretch it to two quarters. Outside of that, few tied to Wall Street care.

CNBC and other financial media entities only promote this point. They are nothing more than speculation and propaganda machines.

Crypto takes this to another level. It seems that most in crypto want to be traders. They believe they can earn a fortune simply swapping in and out of tokens. Certainly, this is that potential.

However, few have the emotional intelligence to do this. Look at all those people who lost their shirts on NFTs. How about memecoins? Many are still scouring social media trying to help built the next pump so they can earn their money back.

The majority lose.

Long-term focus does help to eliminate some of what the masses experience. This is something that the early Bitcoin HODLers used to their advantage. Some of the crypto old guard amassed a large stake early on and just sat on it. They didn't buy into mania nor get flushed out during pullbacks (crashes). Instead, they held strong, i.e. went counter to the herd.

Of course, there are many wallets that are filled with long-term garbage. Many early coins are worthless. So one has to be practical with the choices being made.

If you find you are in agreement with everyone else in the market, it might be something to take a closer look at. Understanding the majority lose is a good way to start the process of separating oneself.