Good day Hiveians!
Join me in analyzing the crypto markets!
In light of the recent optimism for bitcoin (countless threads on the the big bull move and so on) I want to speak a word of caution in terms of crypto investments. It's not that my analysis is necessarily better than others, but I think a lot of people who don't know much about trading could lose a lot of money. So I just want to point out the caveats in the current crypto market.
In my post on March 12th "Brutal Market Correction... But anticipated!" I had warned about a big sell off in the crypto market. We saw a correction that was even worse than I had expected; it went all the way down to 3.7k. Of course, that presented itself as a really good byuing opportunity and if you kept yout bitcoins until today, you would have made a really good ROI. But are we already in the next big bull phase or will we see a return to the 3-5k area? There are some arguments to be made why the bull phase is not yet dead (or just beginning), see e.g., "Whether you like it or not, Stocks are going to soar and so is Bitcoin". But what a lof of people are not acknowledging is the high risk investment that entail in the current market. Stocks are just as volatile as cryptos now and in both markets you should be cautious.
So let me present my arguments/clues for why you should perhaps wait on your investment:
- A long term persepctive reveals a large triangle in which the price of bitcoin has been moving. This triangle is a good indicator of how long the price could still be trading in this price range. And as you can see there are still 2 years for the price to "move" in it. My analysis of crypto markets (especially BTCUSD) has shown that these triangles never hold until the end. There is a breakout up or down quite a bit before the "end". Previous fractals suggest that this could happen well in the year of 2020.
For some reason, the price of bitcoin has often rallied or crashed in the time of new year. This is marked with the third vertical line in the graph and gives a reasonable time point of when prices could break out. The smaller traingle in the middle of the graph suggests this could be a fractal for the current bigger triangle. If so, it would indicate a breakout to the top within about half a year (which coincides with the new year time period).
The second vertical line is the point of the last halving. If you compare it with the first vertical line (the 2nd halving) you can see that there was a strong correction of about 40% which has not happened yet for the current post-halving time period. If you know about fractals, this could well be an indicator of things to come.
Volume is way down, indicating a larger prcie swing is imminent. Others have pointed out that a bull phase never happens on a declining volume, suggesting that a break out to the top is now quite unlikely.
Then we have a very similar pattern which we are seeing being repeated currently. The first oval corresponds to the second oval which also suggests a stark decline in price.
On a linear scale, there is a very strong resistance line coming all the way back from 2017. It could not be breached until now and if volume does not pick up, it won't be.
- One more obvious factor is the stock market: It has rallied like no tomorrow, but the question is: is it sustainable? If anything, we have learned that our wolrd and its economy is anything but stable and a virus has the potential to end it... (we got lucky this time as it has a low mortaily rate). But is Corona over? I doubt it as many countries are now registering what might be a second wave. And the economc fallout is still here; we haven't even begun to factor this into the stock market. What happend when the FED's buying power diminishes? What happens if geopolitical tensions escalate? There are many questions and not doubt will this translate to the stock market and the crypto markets.
So I think now is not a good time to invest. Buy the dips as best as you can. Perhaps 3-5k will be here soon again. As for a long term outlook, I think the crypto market could have a very bright future. It's just that its time is not quite here yet. But keep in mind, these are only my 2cents. I might be completely off! It's for you to outweigh the risks and potential gains. For me, the risks are definitely too high right now.
As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!
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