This The Time To Take A Risk On Bitcoin
Today's post will be a little longer because I would like to emphasize why this juncture is so critical to the future success of Bitcoin. Bitcoin has moved within the same upward channel for 7 years. Eventually these trends end or reverse. Nature takes its course every time. Whether we are looking at the beginnings of a multiyear bear market or a continuation into a much much bigger advance in Bitcoin Prices remains to be seen. However, one thing is certain, we seem to be at the make or break point for Bitcoin.
Bullish
If you're looking to buy the dip, this is the optimal time. We found support at the 7 year channel which was a critical support line in both major bottoms in 2015 and 2018. Perhaps we are ranging a short while here before beginning out next leg up towards new ATHs in 2020. When Bitcoin moves it moves fast, so don't be surprised when you wake up one day at it's up 30% and the next leg is starting. I believe we are consolidating in this bottoming range before breaking out of this yellow zone and heading towards breaking out of the correctional channel which is the absolute sign we have officially ended this correction from June highs.
In terms of where we are in the world, from a economic standpoint and given how young and revolutionary the technology is, it is absolutely possible we haven't seen the blow off top phase where all people talk about is Bitcoin and how it will be used to change the world. We really got a small taste of that in 2017 before high transaction fees and clogged networks with extended wait periods to send money halted us. After taking the time between then and now to establish the lightning network, sharding, and other technological breaks to improve the network, it seems that we may be poised to support a much larger network for when Bitcoin prices hit 40,000 and people really start FOMOing in. It's quite possible this gets overly hyped over the next 2-3 years in a blow off top phase before topping out and beginning the multi year correction that seems to be closer than ever.
Bearish
Losing this channel for the second time in as many weeks would be extremely bearish. If this was to be a multiyear correction we could see prices hit lowers much lower than 2018 lows in the 3000s range. Perhaps this capituation would drive the prices down to the $1800 area minimum. We could even see an advance to the top of the short term downwards channel from June 2019 - now and get rejected at the top and continue on downwards back towards the 4000-5000 range while simultaneously losing the 7 year channel.
Psychologically, this would destroy the market and it does make absolute sense given the development of blockchain technologies. There are more scam coins out there then there are practical application for blockchain technologies. The space is unregulated and many have lost a lot in this space through scams and pump and dump schemes. Marketing geniuses dominate the space where they promote s*** coins, generalized comments on the future of bitcoin, bot followers, no real/tangible contributions to the space, etc. It makes sense that this market weeds out all the filth (much like dotcom era) before continuing in it's next leg up to newer highs and real life application. This should take a few years to bottom out and begin reversing. In terms of the tech, we are really still years away from seeing global and mass adoption of blockchain technologies.
Conclusion
Not sure how I feel about Bitcoin while we are in this range, but you will likely get an answer whether to long or short bitcoin for the forseeable future within the next few weeks. Volume has dropped significantly and bollinger bands across many Majors and Bitcoin are squeezing so tight that when volume breaks one direction, we are going to see a huge move either up or down. I am cautiously bullish and am hoping that we are successfully calling the end to this correction correctly and a huge bounce to the upside is imminent over the coming weeks. However, I have prepared myself for both scenarios appropriately because trading is all about risk management.
Bullish
If you're looking to buy the dip, this is the optimal time. We found support at the 7 year channel which was a critical support line in both major bottoms in 2015 and 2018. Perhaps we are ranging a short while here before beginning out next leg up towards new ATHs in 2020. When Bitcoin moves it moves fast, so don't be surprised when you wake up one day at it's up 30% and the next leg is starting. I believe we are consolidating in this bottoming range before breaking out of this yellow zone and heading towards breaking out of the correctional channel which is the absolute sign we have officially ended this correction from June highs.
In terms of where we are in the world, from a economic standpoint and given how young and revolutionary the technology is, it is absolutely possible we haven't seen the blow off top phase where all people talk about is Bitcoin and how it will be used to change the world. We really got a small taste of that in 2017 before high transaction fees and clogged networks with extended wait periods to send money halted us. After taking the time between then and now to establish the lightning network, sharding, and other technological breaks to improve the network, it seems that we may be poised to support a much larger network for when Bitcoin prices hit 40,000 and people really start FOMOing in. It's quite possible this gets overly hyped over the next 2-3 years in a blow off top phase before topping out and beginning the multi year correction that seems to be closer than ever.
Bearish
Losing this channel for the second time in as many weeks would be extremely bearish. If this was to be a multiyear correction we could see prices hit lowers much lower than 2018 lows in the 3000s range. Perhaps this capituation would drive the prices down to the $1800 area minimum. We could even see an advance to the top of the short term downwards channel from June 2019 - now and get rejected at the top and continue on downwards back towards the 4000-5000 range while simultaneously losing the 7 year channel.
Psychologically, this would destroy the market and it does make absolute sense given the development of blockchain technologies. There are more scam coins out there then there are practical application for blockchain technologies. The space is unregulated and many have lost a lot in this space through scams and pump and dump schemes. Marketing geniuses dominate the space where they promote s*** coins, generalized comments on the future of bitcoin, bot followers, no real/tangible contributions to the space, etc. It makes sense that this market weeds out all the filth (much like dotcom era) before continuing in it's next leg up to newer highs and real life application. This should take a few years to bottom out and begin reversing. In terms of the tech, we are really still years away from seeing global and mass adoption of blockchain technologies.
Conclusion
Not sure how I feel about Bitcoin while we are in this range, but you will likely get an answer whether to long or short bitcoin for the forseeable future within the next few weeks. Volume has dropped significantly and bollinger bands across many Majors and Bitcoin are squeezing so tight that when volume breaks one direction, we are going to see a huge move either up or down. I am cautiously bullish and am hoping that we are successfully calling the end to this correction correctly and a huge bounce to the upside is imminent over the coming weeks. However, I have prepared myself for both scenarios appropriately because trading is all about risk management.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.