BTCUSD has put on a show finding new highs over the course of two days. What sparked this large move? Well, part of it can be accredited to Tesla announcing that they were buying $1.5 billion dollars worth of Bitcoin. Crypto is no stranger to the wonders of Elon Musk and this was likely a huge pull for a lot of investors. There is a lot that can be taken away from this rally and there are some observations I made and would like to focus on, volume and psychology to be exact.
1st Observation: Volume on the break of 40k. Last time bitcoin had a large run up, 40k was hit and blown through very rapidly and prices quickly made their way to 42k within the same night. We see similar volume in both of these situations where the prevailing demand creates these long green candles and the volume to match it.
2nd Observation: Pullbacks at Psychological Price Points. While 40k had no problem being broken as price has experienced buying there prior to this run, it is interesting that at 42k, the former highs, Bitcoin began to experience some turbulence (see 2. on chart). Buying took prices more than $1,000 over former highs, but there is brief moment where the rally looked as though it might have been coming to an end. A huge pullback occurs and the price of Bitcoin briefly breaks under 41k. Shortly after, there is some absorption from buyers to take the 15 minute candle back up where it closes above the former highs. Going back to January 8 when these highs were made, there was a similar psychology surrounding 40k, price broke above 40k briefly only to then have what appears to be a rally ending downturn, followed by a quick buyback.
Conclusion: The prevailing bullish sentiment towards Bitcoin continues to astonish me, and as I watch this rally in awe, I only hope to guess what is to come next. However, what can be observed can be the edge needed to make wise decisions while investing and trading. In the wise words of Warren Buffett, "Risk comes from not knowing what you are doing."
1st Observation: Volume on the break of 40k. Last time bitcoin had a large run up, 40k was hit and blown through very rapidly and prices quickly made their way to 42k within the same night. We see similar volume in both of these situations where the prevailing demand creates these long green candles and the volume to match it.
2nd Observation: Pullbacks at Psychological Price Points. While 40k had no problem being broken as price has experienced buying there prior to this run, it is interesting that at 42k, the former highs, Bitcoin began to experience some turbulence (see 2. on chart). Buying took prices more than $1,000 over former highs, but there is brief moment where the rally looked as though it might have been coming to an end. A huge pullback occurs and the price of Bitcoin briefly breaks under 41k. Shortly after, there is some absorption from buyers to take the 15 minute candle back up where it closes above the former highs. Going back to January 8 when these highs were made, there was a similar psychology surrounding 40k, price broke above 40k briefly only to then have what appears to be a rally ending downturn, followed by a quick buyback.
Conclusion: The prevailing bullish sentiment towards Bitcoin continues to astonish me, and as I watch this rally in awe, I only hope to guess what is to come next. However, what can be observed can be the edge needed to make wise decisions while investing and trading. In the wise words of Warren Buffett, "Risk comes from not knowing what you are doing."