Earlier this year I wrote a post about cryptos saying that they’re big, really big. I still believe that, technology has a good chance to disrupt in many fields. Even though the timing of that post wasn’t the best, my long-term views didn’t change much when it comes to bitcoin. We can see that more and more very important companies are getting into the space, they’re investing not only in bitcoin but the underlying technology as well.
But what does this mean for the price action? Sentiment has changed a lot. Greed is not present anymore. Neither is fear of missing out. But there are still a lot of terrible projects that have been funded with ICOs and are still behaving very irrationally. I’ve been tweeting about this quite a lot and I’ve been expecting ether to under perform bitcoin. Exactly this has happened so far.
Regardless, I’m getting some signs bitcoin might be getting closer to the end of the current bear market, but this doesn’t mean the pain has to end immediately. There’s still a very serious risk we could see yet another leg lower.
While many crypto currencies have been in a severe down trend for the past couple of months, bitcoin performed much better lately. It was trading in a range, forming a typical symmetrical triangle, meaning volatility has been suppressed over time. It’s not moving anywhere. It’s stuck between $6,000 and $7,500. We could even call it dead.
And that’s great, because every time volatility gets suppressed over a prolonged time, what often follows is a period of expanded volatility.
So, if the range resolves higher above $7,500, then we could say very reasonably this bear market is ending and a new bull market might have just started. But on the other hand, if this range resolves lower below $5,900, then based on the current price range the target becomes $3,000.
But there’s a catch. Let’s take a look at a longer term chart. We can see there’s a long-term trend line that’s currently at around $4,500.
If the price does fall below $5,900, there’s a chance it could only dip to the trend line and then reverse higher.
I’m not saying that the price can’t break through it lower. If it does get below $4,500, then I might have to revise my long-term views on bitcoin and cryptos in general. But before we do get a resolution in either direction, best way is to stay out and only participate when it gets out of the range.
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