Here on the weekly Bitcoin chart, we can see that a few things have happened since the last BTC analysis. Firstly, we can see that BTC is holding above the 200 week moving average (in purple) at the moment. This is extremely important for the bulls, because Bitcoin has never really broken down below the 200 week in any meaningful way.
You can see that earlier this month, BTC broke substantially below the 200 week MA (falling as low as 3850) but each week closed near or slightly above that moving average, which is currently near 5600. However, we aren't seeing a huge bounce off of the 200 week just yet. In fact, Bitcoin has practically spent the entire month testing the 200 week region.
There is a lot more going on there than just the 200 week moving average. You can see that the top of the blue downtrend channel is also right there. That channel has been on my BTC charts for about a year now. You can see that after BTC broke out above it in May of 2019, it tested the top of the channel all the way through June, before rallying from 6400 to 13800. Now, we're basically testing the top of the downtrend channel for support again, and so far it has held.
Despite BTC's current hold of the 200 week, things aren't all rainbows and butterflies here. You can see that each of the last three weekly candles has closed at or below the lateral red resistance level. In 2018, that level acted as major support. However, we're now caught up in it again, and if BTC can't get back above it, it will continue to be resistance. Last week's candle is particularly interesting. You can see that it has a very long upper shadow and virtually no body, and it closed and opened near the bottom. This candle is called a gravestone doji. A gravestone doji can be described as "a bearish reversal candlestick pattern that is formed when the open, low, and closing prices are all near each other with a long upper shadow. The long upper shadow suggests that the bullish advance in the beginning of the session was overcome by bears by the end of the session, which often comes just before a longer term bearish downtrend."
So, we can see that was the case in last week's candle. However, for confirmation of a return to the downside, we would need to see this week's candle close lower, preferably below the 200 week MA.
Probably the most important consideration for the immediate future of BTC's performance is the stock market. Bitcoin and cryptocurrencies have CLEARLY been beaten down as stocks have been punished over coronavirus. The world is now in recession, and it will likely get worse as the COVID-19 case count continues to accelerate globally. Furthermore, I suspect that we could see after effects, such as a real meltdown in the credit markets, due to extraordinary risk exposure and an exponential widening of credit spreads. In other words, I think that stocks are nowhere near bottom. The rally that we've seen recently in stocks is likely just a technical bear market rally, and I expect that stocks will roll back over to the downside, as the major indices get rejected by their 200 week moving averages. So, if stocks are going to continue lower, there is a big chance that Bitcoin and all of crypto will continue to fall as well.
I know a lot of people don't like to hear that, but the truth is that crypto is extremely risky. Investing in crypto is probably one of the most speculative and risky things you can do with your money, especially given the massive volatility that regularly exists in the crypto space. Not to mention the fact that these technologies aren't even being used in any economically meaningful way. Meaning, the entire space is only worth $176 billion. That's really nothing relative to the global economy. Regardless of that, investors simply don't want to be in risky investments during a recession. That's why stocks are sold — because they're RISK ON investments, and cryptocurrencies are some of the biggest RISK ON investments available.
Think about it this way. If you lose your job or take a pay cut (as many people do in a recession) and you still have to pay your bills and put food on your table, what are you going to do with that measly dwindling crypto investment? Most people are living paycheck to paycheck. As the pressures of recession continue to mount, many retail investors (HODLers) will come to a realization — either cut your losses in crypto or face severe investment losses on top of the job loss/pay cut. Last week the US saw the largest unemployment leap in history. Over 3.25 million people filed for unemployment last week. Those numbers are likely to get worse over time, and that's JUST the US.
Bitcoin's performance in the wake of the coronavirus outbreak has been pitiful. At it's worst, it fell 65% from early February, when the coronavirus outbreak news really started to take hold. So, I wouldn't be surprised if we see BTC break down below the 200 week MA, for the first time ever. I think it could easily dip into the 2000s, and potentially lower. This is the first recession Bitcoin has ever been in, and it is already getting destroyed, as I always believed it would. As the global recession continues to worsen, Bitcoin and crypto should continue to fall.
I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
I dont think people truly think about the "paycheck to paycheck" scenario.
I'm 30 and my GF is 27. We have a kid and hes 1 yrs old.
I make 90k$ yearly. and she made 60k$. Thats a lot of money. Yet we live paycheck to paycheck. Because we have a house, cars, cats, a dog and most important. A kid.
After the corona virus, she works 50% so thats 30k$. So total income is down 20%. And boy do we feel that.
I sold ALL my crypto assets in the middle of the fall (just above 7k). and paid of a huge amount of debt. So now I pay 1500$ less each month. (I Sold everything except my gold and silver)
and I can tell you, there are many many many many people that are in the same boat as me. Some boats are bigger, some boats are small. Someone even have yachts. But they are still paycheck to paycheck.
I've made a lot from crypto. Probably could have made more if I was smarter. But this is a recession and I think it can develop into a depression.
Having cash now and waiting for at-minimum the 50% crash in stock markets (measured from the top in january) and BTC around 3k, possibly 2k would be a fantastic oppertunity to invest some money.
But, not all of it. Still gonna have at least 50% of it in cash as an insurance backup.
I'm not guaranteed to keep my job. Nobody is.
Nobody is going to buy the house or car at "market value" if nobody has money.
Nobody knows how this will play out.
BUT, what I'm 100% certain of is that all the "Captain hindsight" members will come out.
If we get a depression, all the Doom&gloom people will come and out say "told you so".
If Bitcoin surprisingly DOESNT go down, but start a new bull rally. All the BTC and crypto people will say "I TOLD YOU SO! all the signals were there. We even had a bounce on the 200 MA" lol.
In a sitaution like this, its better to become a little rich then either very rich or broke.
Take care and invest wisely.
jpcrypto18
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@Jbergene, You seriously need to re-assess your lifestyle choices if you have a combined income of 150K and you live paycheck to paycheck. Start with your Spending Ratio.
Jbergene
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@jpcrypto18, I seriously dont. All my savings arent "spend" money. Some of them are for the extreme scenarios which I hope will never happen. And a lot of it is for investing. The point is it act as I Dont have them. And like I said, I will only use them in the extreme scenario where both me and my mate lose our jobs.
And if that wont happen, Im not going to live as we make 50k while making over 2x that.
But I never spend money on things I dont need. Ever.
Bannedhammr
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@Jbergene, But I never spend money on things I dont need. Ever.GTFO lol then why are you paycheck to paycheck. shit man I havent cashed my last three paychecks. Your a degenerate spender that thinks he is budgeting
Jbergene
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@charvey63, your'e a degenerate in general.
Propro2020
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@jpcrypto18, 150k in year 2020 probably isn't that much...
Jbergene
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@YilingCao, its above average, but no. its far from that 6 figures feeling it had earlier. When I was 16 (15 years ago) 100k was "oh thats very good" but today, almost all my friends have a house income of over 100k. Its not special anymore.
TheBitcoinChartGuy
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@YilingCao, When you have a stream of 12.5K coming in each month, yes it is. Especially with all the side hustle opportunities that are available in 2020 (like, IDK ... Bitcoin or commission free trading).
Jbergene
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@TheBitcoinChartGuy, I dont have a stream of 12.5k each month. We pay tax you know.
hackerqc
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@Jbergene, pretty good advance and authentic experience. Thanks for sharing it with us!
I'm 30 and my GF is 27. We have a kid and hes 1 yrs old.
I make 90k$ yearly. and she made 60k$. Thats a lot of money. Yet we live paycheck to paycheck. Because we have a house, cars, cats, a dog and most important. A kid.
After the corona virus, she works 50% so thats 30k$. So total income is down 20%. And boy do we feel that.
I sold ALL my crypto assets in the middle of the fall (just above 7k). and paid of a huge amount of debt. So now I pay 1500$ less each month. (I Sold everything except my gold and silver)
and I can tell you, there are many many many many people that are in the same boat as me. Some boats are bigger, some boats are small. Someone even have yachts. But they are still paycheck to paycheck.
I've made a lot from crypto. Probably could have made more if I was smarter. But this is a recession and I think it can develop into a depression.
Having cash now and waiting for at-minimum the 50% crash in stock markets (measured from the top in january) and BTC around 3k, possibly 2k would be a fantastic oppertunity to invest some money.
But, not all of it. Still gonna have at least 50% of it in cash as an insurance backup.
I'm not guaranteed to keep my job. Nobody is.
Nobody is going to buy the house or car at "market value" if nobody has money.
Nobody knows how this will play out.
BUT, what I'm 100% certain of is that all the "Captain hindsight" members will come out.
If we get a depression, all the Doom&gloom people will come and out say "told you so".
If Bitcoin surprisingly DOESNT go down, but start a new bull rally. All the BTC and crypto people will say "I TOLD YOU SO! all the signals were there. We even had a bounce on the 200 MA" lol.
In a sitaution like this, its better to become a little rich then either very rich or broke.
Take care and invest wisely.