Has bitcoin bottomed out? Or will we see even greater drops?

We have been warning for some time that bitcoin is in a bear market. 

Bear markets are not good environments in which to be long, bitcoin bear markets especially so. 

But bear markets do also end, and if you can nail the low, you can make out like a bandit.

I can see one scenario in which yesterday was the low. I can also see one in which we head lower. 

Let me outline them both to you – and you can decide, along with the rest of the market, which is the most probable.

Here’s the bullish scenario for bitcoin
We’ll start with the price action itself. $64,000 was the high for bitcoin; we hit that back in April. Then bitcoin fell over 50% in just a few weeks, hitting a low of $30,000 in mid-May. Since then bitcoin has had a couple of rather anaemic rallies that have petered out around $40,000, and the price has returned to $30,000 again. First comment: bitcoin is extraordinarily volatile. If you can’t stomach the volatility, then take smaller positions. or take a long-term view – “I think bitcoin will be much higher in 2025 than it is now” – and ignore the short-term volatility. Go to the beach and stop looking at your phone. 

Bitcoin is less volatile than it used to be, and it will get less volatile over time as the new technology goes mainstream, but it is still extraordinarily volatile. Either find a way of coping with the volatility, or accept that bitcoin isn’t for you.

So here’s the positive scenario: “from false moves come fast moves in the opposite direction” is a phrase you have heard me utter – or rather read me utter – on these pages many times.

Many traders call these situations a “head fake”, and they tend to occur around obvious points of support or resistance – such as bitcoin at $30,000 now. They often occur at the start of major trends.

For example, a security has been knocking on the door of $100 for yonks. Finally it breaks above. Everyone thinks the security has broken out. It then collapses. It happens all the time at the beginning of bull and bear markets.

$30,000 was an obvious area of support for bitcoin. It tested that level three times over the last month. Yesterday it broke down below to $28,950. Cue peak hysteria in the nocoiner press (which is most of the press), peak noise from the bears, and peak pain for the bulls. It’s the headline story in the Financial Times, which is top of the publication pile when it comes to getting bitcoin wrong – and bitcoin then rallies $5,000. It’s as textbook a head fake as you will ever see – and from false moves come fast moves in the opposite direction. I’m not a great fan of Elliott wave theory, which looks for recurring wave patterns in charts, but there are many who swear by it. No matter. If you are an Elliot waver, you will look at bitcoin’s price action over the few months and see as textbook a five-wave down as you will ever see. It’s another bullish indicator.

Finally, I remind you that 30%, 40% and even 50% corrections are normal in bitcoin bull markets. They come with the territory. In 2013 bitcoin went to $200, collapsed to $70 in April, and by November it was nearly 20 times higher.

Sourse: cityam.com

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Category: News | Views: 108 | Added by: danyagames2007 | Tags: #Bitcoin #Bitcoin Price #BTC | Rating: 0.0/0
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