Bitcoin showing signs of weakness finally
It really doesn’t matter how you feel about Bitcoin; the reality is that we climbed far too quickly over the last couple of weeks. As I write this article, we are down 14%, and had been down as much as 20% for the day. The market is behaving exactly as it always has, going parabolic and then getting smacked right back down. The question of course is this another bubble getting ready to pop? I don’t know that it’s got to that point yet, but clearly enough is enough and people started taking profit.
The volume during the trading session on Thursday was quite a bit more than many of the other days. The volatility continues, and quite frankly this is a great place to lose money if you are not cautious. Those who were foolish enough to buy this market above $13,000 are now hurting. Quite frankly it’s a bit surprising to consider that people would do that after we had that vicious crashes two years ago, but here we are.
The fact that we show so much volume for the Thursday session suggests that it is going to be difficult to rally substantially from here. Quite frankly, that’s a good thing because Bitcoin has gotten so far ahead of itself that it was becoming very dangerous. After all, one week ago prices were closer to the $7500 level, and we essentially doubled after that. That is not normal behavior, and needless to say it’s completely unsustainable.
This is a confidence game pure and simple. In fact, you can say that about Bitcoin in general. After all, if you think about it there’s no reason for it to have value other than the fact that people are speculating on it to rally. Yes, there is the utility of epic quite frankly there’s nothing that special about it. For most people, only cryptocurrency is a speculative game, it’s got nothing to do with utility or usefulness. With that in the back of your mind, you should understand that these erratic moves will happen occasionally. Simply put, if you have double or triple your money in a few days, it’s time to start looking for the exits because I can promise you somebody else is.
So now we need to build confidence. That’s not necessarily a bad thing, and the $10,000 level could be an area to start looking for that. What we need to see several days of calm and relatively boring trading followed by a move higher. If we get that, then the market can continue to go to the upside. We have seen every $2000 or so offer support and resistance, so I have that marked on the chart. At the essentially where you should be looking for a price action to tell you it’s time to think about buying. Right now, it’s very unlikely that we can sustain rallies for a significant amount. Yes, Bitcoin has done this before, but that’s kind of the point.
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