Hello there,
I see a lot of posts talking about going long on bitcoin. I'm not their parents, who am I to stop them? But personally, I've been weary of buying a lot of bitcoin and ethereum for the last few months, I bought some bitcoin around the 50,000 mark on March 6, and recently sold it around the 59,100 level because I had fears of a correction. As we all know now, it has dropped a fair bit, but that's not the reason I'm making this post.
At the time of writing this, it has lost nearly 15% from its new ATH. ETH is looking even worse off. That's not what I'm worried about. I believe it will soon rebound. However, I do not foresee it making another ATH. Same with ETH, I think a serious correction is in the books.
There is a lot of RSI divergence, as I'm sure you've seen nearly everywhere. Not just on the daily chart either, also on the weekly chart. This is quite worrisome, since we haven't had serious divergence on the weekly chart since the bear market from summer 2019 to March 2020. We haven't had any major corrections at all since March of last year.
The OBV is seeing decreasing volume, which means that it is losing its steam. Buyers are not stepping in to push the price higher.
As well, we have had a major RSI trendline break to the downside, which pretty much always signifies a change in trend, since momentum begins increasing downwards.
Same story for ethereum.
Don't jump to conclusions and assume this is a short opportunity, there is currently not enough evidence to say whether bitcoin is simply going to move into a consolidation phase or start a new downtrend. Heck, it could even revert to a weaker uptrend. But at the moment, I have my doubts that it will continue higher.
There's a really good support level at 30k. I think if bitcoin can hold that level, it would be a fantastic buying opportunity. However, my worst case scenario sees bitcoin dropping to 20k, or even 16k. I have drawn 2 exponential curves over the previous 20k ATH in 2017, and adjusted the size so they are proportional to our current ATH, as seen in the image below.
If bitcoin follows this curve, it would trigger an extended bear market that could last another year or two. The ending of the curve has confluence with a very old trendline as well, which is why I believe bitcoin will not fall very far below the 20k level. If it doesn't follow the curve however, it is technically possible for bitcoin to continue higher and higher. At the moment, your best bet is to stay out of the market. If you want, you can sell a portion of your positions, or you can keep them open. Personally though, I advise against entering a new long position until it breaks the RSI trendline. If this happens, a rally even higher is entirely on the table. Until we break the divergence though, bitcoin is at the very very least going to consolidate for a while. If it makes a lower low, though, I'm concerned it may not stop...
Long term, I believe blockchain is the future. Even if neither BTC nor ETH become a worldwide currency, blockchain is here to stay. At the moment, though, the technology is too new for me to say exactly where bitcoin will go in 10 years. It could dip to 20k and stay near that level. It could surge to 200k, 400k, who knows. I don't have a time machine. But at the moment, I highly suggest refraining from jumping in before thinking. Many traders fall into the trap of thinking things just go up forever until you feel like selling it. Without a proper plan in place, you will lose money.
Stay safe out there, good luck with your trading!
I see a lot of posts talking about going long on bitcoin. I'm not their parents, who am I to stop them? But personally, I've been weary of buying a lot of bitcoin and ethereum for the last few months, I bought some bitcoin around the 50,000 mark on March 6, and recently sold it around the 59,100 level because I had fears of a correction. As we all know now, it has dropped a fair bit, but that's not the reason I'm making this post.
At the time of writing this, it has lost nearly 15% from its new ATH. ETH is looking even worse off. That's not what I'm worried about. I believe it will soon rebound. However, I do not foresee it making another ATH. Same with ETH, I think a serious correction is in the books.
There is a lot of RSI divergence, as I'm sure you've seen nearly everywhere. Not just on the daily chart either, also on the weekly chart. This is quite worrisome, since we haven't had serious divergence on the weekly chart since the bear market from summer 2019 to March 2020. We haven't had any major corrections at all since March of last year.
The OBV is seeing decreasing volume, which means that it is losing its steam. Buyers are not stepping in to push the price higher.
As well, we have had a major RSI trendline break to the downside, which pretty much always signifies a change in trend, since momentum begins increasing downwards.
Same story for ethereum.
Don't jump to conclusions and assume this is a short opportunity, there is currently not enough evidence to say whether bitcoin is simply going to move into a consolidation phase or start a new downtrend. Heck, it could even revert to a weaker uptrend. But at the moment, I have my doubts that it will continue higher.
There's a really good support level at 30k. I think if bitcoin can hold that level, it would be a fantastic buying opportunity. However, my worst case scenario sees bitcoin dropping to 20k, or even 16k. I have drawn 2 exponential curves over the previous 20k ATH in 2017, and adjusted the size so they are proportional to our current ATH, as seen in the image below.
If bitcoin follows this curve, it would trigger an extended bear market that could last another year or two. The ending of the curve has confluence with a very old trendline as well, which is why I believe bitcoin will not fall very far below the 20k level. If it doesn't follow the curve however, it is technically possible for bitcoin to continue higher and higher. At the moment, your best bet is to stay out of the market. If you want, you can sell a portion of your positions, or you can keep them open. Personally though, I advise against entering a new long position until it breaks the RSI trendline. If this happens, a rally even higher is entirely on the table. Until we break the divergence though, bitcoin is at the very very least going to consolidate for a while. If it makes a lower low, though, I'm concerned it may not stop...
Long term, I believe blockchain is the future. Even if neither BTC nor ETH become a worldwide currency, blockchain is here to stay. At the moment, though, the technology is too new for me to say exactly where bitcoin will go in 10 years. It could dip to 20k and stay near that level. It could surge to 200k, 400k, who knows. I don't have a time machine. But at the moment, I highly suggest refraining from jumping in before thinking. Many traders fall into the trap of thinking things just go up forever until you feel like selling it. Without a proper plan in place, you will lose money.
Stay safe out there, good luck with your trading!