Perception is all about feelings and history. By studying historic charts, we can judge the present perception of the markets, relative to the past. The Gold Dow ratio is for instance at a historic high, indicating that stocks are trading at elevated valuations relative to gold.
Google trends can also help us analyse perception. There is for instance very little interest in "buy bitcoin", despite the late run up in its price. It appears therefore that its price has become elevated without a corresponding positive development in overall perception. A downward price correction appears to be imminent.
Circumstance on the other hand, has to do with utility and scarcity. Foods and metals have utility in that they feed us and provide machinery for production of goods. When there are scarcities in commodities, prices go up, unless there is a strong perception that circumstances will change.
To get a good idea about likely price changes, we need to be well informed about perception, utility and scarcity. Only then can we hope to act rationally in the market. Given that most of us are less informed than professional traders, we should not get ourselves into the business of making short term predictions. However, long term predictions can be made with a great deal of confidence, especially for things that have well defined utility and scarcity. Gold, real estate and index funds are good investment vehicles for this reason.
Crypto-currencies on the other hand, are terrible in this respect. They have no utility in and of themselves, and are therefore valued purely based on perception. No-one needs crypto for anything. It cannot be used for anything other than transactions. It is not like gold, which is used in jewelry and electronics. There is no fundamental need for anyone to own crypto. No-one will refuse our hand in marriage due to a lack of crypto.
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