Well, the bearish scenario played out since I last looked at ADA back in February, and we saw the predicted drop to around $0.40 -- a hefty 88% retracement from the ATH. I was buying at $1, so you can bet I'm buying here too!
Weekly RSI has bottomed out at 30 (an all time low), and low TF structure leads me to believe we might be heading for a retest of the downtrend line. No need to FOMO though... I think we'll likely have another opportunity within the accumulation zone before ultimately heading back towards $1. But if you're like me, and you think we'll see $4-$5 ADA prices within the next couple of years, $0.50 doesn't sound like such a bad price in the grand scheme of things.
Don't forget the broader economic context though, and that things could still get worse before they get better. Some are even calling for $0.10 ADA. I think that's unlikely though, and hindsight will prove this to be one of the better buying opportunities of the bear market.
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This is the low TF structure I mentioned, and one of the reason I think price is more likely headed for a retest of the downtrend line (rather than another leg down). Halfway between an IH&S and a C&H:
Ive had this same thing drawn on my chart for a month now
cryptodreamer79
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Just look back at the last bear market and what that one did to alts, they lost 95% to 99% from ATH. I get the hype, i get the looking up to the highs, but in a bear market it is better to look down to know where to buy. In the case of ADA i start to accumulate between 0.10 and 0.04, so IMHO you are very very early to the accumulation party, remember @0.1 you can buy 5x as much coins.
reees
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@cryptodreamer79, it's certainly possible that ADA could bleed 99%, but I wouldn't bet on it simply based on the fact that it happened last time. Market is maturing, cap is much larger, and cardano is much more developed than it was 4 years ago. But for sure, if we see a $0.04 ADA I'll be mortgaging my house to buy more!
In my experience, I have a lot more success using a probabilistic cost-averaging approach rather than trying to pick an exact bottom or top. There's some probability that price will drop to 0.04, and some probability that it won't. There's also some probability that 0.39 was the bottom, and a high probability that price will hit $4.00 at some point within the next couple of years. So if price is at 0.40 and I have free capital, buying is a no-brainer for me.
Out of curiosity, suppose the bottom for ADA is $0.15 and your orders between 0.04 and 0.10 don't get filled. What do you do? Do you buy on the way back up? How do you decide where/when? Or do you just forget about ADA and accept the fact that you missed the boat? Genuine question, not rhetorical
cryptodreamer79
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@reees, a wise man once told me you have unlimited chances to buy, but you can spend your money only once. Last cycle showed us that BTC dropped 85% and alts dropped 95% to 99% all across the board, so not one, not a few but all alts. That is what set my baseline for this cycle. I invest 10% of capital off baseline, say between 0.25 and 0.11. The other 90% is invested between 0.10 and 0.04. To answer your question, if the market really turns the other way i can always use my remaining capital to buy at that moment. That is why i favor this strat, in your case you already invested most of your capital at way higer prices. By doing this i bought ada last cycle at an average price of a little over 0.04 with a best buy at 0.02 and sold all at 2.00, so this method has proven itself to me.
reees
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@cryptodreamer79, sounds like a perfectly good strategy to me, assuming you have an effective way of determining when the market has truly turned the other way. That's the tricky part for me. Usually by the time you can definitively say that the market has turned bullish, alts have already surged 50%, 100%, or even 200% from the bottom. Or if you guess that the market has turned bullish and you're wrong, you just end up buying local tops on the way down to the bottom.
reees
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@cryptodreamer79, another big difference between last cycle and this one is that last time around, nearly every coin had a blow-off top with explosive gains, so a 95% retracement is a natural and proportional response to that. This time around, we saw much more modest gains, so naturally I would expect that to be tempered with a more modest correction.
cryptodreamer79
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@reees, All valid reasons why the market could turn right here that are whispered by youtube hotshots. I like to look at total market structures and macro economic climate. Let's be honest, those don't look good, we are in a risk market and we are on the verge of a recession and possibly even a depression. That brings me to my stance that this bear market most likely will be just as severe as the last one and possibly even worse.
How do i spot a real return? I look at BTC as BTC dictates this market. I just draw fibs on a larger timeframe that cover the most recent big drop, from that BTC has to break the 0.5 fib (meaning 50% recovery of the drop) with decent volume (so not on a weekend). For the curent market it needs to break 25k, as it fails to do so right now i still see more downside to come. If a bear market doesn't break to the upside it will continue down. Just an important detail, i don't buy the local top if it breaks the 0.5 fib, i then wait for it to retrace and then buy.