Will Bit Coin Reach 20k Again
Introduction
I wrote an commodity iii weeks ago explaining why I was shorting the Bitcoin (BTC-USD) bubble. Many investors who followed my trade have made a prissy profit during the last 3 weeks. 3 days ago, I wrote some other article to explain the primal causes of the contempo 50% collapse in Bitcoin price and what could happen next. Many readers asked about my view on Bitcoin's technicals. Equally such, in this article, I will focus on the technical assay and share what I am planning to do.
What happened to Bitcoin in May?
Every bit I explained during my previous article, Bitcoin's cost movement is post-obit the textbook marketplace psychology nautical chart.
Source: Tradingview
At the moment, Bitcoin's macro trend clearly indicates it is in a bear marketplace, and Bitcoin is in the "denial phase" of the marketplace psychology. Many Bitcoin influencers in Youtube and Seeking Blastoff are completely ignoring the extremely surly technicals and challenge this is somehow a normal level of correction, and Bitcoin volition start roaring back to an all-time-high in few weeks. Even though that is possible, based on the extremely negative fundamentals (government regulation, ESG concerns, alt-money dilution, Musk U-plow) and terrible chart pattern, I call back it is more probable for Bitcoin to collapse back to the $15K range. In fact, Bitcoin is at present significantly closer to $0 than to $100K.
In this commodity, I will explicate what I think is the fundamental resistance level that both Bitcoin bulls and bears should focus on before making whatever decisions.
$40K sparse resistance: Just a dead-cat bounciness?
Source: Bitcoin/USD Trading View
During the final 2 weeks, after the massive $40K to $30K collapse, Bitcoin was able to rally and recover its losses and move dorsum to the $40K marking. However, when Bitcoin reached $40K with an extremely strong bullish momentum, it has lost its momentum and has been hovering around the $40K resistance during the last few days. It seems like bulls really want to pause the $40K mark, just there are lots of selling pressure level that is constantly hammering down the bullish momentum.
If the $40K resistance breaks down, I think Bitcoin can hands collapse dorsum to the $20-30k range in a heartbeat. I think this $40K mark is an important brusk-term resistance that Bitcoin bulls need to concord during the next few weeks. This is because, during the February bull market, $40K has been a key technical point where bulls needed several attempts to break above. In my stance, the bulls were able to break that resistance because of Elon Musk and Tesla catalyst, Tesla buying i.5Bn worth of Bitcoin.
If Bitcoin could get higher up the $40K mark and agree, there is a probability that Bitcoin can ascent back to the $45-50K region. I call back the $45-50K region would be the almost important key resistance that will determine Bitcoin'south fate.
Key resistance: 45-50K resistance, why it is of import
Source: Bitcoin/USD Trading View
The $45-50k resistance is an of import number to keep in mind for both bulls and bears considering of two reasons:
- Get-go, this range was the key resistance that Bitcoin bulls had to attempt multiple times to pause this march.
- Secondly, during the 2018 Bitcoin cycle, Bitcoin complanate downwardly to the $13K mark and rebounded back to $18K, which represents around 50% dead-true cat bounce. Moreover, altcoins rallied close to 70% after the massive collapse around this fourth dimension. Using 2018 price movement as a guide, 50-70% bounce from the $28-30K, 2021 low would exist $45-51K.
Source: Tradingview - 2018 Bitcoin bubble plummet
Can Bitcoin Bubble Keep?
If Bitcoin breaks through the $45-50K mark and continuously goes upwardly to the $55-60K mark like what we have seen during the Bitcoin rally in Q1 2021, I think at that place is a probability that Bitcoin could continue its bull-run to $100K. Since Bitcoin does not have greenbacks flow, dividends, yields, or use-example other than speculation, Bitcoin's toll absolutely depends on what someone else is willing to pay. This ways the upside is unlimited, and any price above $0 is an overvaluation for Bitcoin.
My Plan
In order to profit from a behave market, I believe investors should short the rips and comprehend at the key resistance levels. As I explained, I wouldn't be surprised to meet Bitcoin going up to the $45K mark, considering the technical pattern. Even so, considering the bearish fundamentals and the weak momentum that I am repeatedly observing, I don't retrieve Bitcoin could defend the $45K resistance for a long fourth dimension. I recall information technology is more likely for bears to drive information technology back downward under $30K. I think $45K would be the point where investors who want to bet on Bitcoin's further turn down could outset shorting it. If Bitcoin collapses under $40K, I think the key downside resistance could be around $30K and $20K. I call up $29-31K could be the bespeak where TSLA purchased Bitcoin, depending on the time of the purchase. It is a probability that Elon Musk may write bullish tweets to defend TSLA's cost base, or Tesla (TSLA) may liquidate its Bitcoin position when the Bitcoin toll nears the cost base of operations. Even if Elon Musk decides to defend Bitcoin through his Twitter account, I retrieve Elon Musk's Bitcoin pump is losing its efficacy. For example, Elon Musk'due south recent positive tweet regarding Bitcoin miners only drove Bitcoin toll by $one,000-one,500, and the rally died off very apace. If Bitcoin bears realize that Elon Musk is no longer a threat, and then they will brusk Bitcoin more than aggressively, driving Bitcoin price to another heinous decline. After breaking the $30K resistance, I await Bitcoin to fall to the $nineteen-20K level, which is Bitcoin'southward 2018 bubble elevation. At this point, the run a risk of shorting outweighs the potential proceeds; therefore, I am planning on roofing my shorts.
Risks
Bitcoin is a speculative bubble and driven by irrational marketplace psychology. It is extremely of import for investors to set a clear end-loss and a target price before shorting the chimera, every bit unexpected swings in Bitcoin prices could cause a forced liquidation. My main business is some type of unexpected catalyst taking identify out of nowhere that causes a 20-30% spring in Bitcoin prices. I think investors with a very high-take a chance tolerance should brusk Bitcoin. My advice for other investors who are not willing to take this level of chance is to stay on the sidelines and sell their Bitcoin position as I expect Bitcoin cost to become much lower from hither.
Decision
As I predicted in my previous commodity on May fifth, Bitcoin has collapsed more than 50% in less than 3 weeks. Bitcoin continuously failed to defend the $40K resistance after it bounced dorsum to the $35-40K region later on it went beneath $30K. Information technology is highly probable that the Bitcoin Bear market place is not over and it could fall considerably more from this level. I think Bitcoin is mostly driven by retail momentum and exotic catalysts. As such, in order to profit from trading Bitcoin, being a nimble technician who can read key technical trends and market psychology is extremely important. Both Bitcoin'south chart pattern and catalysts during May were extremely bearish. The macro chart pattern clearly indicates that the Bitcoin bull market is over. During the bull market, investors should buy the dips and seek to climb the mountain college, but during the surly downward, investors should call up most shorting the chimera and glide down the mount rather than trying to climb upward. The primal resistance to me is $45-51K based on the previous dead-cat bounciness of Bitcoin and other altcoins in 2018. I think $45-51K would be a pivotal entry point for Bitcoin shorts. If this pivotal resistance breaks down and Bitcoin collapses downward further, the target price for my short position would be $30K and $20K.
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Source: https://seekingalpha.com/article/4432045-bitcoin-terrible-technicals-bitcoin-could-collapse-back-to-20k-soon
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