Why BTC could be going MUCH lower. Part II: Vox populi

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
"Be fearful when others are greedy and greedy when others are fearful.”

Possibly one of the most influential quotes of all time when it comes to investing. While this is necessarily not always the case, Warren Buffet understands that the whole merry-go-round that we call the stock, gold etc. markets are based on one, though far from simple, thing: psychology of the participating individuals.

It is the reason why 90% of all individuals fail in trading as they are lead by emotions and irrational deicisions. The other 10%? They understand the game and simply go against the mass sentiment of the sheep, profiting of off them in the process.

So what is the current sentiment in the crypto sphere?

Well, if we take a look at the crypto fear and greed index we can see that currently greed is in the market with a valuation of 57 (you can look up on what the whole algorithm is based on). If we take the TA approach, we can see that the 60 mark provides a heavy resistance. 56 is the point at which Bitcoin tumbled, broke 6k and capitulated (though if that was the true capitulation remains to be seen).

What does this mean?

Well, firstly, do note that there are times when a greedy overall sentiment can be justified. For example, if Bitcoin made a higher high and established a firm support at a new level that would definitely mean that greed is, at least for the short tem, a justified sentiment. Another example would be Bitcoin decisively breaking the 6k support-now-resistance level as that would essentially signal the start of a new bull market.

But, with that being said, can the greed really be justified in this point in time?

If you look at the TA fundamentals, we are now facing heavy resistance on a weekly time frame with a multitude of indicators:

1. 200 EMA (in red) is holding the price firmly below 4100
2. 20 MA (in black) is falling down like a bomb and though an argument can be made that we broke it, I would like to see a breakout with A LOT of volume . Breaking such significant MA is no small feat and any breakout without volume cant really be taken particularly seriously.
3. RSI on the weekly is 1. overextended and 2. at a super heavy resistance around 43,44

In short, the sentiment is telling us moon while the TA is telling us a completely different story. That would make the current greed sentiment UNJUSTIFIABLE.
I plan to take additional short positions and cant wait for these thing to fall like a rock to at least 200MA. Once there we will evaluate the position and react appropriately.

Stay tuned for Part III of the series, where we will take a look at an indicator with a literally 100% accuracy. Thank you!

P.S. If you like my analysis, please hit a like as otherwise, if no one is reading them there is no point in writing them either.

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