On waking up this morning, I did something that had never be done before – look at my phone! I don’t think it is a good habit and I put this down to a one off. So, what was I checking? Bitcoin price of course! Seeing the price at $9738 (Bitfinex prices) made me immediately think of the next breakthrough price - $10,000. Just a few hours before writing this piece, the price of Bitcoin had gone over the $9900 mark. $10,000 does look inevitable but we must bear in mind that there could be a potential problem.
Parabolic moves by any asset sometimes bring about a major move in the price. In this case, the fear of missing out (FOMO). We are bound to see many more people come into the market precisely due to FOMO. This can only lead to a higher Bitcoin price. For those who use moving averages in their strategies will know that parabolic price moves tend to test the 100-day moving average before bouncing off. The same goes for the 100-day exponential moving average if that is what you use. We must also bear in mind that testing 100-day moving averages does not mean the price won’t fall through. It has in the past and will in the future. I conclude by asking how high you think the price will go before a major retracement? I have my answer but then again, your guess is as good as mine.
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Crypto is coming: get ready to spend Facebook’s money
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In my previous blog piece – Momentum or Serious Retracement -, I stated that if Bitcoin were to break the $8300 resistance (at that time), it would hit $9000. It did even if for a short time. The Bitcoin rally over the last few weeks has been to an extent FOMO (Fear of Missing Out) based. I am sure there are other factors involved, but let’s put them aside. Thus, what is maximum FOMO? This is only when the marketplace comes to a stage where we will experience a major retracement in the price of Bitcoin. In my lowly view, I don’t believe we are at maximum FOMO. Here are some of my reasons why:
Firstly, I believe there are people still interested in investing in the Bitcoin market. I think that when we see prices return to $9000 levels, then we will see a rush into the market. Maximum FOMO may then be hit at the $9500 - $10000 levels. I back this up by looking at the BTC price levels on the higher timeframes. The BTC weekly chart shows the overbought levels in the RSI (Relative Strength Index) indicator. The monthly timeframe has also shown overbought levels.
Secondly, I mentioned the $9500 levels because the Fibonacci retracement level of 61.8% shows resistance. We can also see that there has been a significant overbought activity for the month of May.
Thirdly, Bitcoin has been on a bullish-run with almost no retracement whatsoever. Many are wondering when this will occur. There is some sentiment that this could happen any time soon. We know that BTC has a history of bullish-runs in the past and this is no exception. However, what occurred on Thursday did shake a few up. I believe should the Bitcoin price fall below $8000 then a major retracement is on. Bitcoin price action, on the other hand, may say otherwise.
As we all know, the market will do what it wants regardless of how we feel. All we can do is be vigilant for what may occur. And as to when exactly maximum FOMO might happen, your guess is as good as mine.
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