When Can You Buy Cheaper Bitcoin? Short Vs Long Opportunities
Good morning, everyone.
How the halving works
A quick recap, just so we understand what has fundamentally happened to BTC this week -- After every 210,000 blocks mined, or roughly every four years, the reward given to Bitcoin miners for processing transactions is cut in half. That means the rate at which new Bitcoin is released into circulation is reduced by half. In theory, this would have been a sell-the-news event, but we haven’t seen the expected sell-off just yet. In fact, Bitcoin appears to be climbing ever higher, toward 8900 - 9000.
Bitcoin post-halving analysis
Now with the housekeeping out of the way, let’s move into some Bitcoin analysis. During yesterday’s live stream, I made a quick short scalp trade at 8720 and got out at 8650. It was risky trading on halving day, but treating this as a fast in-and-out trade turned out to be a wise move. Since I took that scalp, the market has climbed near 9000 by late morning.
Earlier this morning, the 15-minute chart revealed a key support-resistance (SR) level was being challenged, and because chances were higher for a breakout, I placed a long trade with a target in the area of 8975. Above that range is a good amount of liquidity consolidating from the past day of price action. A wick into that zone is likely to take out some of that liquidity and set us up for the next trade. Bitcoin is still too correlated to the S&P 500 to ignore traditional markets, and I will be observing the S&P 500 carefully for any sharp moves. Once equities roll over, BTC is likely to drop even harder.
A longer-term view of Bitcoin. The Schiff Pitchfork reveals how BTC touched the 75% Fib for a perfect rejection. If the price passes 5000 or 4000, chances will be high for BTC to take out the low of the Coronavirus dump. The 4-5000 area is a strong support area, and if it cannot hold BTC up, that will be a knock-out blow for the asset. A break below that SR level opens up a target of 2400, then as low as 1400 below that.
In the near term, as the price tests the 8900 region, the four-hour time frame shows that BTC is back inside the larger range at play since the breakout of the symmetrical triangle from a couple of days ago, and the price is under the EQ signified by a white dashed line in the image below. The lower bound of the range is around 8386, while the high of the range is about 9490. A break above the EQ this morning gave a target of 9490, whereas if the price eventually breaks below 8386, I'd like to short down to about 7900 - 7800.
RSI remains bearish on the four-hour time frame while the recent daily candle printed a Doji, meaning overall price action is neutral to bearish from that perspective.
Bitcoin finally printed a red weekly candle after eight straight weeks of bullish upside. I see no strong support on the way up from a weekly perspective, so once Bitcoin starts to slide, I’m expecting it to slice through several SR levels. Be careful if you are trading Bitcoin this week, if only for those reasons.
To answer the initial question, “when can we buy cheaper Bitcoin?”
Asset manager Leah Wald tweeted today that the Bitcoin halving event is not a strong buy signal, and I’m inclined to side with that. Since the price crash in March, Bitcoin has lived in a risk-off environment meaning that it will not fare well when US equities start to downtrend. Be careful when trading illiquid, speculative assets such as BTC in times like this, when nobody can make a sensible prediction of where these markets are going to go. Therefore, the best time to buy Bitcoin at cheaper prices is likely once we’re deeper inside the trough of an overall economic downtrend. I am trading level-to-level with much less capital than I was prior to the economic downturn, so until prices slump lower with equities markets, Bitcoin to me remains overpriced.
How the halving works
A quick recap, just so we understand what has fundamentally happened to BTC this week -- After every 210,000 blocks mined, or roughly every four years, the reward given to Bitcoin miners for processing transactions is cut in half. That means the rate at which new Bitcoin is released into circulation is reduced by half. In theory, this would have been a sell-the-news event, but we haven’t seen the expected sell-off just yet. In fact, Bitcoin appears to be climbing ever higher, toward 8900 - 9000.
Bitcoin post-halving analysis
Now with the housekeeping out of the way, let’s move into some Bitcoin analysis. During yesterday’s live stream, I made a quick short scalp trade at 8720 and got out at 8650. It was risky trading on halving day, but treating this as a fast in-and-out trade turned out to be a wise move. Since I took that scalp, the market has climbed near 9000 by late morning.
Earlier this morning, the 15-minute chart revealed a key support-resistance (SR) level was being challenged, and because chances were higher for a breakout, I placed a long trade with a target in the area of 8975. Above that range is a good amount of liquidity consolidating from the past day of price action. A wick into that zone is likely to take out some of that liquidity and set us up for the next trade. Bitcoin is still too correlated to the S&P 500 to ignore traditional markets, and I will be observing the S&P 500 carefully for any sharp moves. Once equities roll over, BTC is likely to drop even harder.
A longer-term view of Bitcoin. The Schiff Pitchfork reveals how BTC touched the 75% Fib for a perfect rejection. If the price passes 5000 or 4000, chances will be high for BTC to take out the low of the Coronavirus dump. The 4-5000 area is a strong support area, and if it cannot hold BTC up, that will be a knock-out blow for the asset. A break below that SR level opens up a target of 2400, then as low as 1400 below that.
In the near term, as the price tests the 8900 region, the four-hour time frame shows that BTC is back inside the larger range at play since the breakout of the symmetrical triangle from a couple of days ago, and the price is under the EQ signified by a white dashed line in the image below. The lower bound of the range is around 8386, while the high of the range is about 9490. A break above the EQ this morning gave a target of 9490, whereas if the price eventually breaks below 8386, I'd like to short down to about 7900 - 7800.
RSI remains bearish on the four-hour time frame while the recent daily candle printed a Doji, meaning overall price action is neutral to bearish from that perspective.
Bitcoin finally printed a red weekly candle after eight straight weeks of bullish upside. I see no strong support on the way up from a weekly perspective, so once Bitcoin starts to slide, I’m expecting it to slice through several SR levels. Be careful if you are trading Bitcoin this week, if only for those reasons.
To answer the initial question, “when can we buy cheaper Bitcoin?”
Asset manager Leah Wald tweeted today that the Bitcoin halving event is not a strong buy signal, and I’m inclined to side with that. Since the price crash in March, Bitcoin has lived in a risk-off environment meaning that it will not fare well when US equities start to downtrend. Be careful when trading illiquid, speculative assets such as BTC in times like this, when nobody can make a sensible prediction of where these markets are going to go. Therefore, the best time to buy Bitcoin at cheaper prices is likely once we’re deeper inside the trough of an overall economic downtrend. I am trading level-to-level with much less capital than I was prior to the economic downturn, so until prices slump lower with equities markets, Bitcoin to me remains overpriced.
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