Bitcoin Prediction: Bitcoin will speed through the $5k value area
The $5,000 value area for Bitcoin has long been considered a very important level. Why? Why is that level considered so important to many traders, investors and analysts? It has to do with psychology and familiarity. We use the number five in many, many forms. 5 bucks, 50 bucks, $1.50, etc. Yes, there are many numbers that we use frequently, but the number five is often used and understood as a ‘half way’ point in many of our thought processes. So it’s not a surprise that people would assume that $5,000 is an important level. But we need to use objective analysis to study levels. To do that, one of the best tools in our trading toolbox is the (market profile, volume-at-price analysis, etc).
is a part of what is known as Volume-At-Price Analysis (VAP). Regular analysis on a chart shows vertical columns that show how much of something was traded at a particular time. VAP shows how much of something was traded at a particular price. VAP shows where most of the participation has been and where people have bought and sold the most. These areas generate horizontal levels. Longer horizontal columns are called high nodes while very small and short horizontal columns are called low nodes. The way that traders and analysts view these levels is much like normal – with one factor being different.
High nodes represent strength and it is very difficult to move above or below those levels because they represent equilibrium. But, when prices do move above or below those nodes, extremely powerful moves can occur. The major gaps between high nodes, known as low nodes, act a sort of vacuum – prices get sucked into them and then to the next high node. We see this principle playing out on Bitcoin’s chart. As soon as Bitcoin crossed above the high node between the $3800 and $4000 value area, it exploded higher. And it is continuing to move higher. How high? To the next high node – which is inside the $6400 value area.