Anybody who has been in the BTC game for a few years will tell you that psychological levels are huge in this market, and fairly predictable. $50K and $60K are the current ceilings and $40K has established itself as the current floor, but buyers beware. Breaking through the floor can lead to an incredibly scary moment.
If you paid attention to our blog Wednesday we sent a clear message that “sharks were getting hungry” this was when BTC was approaching $40K. Did you snap up any extra coin? Since then it hit around $45K before sliding back down to test the low.
The V shaped recovery was great, but we also need to be aware that unless we clear $50K we are going to go through the bottom. These floors get worn out after the first big bounce. In other words if we go down again it is likely we go through the $40K floor. If you are looking through the eyes of a day trader, getting a little off the table above between $44 – $50K wouldn’t be the worst strategy in the world, but day trading Bitcoin is like playing roulette; and when you gamble, only the casino wins. We prefer the long game strategy. All signs point towards the possibility of a 6 figure bitcoin in the next 5 years. But we don’t have a crystal ball, we only have the past that we use to predict the future. Black swan events happen, and Bitcoin dropping 80% is built into the nature of the charts. We may currently be on the path to a sub $20K Bitcoin…. I know that is hard to hear, but you must accept it as a possibility. Does that mean you should dump all your coin and wait to buy in again? Well, it could just as easily make a run towards $60K…. And here we have the Crypto conundrum.
The crypto conundrum is the acceptance that this is a perplexing market, and is as unpredictable as it is confusing. In our opinion it is better to have long term vision than short term greed.
There is always a reason behind these big price moves and once again it seems to be China is mucking up the waters. I don’t think it is a big surprise to anyone why this may be the case. After Evergrande fiasco and meltdown the CCP are desperately trying to secure confidence in the market place, and Bitcoin is a market disrupter in the eyes of the ruling party. What better way to discourage a flight from the currency into Bitcoin than to make the act of doing so illegal? In the years that we have been watching BTC it always has had this on/off relationship with China. They ban it, the price drops and all of a sudden it pops back up and news comes out that they never banned it and it was just a proposal. This scenario has repeated again and again with variation. The real question now is whether China is actually serious or this is just another head fake.