![f2d0dfb556b5be479019016872078f45ad26c196c3a6fed5d780d69ecfff18cb.jpg](https://i.imgur.com/6gpEtEA.jpg)
**Laws That Govern**

All markets are binary in nature and operate on multiple levels of relativity. These are inherent laws, or dynamics if you will that govern and direct markets. Most are aware of the fundamental and most basic relativity ratio that decides price. The dynamic of BUY versus SELL. If the selling pressure surpasses the support created by buyers, the price will inevitably drop, and vice versa. Strong demand will ultimately push prices higher, while weak demand will drive prices lower. This is exactly what you will see playing out during the euphoric stage of a [bull market](https://leofinance.io/@leoglossary/leoglossary-bull-market). Everyone and his uncle is buying, hence the parabolic price action. When markets shift into a [bear market](https://leofinance.io/@leoglossary/leoglossary-bear-market), participants have lost enthusiasm, they want out! Market participants shift into a state of paralysis or fear, meaning they either stop buying, or they sell. This is the gist of it. There are other “measures” that operate on relativity that will signal how strong a particular market is at any given time. Let’s take a look at one.

**Understanding The Wind**

When a strong wind breaks out, it reveals a lot by the destruction it leaves in its path. Structures that are destroyed, or damaged by the wind reveal weakness, or inferiority, in terms of structural integrity. However, those that remain reveal strength. They may take a pounding and be a little worse for wear, but they are still standing. One has to measure the damage against the force. When you consider that the same force destroyed certain structures, while others survived, it becomes clear that those that remain are stronger and of better quality. The same applies to Bitcoin, stocks, and any other market.

![Facebook Shop 40.jpg](https://i.imgur.com/XGM16qV.jpg)

This means that even a drop in price can be bullish. Some may consider this rather counterintuitive, but it’s really not. For instance, if the FED came out with a 100 bps rate hike and Crypto only dropped 2%, it would be extremely bullish, correct? You have to measure the move against the significance of the “event” or economic climate. This is where so many have completely missed the bus during this bear market. Not only did many ignore the macro environment, they too somehow thought it had little to do with Crypto. As a result, they began making price predictions void of the most important data, at this current time.

**Let’s Revisit The China Ban**

Many months ago, I published an [article](https://sapphirecrypto.org/2022/01/29/the-true-extent-of-the-bitcoin-mining-ban-in-china/) addressing China banning Bitcoin mining. What I suggested was that if that event had not taken place, BTC would have surpassed $100K! When you consider the magnitude of the event and the price action that followed, it tells a story. At that point, the majority of Bitcoin miners were located in China. If you didn’t know, electrical costs are meager in China, at least they were then. I haven’t checked as of late. When you consider that these miners went offline and caused the [hashrate](https://leofinance.io/@leoglossary/leoglossary-hash-rate) to drop by 50%, it’s a big deal! Even though the BTC price tanked, it turned straight up and went on to surpass the previous high. There was no sideways movement! It was literally a u-turn!

**Extremely Bullish**

When you consider the event’s significance and the price action that followed, you realize how bullish the market was, even at that point. Consider then if it had not taken place. That was “bullish steam” that pushed BTC from $29K to $69K. Whether you choose to recognize it or not, it was a sign of a strong market. Relatively speaking, BTC was up against a “swan event”, and managed to move higher than when the event was first triggered. When you analyze price action, you need to factor in the many different dynamics that are at play. Understanding and studying the “relativity aspect” can help you discern the true state of any market. Anyway, that’s me for this Sunday. Have a great week!

![Facebook Shop 30.jpg](https://i.imgur.com/CZvyCap.jpg)

**Disclaimer**

First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.

This article was first published on [Sapphire Crypto](https://sapphirecrypto.org/2022/09/25/understanding-the-relativity-dynamic-that-dictates-price/).

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