Hi everyone! First of all have a happy new year - stay healthy and well :-)
When analyzing BTCUSD I have noticed a resemblance between what is happening right now (months of Dec2020 and Jan2021) and December2017/January2018. BTC made similar gains, as it did in that year of 2017/2018, recovering from a previous low back to the ATH (approx. 60%), before rallying to 20000USD (140%), followed by a long phase of distribution and panick selling. This time BTCUSD recovered back to the ATH of 20000 (approx. 60%) and then reached new highs of 42000 (approx. 107%).
Back in 2017/2018 the bull run held for about four weeks - we are also now in week four. What COULD follow is a strong phase of distribution (profit taking), followed by people panicking.
Yes, now "it's different" I hear many people saying and truth is, it could be. But also keep in mind that back then, when BTC reached 20000 USD, many claimed it will go even higher and higher. People took their savings and even some took loans and put it into BTC as they saw it plummeting and then sold out of desperation.
What I am saying: Please be very careful with trading BTC. Those who claim that it will go to 200.000 by the end of the year, are those who are holding BTC and want to catalyze.
A major difference that we can observe with this phase is that we have some big companies involved (Grayscale, Microstrategy etc.) holding millions of USD in BTC. Many see this as positive sign for the BTC prive development, but there is also a major risk: With Grayscale holding 3% of the circulating BTC we have a whale that can dump a huge amount at any time for profit taking and then rebuy at a cheaper level when individuals panick sell.
In conclusion: Watch the price carefully, it's better to use dollar-cost-averaging, since the bull run MIGHT be over (possibility, but not 100& outcome). Use stop-loss and do your own research.
I am no financial advisor and this is no financial advice!
Many thanks to c0tt0nc4ndyTA and Wyckoffmode - so far I have learned a lot from the both of you and still learning!
I agree but you should factor in that Grayscale has actually purchased 5100 BTC in the last 24 hours. That's 25% of the total volume. I can't see them taking any profits until 3rd or 4th quarter if any this year.
redfoxpack
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@cryptotay, I agree, but that does not mean that we are on the safe side and that Grayscale, Microstrategy and other whales did not profit take at the top in small amounts so that they could rebuy (accumulation) at these levels. They will always hold a specific amount and sell the other for profit taking (distribution). If you can get the flock into rebuying, then the price goes up, while you sell again at the next top.
The main point here is to trade with caution and not rely so much on people who "predict" the price will go to the "moon" etc. I think it is important that everyone trades with a healthy mindset and not be mislead by promises.
Having major companies with millions of USD invested is not only a strong backbone, but also gives them more leverage when it comes to moving the price in their favor.