We may be wondering if we should buy Bitcoin now that he crashed more than 40 % since the last ATH at 63k $ less than a month ago. We will also look at Ethereum which is the second leading coin.
█ BITCOIN ANALYSIS
It has been two weeks now since Bitcoin got corrected down to 30k $. The fact that it left two huge wicks (circled in yellow) shows that this is a really strong support area. It also broke the short therm descending resistance that was built also creating relative higher lows. Support bounce like this is a bullish sign, even after such a correction, which is nothing if we look at Bitcoin's history. After the rally it went through this year, Bitcoin needed to breathe. We could see it on the daily RSI, a massive bear divergence. We could still be in the bull market, although no one knows for sure.
Fundamentaly, there has been a lot of FUD around Bitcoin, with Mr. Musk changing his mind all the time, and also the rapid growth forcing governements to take action to save their economy from inflation, if we take the example of Turkey: "On 16 April 2021, Central Bank of the Republic of Turkey issued a regulation banning the use of cryptocurrencies including bitcoin and other such digital assets based on distributed ledger technology, directly or indirectly, to pay for goods and services, citing possible "irreparable" damage and transaction risks starting 30 April 2021." - from Wikipedia We could say that yes, Bitcoin's success could be its worse ennemy. If it becomes globally adopted, and it will, nothing can stop it besides governements banning it.
A chart we like to bring when we need some step back, is the Bitcoin's logarithmic Stock to Flow.
This chart shows the correlation between Bitcoin's Halving events and price. Stock to flow is defined as a relationship between production and current stock. Bitcoin's scarcity will increase through time and eventually bring the price up, as it did until now, and the point we are at today is, looking at history, a buy point.
█ ETHEREUM ANALYSIS
This is the chart everyone will be looking at when searching for Ethereum. A massive all time high with a horrendous candle.
But things don't behave in a linear way. In fact the world is full of exponentials. If we look at the logarithm chart, what we're seing right now is pretty normal:
We can draw a general mid point for Ethereum which price has been following through history. And we're just above that point right now. What happened is that price broke through it from the bottom. Then there was a sell off (the huge candle) and we're almost at break even for the month of May, making support on this mid point.
A last chart that is important to look is ETH/BTC.
The chart shows that Ethereum has been making higher highs and higher lows for months, and just recently hit the mid point from the bottom. The last time it happened is in 2017 and after a short correction, it rallied even further. Candles are not going to be exactly the same, but judging from history, things are looking really bullish. It means Ethereum still has a lot of room to grow against bitcoin.
Fundamentally, things are looking good for Ethereum, with ETH 2.0 and Defi I would not worry about the usages of the coin as it's already made its proof.
█ CONCLUSION
No one can say if this is the beginning of a bear market or a continuation of the bulls. Though in my opinion a 40%+ dip is nothing other than a discount. I would keep an eye on this for entry points on BTC and ETH.
My point of view about investment: Right now let's be honest: the interest rates are at the lowest, and we know they can't stay like this forever (even though everytime they get lower). If we look at investing, savings accounts are not that interesting due to these interest rates, unless you're onto a really old contract... Real estate: sure, since rates are low, it is easy to get a loan and buy some stone. However who knows who will be able to buy your good once the rates go up and it's not anymore loan paradise? Not to mention the housing market is at the highest (at least here in France). What about stocks then ? I don't even need a chart, we all know it's at the highest right now and sure-as-hell over-priced (at least in my opinion), so very risky to get into right now. What's left then? Fiat founds? Forget it, they get lower returns each year. Well, that leaves us with crypto. It's inflation-free due to the halvings of Bitcoin, and every altcoin is indexed on Bitcoin. Still, this is a high risk investment, and I really want to emphasize on this: do not invest more than you are able to lose. Also, this is not a financial advice! (I'm just a passionate developer)
If you read it all, thank you, and you have a better investement idea, I'll be glad to hear it in the comments.
@cyatophilum, maaaan, thank you so much, i will study this one little bit, seems very interesting for me, i have a difficult to use a chart with too many indicators, so i prefer EMA's and a simple OBV, thankyou
cyatophilum
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@andrade_marcotulio, I make custom indicators if you're interested too, check my profile ;)
birarakisarap
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really well written and studied articles here, shining like a bit of gold in all that noise
cloud9hawk
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One of the better analysis. Thank you.
icrypto1
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Thank you for your analysis!
NR91
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That 30k support is going to to be broken down one way or another. Another engineered FUD coming specifically for that. We might witness sub 20k in a couple of weeks or sooner. Until then, there will be false bullish pattern and impulsive green candle
cyatophilum
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Thanks for the heads up @NR91,
Which FUD are you talking about?
I think that yeah not go all in at this point. Keep some stable or fiat in case there is an even bigger discount.
NR91
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@cyatophilum, Nothing specific. But i am saying that the big money will engineer another FUD to break that support so that it will give the impression that the bear market officially started. Hence people will panic sell and drive the price even lower. Then, they will scoop it up. One of the things i can think of is Elon gonna announce Tesla sold most, if not all, of their BTC at some point (They probably have but haven't announce it yet). India has not take an official stand on crypto yet (juggling between banning and regulating) and China, well, they will come up with something (shutting down their mining temporarily could do the trick)
I agree with you on keeping stablecoins for now. This is the calm before the storm (not so calm at the moment)