Bitcoins consolidation phase, in it or still towards it
Past days i have been showing in my channel that we are very likely at an important stage. It's either a continuation of the rally (which i think is too soon, but would fit the parabolic movement and madness of the past 2 months, i mean, it's Bitcoin :) ). A better, healthier scenario would be to make a much bigger consolidation coming period before we move up again. As always, can go both ways, but let me explain my thoughts a bit.
Me personally, even if we see 16K next week, to me the chances will remain very big that we can dump just as fast again. Explained this several times past months, even during the 3K prices. When a market moves up extremely fast without a good retest and consolidation, it will always remain very nervous/fragile because there is no real backup (the consolidation before the rally continues) to find support again. Maybe think of it as the 6K zone in 2018. How many times did the price dump to that level and bounced up again. That's what called a real support zone, because everyone can see it and not many people will panic sell when it reaches that level. That the 6K eventually broke is a different story. Simply said, after many retests for 10 months, the market just didn't have enough confidence to go higher.
I explained this during the rally to 13.900 as well. We moved up extremely fast since the 7500/8000 and people (retail and pro money) tend to increase the positions when an asset is very bullish and the positions is already at a very comfortable profit and a wide distance from the Break Even point. So when the positions pile up (so getting a higher average price because of increasing at higher prices), what happens when the price makes a big correction? We see a lot more profit taking than usual. So it seems as if the market is super strong, but to me it's not. With that i mean long term.
With this i mean, would i prefer to see a parabolic move just to see it dump again? Or would i prefer to see a 3/6 month consolidation above the 8k or maybe even 9k. If we get a level coming period that, with time gives the impression it's impenetrable (like the 6K in 2018), how much more comfortable would traders and investors be to get in at that support. Even new money would be much more likely to get if we get a huge support zone. Think everyone has seen (and prob felt) the 4k drop from the high 2 weeks ago.
So in general for me personally, the faster we move up, the more cautious i will be. We should never forget, even though fundamentals have changed a lot past year, this is still a speculation market. Speculating that Bitcoin/crypto might become the real deal. If it were facts, price would have been much higher already. Maybe compare it a bit with Gold, also a speculative market. There is a fundamental part to it as well, just like Bitcoin, but also a lot of speculating. The more experienced traders might remember the Gold Rush of 2005/6. Where so many people were already talking about 5K prices for Gold. I actually talked about this a lot in during the ATH of Bitcoin. Where i compared the Gold rush to Crypto. Back then, we had Gold (Bitcoin) and Silver (maybe ETH) that were extremely hyped and popular. Gold and Silver would replace fiat money, many people were just as convinced as we see now with crypto. What did we have back then as well? The gold and silver mines, you can compare them to the alt coins. There were countless silver/gold mine stocks that made similar gains as alts coins. Moving up from 0.05 cent to a few dollars. Back then i was telling people who asked me for my opinion, almost the same thing as the past year or 2. Most had market caps of 20 to 200 mil and therefore extremely easy manipulated. In my home town there was 1 particular silver mine stock that most talked about. I kept telling them, it's all of you who is pushing up the price. You need to understand, daily volume was like 100k to 1 mil on a good day. So if someone wanted to buy worth 50k, he would prob double the price himself because of it. Something we have seen a lot in crypto with the Pump & Dump schemes. Nowadays, social media is much bigger than 10/12 years ago. I did not see a lot of online talk as we are seeing with crypto nowadays, maybe not even 1% then of what we have now. Without sounding to negative, my general advice was to them was: At least know what your buying and not what OTHERS are telling.
In general never trust anyone who tells you to do something when they have (a significant) stake in it themselves as well. Kept saying this countless times during the ATH of Bitcoin as well and i will keep saying it. Of course people who have millions in Bitcoin will tell you that it's the real shit. Of course a crypto fund manager will tell you Bitcoin will go to the moon. Do they even have another choice? Selffulfilling prophecy is a very strong tool!! When enough people believe something will happen, without knowing it, they will buy the price up themselves to make it happen. But this is all short term, because if something isn't for real (settled fundamentals), within a few months to a few years it will eventually come down again.
To the chart now, trying to show what i mean with a bigger consolidation, not in price but in time. The 2015/16 rally also shows that real consolidations take much more time, same as the Gold chart above. Now even i can accept that Bitcoin moves much faster than traditional assets, but when look at other moments we can still see that the current consolidation of 2 weeks ia very small. However, what i can't say or know, is this just another small correction before making one more move up for the bigger consolidation. Meaning, are we in the blue or yellow circle of 2016. That i can't know and i don't even dare to make prediction on that.
You can say that this post is not to make a prediction of what we will do coming period, but it's to give an impression of what is realistic and to show that we almost always get a second or even third chance to get in again. 2 months ago when we first reached the 8K, i could smell the FOMO in everywhere, even in my own chat. So i wrote a big message trying to calm everyone down with the general message:
If you were not in already at low prices, go sit on your hands and just watch and be patient. Very likely to see the price come back down again eventually to the current price. At least then you are able to judge if your buying a support instead of buying the high. Since that moment we we crossed the 8K several times, even reaching 6500/7000 after. At the 12k similar thing, posted a similar message. If your not in already, don't buy the high and be patient. We even reached 9700. Now don't think it's easy for me to say this, because when i am wrong and we simply continue to go up, than i am the big idiot preventing them to make profit. But think about and be honest, how many times did a real FOMO buy make you profit (not paper profit but that you really sold for a profit) and how many times did you buy close to the high. Is that 50/50 or is more close to 80% failure. And the moments it did continu to go up, did you take profit at some point or were you still holding after a big dump below your entry? So is does FOMO strategy have a 20% success rate or is it actually more like 5% (because of the non profit taking).
I have no idea of course, but my guess is, that the ones who did FOMO or were having a hard time not to FOMO at 13k, maybe max 5% of them bought at 9700/10500. Human nature and when being inexperienced in this game, to feel bullish on the way up and bearish on the way down. Maybe it's time we stop making it so easy for the whales and filling the order book with buys at the highs and sells at the lows?
Think long term, like the big boys are doing and plan ahead to prevent emotional decisions.
Don't forget to like if you appreciate this :)
Previous posts:
Me personally, even if we see 16K next week, to me the chances will remain very big that we can dump just as fast again. Explained this several times past months, even during the 3K prices. When a market moves up extremely fast without a good retest and consolidation, it will always remain very nervous/fragile because there is no real backup (the consolidation before the rally continues) to find support again. Maybe think of it as the 6K zone in 2018. How many times did the price dump to that level and bounced up again. That's what called a real support zone, because everyone can see it and not many people will panic sell when it reaches that level. That the 6K eventually broke is a different story. Simply said, after many retests for 10 months, the market just didn't have enough confidence to go higher.
I explained this during the rally to 13.900 as well. We moved up extremely fast since the 7500/8000 and people (retail and pro money) tend to increase the positions when an asset is very bullish and the positions is already at a very comfortable profit and a wide distance from the Break Even point. So when the positions pile up (so getting a higher average price because of increasing at higher prices), what happens when the price makes a big correction? We see a lot more profit taking than usual. So it seems as if the market is super strong, but to me it's not. With that i mean long term.
With this i mean, would i prefer to see a parabolic move just to see it dump again? Or would i prefer to see a 3/6 month consolidation above the 8k or maybe even 9k. If we get a level coming period that, with time gives the impression it's impenetrable (like the 6K in 2018), how much more comfortable would traders and investors be to get in at that support. Even new money would be much more likely to get if we get a huge support zone. Think everyone has seen (and prob felt) the 4k drop from the high 2 weeks ago.
So in general for me personally, the faster we move up, the more cautious i will be. We should never forget, even though fundamentals have changed a lot past year, this is still a speculation market. Speculating that Bitcoin/crypto might become the real deal. If it were facts, price would have been much higher already. Maybe compare it a bit with Gold, also a speculative market. There is a fundamental part to it as well, just like Bitcoin, but also a lot of speculating. The more experienced traders might remember the Gold Rush of 2005/6. Where so many people were already talking about 5K prices for Gold. I actually talked about this a lot in during the ATH of Bitcoin. Where i compared the Gold rush to Crypto. Back then, we had Gold (Bitcoin) and Silver (maybe ETH) that were extremely hyped and popular. Gold and Silver would replace fiat money, many people were just as convinced as we see now with crypto. What did we have back then as well? The gold and silver mines, you can compare them to the alt coins. There were countless silver/gold mine stocks that made similar gains as alts coins. Moving up from 0.05 cent to a few dollars. Back then i was telling people who asked me for my opinion, almost the same thing as the past year or 2. Most had market caps of 20 to 200 mil and therefore extremely easy manipulated. In my home town there was 1 particular silver mine stock that most talked about. I kept telling them, it's all of you who is pushing up the price. You need to understand, daily volume was like 100k to 1 mil on a good day. So if someone wanted to buy worth 50k, he would prob double the price himself because of it. Something we have seen a lot in crypto with the Pump & Dump schemes. Nowadays, social media is much bigger than 10/12 years ago. I did not see a lot of online talk as we are seeing with crypto nowadays, maybe not even 1% then of what we have now. Without sounding to negative, my general advice was to them was: At least know what your buying and not what OTHERS are telling.
In general never trust anyone who tells you to do something when they have (a significant) stake in it themselves as well. Kept saying this countless times during the ATH of Bitcoin as well and i will keep saying it. Of course people who have millions in Bitcoin will tell you that it's the real shit. Of course a crypto fund manager will tell you Bitcoin will go to the moon. Do they even have another choice? Selffulfilling prophecy is a very strong tool!! When enough people believe something will happen, without knowing it, they will buy the price up themselves to make it happen. But this is all short term, because if something isn't for real (settled fundamentals), within a few months to a few years it will eventually come down again.
To the chart now, trying to show what i mean with a bigger consolidation, not in price but in time. The 2015/16 rally also shows that real consolidations take much more time, same as the Gold chart above. Now even i can accept that Bitcoin moves much faster than traditional assets, but when look at other moments we can still see that the current consolidation of 2 weeks ia very small. However, what i can't say or know, is this just another small correction before making one more move up for the bigger consolidation. Meaning, are we in the blue or yellow circle of 2016. That i can't know and i don't even dare to make prediction on that.
You can say that this post is not to make a prediction of what we will do coming period, but it's to give an impression of what is realistic and to show that we almost always get a second or even third chance to get in again. 2 months ago when we first reached the 8K, i could smell the FOMO in everywhere, even in my own chat. So i wrote a big message trying to calm everyone down with the general message:
If you were not in already at low prices, go sit on your hands and just watch and be patient. Very likely to see the price come back down again eventually to the current price. At least then you are able to judge if your buying a support instead of buying the high. Since that moment we we crossed the 8K several times, even reaching 6500/7000 after. At the 12k similar thing, posted a similar message. If your not in already, don't buy the high and be patient. We even reached 9700. Now don't think it's easy for me to say this, because when i am wrong and we simply continue to go up, than i am the big idiot preventing them to make profit. But think about and be honest, how many times did a real FOMO buy make you profit (not paper profit but that you really sold for a profit) and how many times did you buy close to the high. Is that 50/50 or is more close to 80% failure. And the moments it did continu to go up, did you take profit at some point or were you still holding after a big dump below your entry? So is does FOMO strategy have a 20% success rate or is it actually more like 5% (because of the non profit taking).
I have no idea of course, but my guess is, that the ones who did FOMO or were having a hard time not to FOMO at 13k, maybe max 5% of them bought at 9700/10500. Human nature and when being inexperienced in this game, to feel bullish on the way up and bearish on the way down. Maybe it's time we stop making it so easy for the whales and filling the order book with buys at the highs and sells at the lows?
Think long term, like the big boys are doing and plan ahead to prevent emotional decisions.
Don't forget to like if you appreciate this :)
Previous posts:
منشورات ذات صلة
إخلاء المسؤولية
لا يُقصد بالمعلومات والمنشورات أن تكون، أو تشكل، أي نصيحة مالية أو استثمارية أو تجارية أو أنواع أخرى من النصائح أو التوصيات المقدمة أو المعتمدة من TradingView. اقرأ المزيد في شروط الاستخدام.