Volatility is the name of the game in Bitcoin
What a day it was in the Bitcoin world yesterday! I was driving from one city to another yesterday and could not post. Having been in the market for well over 4 years now and having seen many corrections (20% to 30% plus), it still took me some time to digest yesterday's sharp move. Of course, I have learnt to ignore the onset of a bear market and all the negativity from mainstream media, but yesterday's move was good enough to make me look at the charts once again.
On the 1 year timeframe, not much has changed. Bitcoin closed the day above 200 DMA and is still in the downward trending channel. The short term yellow support line has been broken through, but with RSI literally at an oversold level, one can expect that a local bottom has set in. The support around 200 DMA was strong and one can be assured that 200 DMA will act at strong support during this bull-run. In this post of mine from 2 weeks ago, I did mention that Bitcoin will head closer to $50k first before heading to $75k and higher. I was expecting Bitcoin to stay above $50k though. However, I ignored that when Bitcoin falls, it will close a lot of leveraged longs with it.
This is Bitcoin's chart for its entire existence -
The chart shows that there is strong support for Bitcoin between $20k and $30k. If anyone is worried after hearing these numbers, then I must highlight that anything is possible in this space. While I think that the probability of a further fall is low, a massive risk-off scenario can cause a lot of institutional money to pull away from this highly volatile space. To give you some comfort, I invested for the first time at ~$20k and then stayed on negative returns for almost 3 years. In this game, one has to be patient and be able to digest extreme volatility. Such volatility in any other market can destroy billion-dollar firms! Of course, that happens with leverage.
There is another chart that I want to share for context and I am borrowing it from someone else -
The above is a list of all the 30% plus corrections that happened during the 2017 bull run. This bull run will not be very different. If anything, it could be worse because now we have leveraged institutional capital in the space that is probably placing much larger bets.
The close above 200 DMA is extremely important from yesterday. Also, corrections are healthy as they take away a lot of the greed that builds up in this market. If you aren't a big trader and are investing for the long run, then invest small, take no leverage and Hold that bitcoin On for your Dear Life!
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