This is just a very short video discussing the price of Bitcoin. I have done several pieces in the past discussing the very topic of Bitcoin price possibly falling to $6500. For those who have not read of them, here are the links:
Bitcoin: Next Stop $6500?
Bitcoin: Road to $6500 Still On?
Bitcoin: Is This the Bottom Before the Rise?
The video that follows simply echos the point by pointing out what the market is saying today. Enjoy!
I must admit that I should have written this piece over a week ago but didn’t. Bitcoin has once again stunned many people with its surprise move a little while ago. I began to wonder if the price had bottomed out. This could only mean one thing, a look at the charts. Many of you may recall that I have mentioned looking at the higher timeframe charts, in this case, the weekly charts with the assistance of some moving averages.
A look at the BTC: USD weekly chart from Bitfinex indicates that there is a high probability that Bitcoin has bottomed. The reason for this is that Bitcoin’s last two weekly prices ranges closed above the 21-weekly EMA (Exponential Moving Average). So far this week has closed above the 21-weekly EMA. As I have said in the past once price closes above the 21-weekly average on two consecutive occasions, then it is most likely that the price will rise. The second condition is for price to stay above the prior low which was $7333.40. If these two conditions are maintained then this means that the buyers and bulls are in control.
We must not fail to mention that the price is also above the 55-weekly moving average. Falling below this average means falling below the previous low. If this happens, then the bears and sellers are in control, which could mean a price fall. Bitcoin volatility comes as no surprise hence, massive price rises and falls. No one can say when and how this will happen but then your guess is as good as mine.
Considering what has been happening in the world of crypto, you can say this has come about a week too late. You will be right to say so as I have spent the last few weeks promoting my new book. I apologise to my regular readers and hope to get back to publishing more often. With that out of the way, let’s get back to discussing Bitcoin. In late September, I wrote about how I believed Bitcoin falls to $6500 (please see the blog piece here if you’ve not read it). I have not changed my view as of yet.
Once again I refer you to the BTCUSD weekly chart with the EMA 21 & 55 as overlays. We see that the closing prices over the last 3 weeks are below the 21-weekly EMA. It is likely to continue. The chart also shows that the price just above the 55-weekly EMA. The volume profile chart overlay also reveals that there is activity at the $8325 and $6689 levels.
A glance at the BTCUSD daily chart shows that the 21-day EMA is below the 55-day EMA. Some may view my reasons as too simple but as I said, I am only stating that nothing has changed. I could get intellectual about it but then again, your guess is as good as mine.
I said in my blog of 18 September that if Bitcoin breaks the $9100 level, we should expect it to fall to $8000. The $8000 level was also broken falling at one point to $7820. Currently, the price is hovering between $7974 - $8171. There are some indications that there is a bit of a fightback by the bulls. They don't seem to be getting far with their endeavour. Nevertheless, the question remains, is $6500 possible? Simple answer, yes.
To see why we must look at just two things. First, let us look at the weekly Bitcoin price. Second, Bitcoin's volume profile. For those who have no idea what volume profile is, here is a short explanation. Volume profile is an advanced charting study that displays trading activity over a specified period at specified price levels. The study plots a histogram on the chart meant to reveal dominant or significant price levels based on volume. Unfortunately, discussing volume profile in full is beyond the scope of this blog piece.
Combining both the volume profile and Bitcoin weekly prices is seen in the chart above. There is a clear indication that there is volume activity at around the $6500 levels. The next level of support for Bitcoin is $7500. If breached, $6500 is certainly possible. Public commentary on Bitcoin has become ridiculous in many cases. I will ignore giving examples as they are too numerous to mention. I may remind everyone of the following - "You can't trade the market you want only the one in front of you". We must stick to this simple principle and make our decisions from that. And as to where the market wants to go, your guess is as good as mine.
Bitcoin Volume Profile and Weekly Price courtesy of GoCharting
The cryptocurrency market is probably one of the most confusing and frustrating markets ever in existence. This has been further exacerbated by the presence of social media. Social media is not necessarily a bad thing. We now have sentimental analysis in full swing due to social media. One example is Twitter. This platform can inform an investor/speculator information as to what to expect from a particular asset. This very same media platform is also full of rumours and of course false information. This is why I would rather study the charts and ignore the chatter. Social chatter on Bitcoin is particularly infuriating. Case in point, Bitcoin is dead articles.
Getting back to Bitcoin, we all have observed that it has been in a consolidation pattern. Price volatility has not been too bad. I am sure those using Bollinger bands can bear witness to that. Looking at the BTC charts, we realise that price has tested support several times over the last few months. That support is at $9352 level. Remember the more times price tests a key level, the more likely it will be broken. As seen on the chart, if Bitcoin tests this key level, it will be the fourth time and may well breakthrough. If this level is broken, and price falls to $9083, expect the price to fall to the $8000 level.
You must remember that you are not alone in observing price movements, others are seeing the same patterns. Traders in long positions may well feel that the BTC price may well drop below support. The more insecure they feel, the more they are likely to sell their positions. We must not fail to mention those on the sidelines, in other words, those not in the market but observing. For them, an opportunity to sell into the market may have presented itself. They are likely to sell short. This will put even more selling pressure on the price of Bitcoin.
Having said that, nothing is stopping the price hitting $12000. We cannot underestimate that possibility. As I have often joked in the past, all it takes is Vitalik Buterin changing the colour of his underwear and the price goes up. I have admitted that things have since changed from such days. The crypto market is still fickle and could change suddenly with no warning. And as to where the price is heading, your guess is as good as mine.
The price of BTC has confused a lot of people and the noise put out there called commentary or should we say analysis is no clearer as to the direction it might take. Even though I could write more regularly in this regard, I tend to watch the price activity for a little while before saying anything. Rather than complicating matters, I decided simpler metrics should come into play.
BTC Price & the 21-weekly Exponential Moving Average Courtesy Tradingview.com
Looking at the BTC weekly chart you will see that price is still above the 21-weekly exponential moving average. On the week starting 14 July, the price of Bitcoin fell to $9090.4 just over $1000 off the 21-weekly EMA. The current price is now at $10376.2 (at the time of writing). As long the BTC price does not break support at the 21-weekly EMA then we are not in a bearish market. Should it do so, then we are heading into a bearish market with a potential drop to between $6000 - $7000. A drop to this level means breaking support at $6747 – 55-weekly EMA – and potentially a fall to $5000.
Could this possibly happen? Maybe, but as none of us really know what exactly, your guess is as good as mine.
While there is plenty of excitement in the air, there is a feeling of uncertainty about it all. Why this is the case fails me. At first, I thought I was the only one feeling that way but several friends of mine said the same thing. There is plenty of excitement about the price of Bitcoin that we all wonder, what next? Some may have noticed that I haven’t written anything for a while. I have spent the time watching the markets and studying. The omens for a continued rise in the price of Bitcoin look good; and yes, there will always be some retracement, which is normal in all markets. Nevertheless, the feeling of an inevitable crash lingers.
Bitcoin Testing the 21-day EMA Support (Chart Courtesy of TradingView)
As I have said, the omens look good for Bitcoin $14k. If BTC breaks the $13k barrier then we are most certainly on for $14k. On the Bitfinex exchange, BTC did break the $13k barrier but price falls back to the late twelve hundreds. I don’t think it will stay there for long. You may recall that BTC broke the $13k barrier two days in a row in June. It subsequently fell all the way down to $9583. There is, however, one key reason for BTC $14k. It is the fact that for the seventh time this year, BTC has tested the 21-day exponential moving average (EMA) and bounced off it. This means that in the short term, the 21-day EMA is a key level of support. If the 21-day EMA continues to hold could BTC $14k be imminent? Probably; but then again, your guess is as good as mine.
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.
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.
You would have to be deaf, and blind not to notice the commentary on Bitcoin at the minute. With the parabolic rise of this cryptocurrency come a plethora of thoughts. Some believe BTC $50 - $100k next while others submit it may fall to $3k. As many a trader will tell you, always look to the higher timeframe to deliver an indication as to what the price of a cryptocurrency, stock, or instrument might be. I studied recent Bitcoin charts this way, and here is what I discovered. I trade BTC on daily charts and not hourly. Because of this, I look at the weekly charts for guidance. Sometimes I look to the monthly charts for more guidance.
The weekly charts show you that there may be some momentum left in Bitcoin. Appearing at the chart below, you will understand that the momentum indicator has proven strength in the trend for the last eight weeks. The indicator shows no sign of momentum dropping any time shortly. In other words, the momentum is very bullish. This (momentum) may dissipate in about three weeks, and bring about a retracement. You may have also noted that there is some resistance at the $8300 mark. I think that if Bitcoin breaks this resistance, $9000 is certainly on the cards before any future drop in price. Like so many of you, I would love owning a crystal ball telling me the future price of Bitcoin, unfortunately, this is not the case. And since it is not the case, your guess is as good as mine.
BTC Weekly Charts with Momentum and CCI Indicators Courtesy Investing.com
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