A follower brought this to my attention on another idea, thought worth sharing.
Volatility. The above 2-day chart compares the volatility index with Bitcoin price action. It is such a fantastic indicator for risk assets.
The orange line is Bitcoin price action, The purple circles circle show spikes volatility with Bitcoin price action. Isn’t it fascinating?
Spikes in volatility are always matched with bottoms in price action. Look left.
Here is another chart showing PUT/CALL ratio versus BTC price action. PUTS are people going short on the market, with money they don't have. (Don’t do leverage people).
You can see every single time without fail when the majority of market participants go short we have a bottom in Bitcoin price action. It never fails.
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** volatility bearish divergence ** Look left!
On the volatility daily chart below regular bearish divergence is printing. When green, you really want to be short vol, especially with huge spikes like we’ve just seen.
Notice the overbought Stochastic RSI red shaded areas (purple circles)? They only trigger when a number of overbought conditions are true. Look left.
Switching back to the 2-day chart at the top. Fantastic. This is what the bottom looks like folks. Struggling to buy? That emotion is no different that the one you fight when selling the top.
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Just to conclude the FED meetings mentioned below, the market is now digesting the news... what did we learn? Absolutely nothing. They talked lots and said nothing. We've been hearing rates are going to rise for years, they tried and then backed off 5 minutes later. We're still in the same boat, talk but not commitment.
The truth is, if rates rise, the near $30 trillion dollar US debt becomes a lot more expensive to manage. The government would need to find an extra 500b at least every year just to manage interest payments. The options are:
1) Raise taxes (not going to happen running up to elections, not a vote winner ;)
2) Default.Yeah, that's not going to happen.
3) Let inflation run hot for some months to come to melt the debt away.
No. 3, despite the harm it will do to consumers is easily the least painful option. We know it, they know it, they talk tough but shoot feathers.
The party continues until near summer time for the moment.
Great points! It really looks like the bottom is nigh in time, question is where it is in price. The mega-spike in 2019 was sharp, and it looks like we are at max volatility now (if we consider that 2019 an outlier). Fear must be overwhelming too... BTC will undoubtedly rebound, I just think of all those that haven't lost money yet and are yearning to catch the train they missed before. My doubt with the bottom is that we have seen large red candles, but not a > 2x volume spike (e.g. past 17 May) of buyers meeting sellers head on. It looks like sellers are recent buyers trickling down (you mentioned in other posts that BTC in exchanges is at a low), and that shorts are piling and enjoying the news of leveraged longs vaporizing. When the big wallets pull the trigger and push through a resistance, the cascade of liquidated shorts can be epic. Do you think we'll see that high volume spike, or that reversal will be just a bounce on average volume?
without_worries
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@molbioinfo, I think once the FED meetings from Tuesday / Wednesday are over we will see a large move in price action. They and only they are controlling the entire market. They'll probably come out saying, actually we're only going to do 2 interest rises this year not 4, something not to hawkish nor too dovish.
Remember we're not so interested in knowing where the bottom is, it is a fools game. Instead look at the probability of return versus risk of more downside. You should now realise the risk / reward ratio massively favours the longs.
molbioinfo
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@without_worries, I think Benny Hill would have not done great in the market (at least if he behaved as such, chasing bottoms, hehe). I am interested in the bottom from the TA perspective, if a big volume spike is a requirement to a bottom or just adds weight to a confirmation to it. From the risk reward perspective I have added two positions on the way down, that I am happy enough with so as not to add myself to the panic sell. Emotions are amazing, they try to trick what your eyes see... really amazing.
without_worries
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@molbioinfo, Ha Benny Hill, not heard that name since the dawn of time! Just wait until that emotional control spills into the real world and you inadvertently manipulate people in to achieve your goals. Hello Boris, I'm thinking of you.
molbioinfo
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@without_worries, somehow Benny Hill was a hit in my home country when I was a kid, hahaha. Man, Boris *is* a good trader, he has shown it all over. A great power needs a great responsibility though, and maybe he's wondering where the bottom is now too :P
dualmass
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@without_worries, i disagree, bitcoin moves on its own time frame, the fed, the news, wars etc are not related, one more drop then 149 end this market cycle... eth 14k bch 4200 xvg 30 cents etc
without_worries
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removed//
CryptocurrencyWorkingGroup
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From my layman perspective, it looks like the volatility and put/call have a long way to go to make a meaningful spike on the chart in this moment. The price action looks drastic but the indicators don't to me.
BTC will undoubtedly rebound, I just think of all those that haven't lost money yet and are yearning to catch the train they missed before. My doubt with the bottom is that we have seen large red candles, but not a > 2x volume spike (e.g. past 17 May) of buyers meeting sellers head on. It looks like sellers are recent buyers trickling down (you mentioned in other posts that BTC in exchanges is at a low), and that shorts are piling and enjoying the news of leveraged longs vaporizing. When the big wallets pull the trigger and push through a resistance, the cascade of liquidated shorts can be epic.
Do you think we'll see that high volume spike, or that reversal will be just a bounce on average volume?