BitcoinPrice Analysis

Bitcoin Doubled in 18 Days – Here’s What To Do Now

By November 30, 2017 No Comments
They're all selling?  Then BUY, BUY, BUY!  They're all buying?  Then SELL, SELL, SELL!

"They're all selling? Then BUY, BUY, BUY! They're all buying? Then SELL, SELL, SELL!"  Bitcoin has doubled in 18 days, but retracements can feel like free-fall - we're here to help.  Stay calm and trust the math.

Disclaimer:  The information in this blog represents the opinions of its author and is for educational purposes only.  It is not intended as investment advice.  Cryptocurrency markets are extremely risky so you should only invest money you are willing to lose.

Explosive Move - Even For Bitcoin

The most famous crypto-juggernaut in history already had a rep for wild price swings, but when it blasted through the much vaunted $10,000 level on November 29th, it did so in an explosive move that was impressive even for bitcoin.

After crushing major resistance and a massive looming "sell-wall" at $10,000, bitcoin shot up to $11,485 on GDAX in just a few hours only to plummet nearly $3000 over the next 4 hours.

By the end of the day its price was still manically jumping around between $9,000 and $11,000.

Manic volatility: after blasting through $10,000, bitcoin took investors on a wild ride up to $11,485, then dropped precipitously nearly $3000 in a few hours.  We identified a convergence of trendline support and a fibonacci bounce zone in the $9150-$9200 range

Manic volatility: after blasting through $10,000, bitcoin took investors on a wild ride up to $11,485, then dropped precipitously nearly $3000 in a few hours. We identified a convergence of trendline support and a fibonacci bounce zone in the $9150-$9200 range.  chart: coinigy.com, technical analysis: digitalassetuniversity.com

Huuuuuuuuge Milestone

Just a few days ago we were talking about the price of bitcoin in hundreds - 68, 74, etc. - now we're starting to talk thousands - 9, 10, 11 ... Now THAT'S a major milestone.  Not to mention the fact that the cryptocurrency juggernaut which emerged from the shadows of the dark web is now bigger than McDonalds, Paypal, IBM, Disney, GE, Bill Gates, and 135 countries.

Uniquely Manic Volatility

Any market can experience price swings that are magnified by investor emotion, but bitcoin is particularly susceptible to manic volatility for 2 unique reasons.

Born From The Rubble

First, Bitcoin was born out of the rubble of the 2008 financial crisis.  The people driving this bubble are the same average investors and homeowners who were decimated in that crisis and watched in horror as their tax dollars were used to bail out the same corrupt, greedy bankers who caused the crisis in the first place.  For this reason, bitcoin's powerful upward momentum is fueled by optimism, hope, and faith in a revolutionary new monetary system.

Retracements can feel like free-fall, so while everyone else is panicking the smart investor will take a step back, breathe, and look at the big picture.  In this case the convergence of trendline support and Fibonacci zones based on the long term uptrend give the smart patient trader an entry point at $9150-$9200.  chart: coinigy.com, technical analysis: digitalassetuniversity.com

Retracements can feel like free-fall, so while everyone else is panicking the smart investor will take a step back, breathe, and look at the big picture. In this case the convergence of trendline support and Fibonacci zones based on the long term uptrend from the low of $5511 on Nov. 12th, give the smart, patient trader an entry point at $9150-$9200. chart: coinigy.com, technical analysis: digitalassetuniversity.com

Emerged From The Shadows

Second, it is extremely rare for any asset to have to dig itself out of such a deep hole of universally negative PR.  Think about it - bitcoin has, almost overnight, emerged from the shadows of the dark web to become a beacon of optimism and hope that a revolutionary new math-based technology can replace an antiquated obsolete one in which a few corrupt individuals control the entire world economy.

Tsunami Of Cash

Bitcoin's price swings, already magnified by investor sentiment, are becoming even more so in anticipation of a tsunami of cash entering the cryptocurrency markets, whose total capitalization now exceeds $300 billion.

The Chicago Mercantile Exchange will start trading bitcoin futures next month, and Nasdaq plans a similar offering next year.  Once futures come online, ETFs are sure to follow, allowing any investor to add cryptocurrencies to their conventional portfolio.

This is also a popular movement.  Individual investors aren't waiting for the green light from the corrupt bankers they bailed out 10 years ago.  Coinbase, the most user-friendly on-ramp to cryptocurrencies, added 100,000 new wallets in a single day over the Thanksgiving weekend rally to $10,000.  The online wallet provider now boasts more than 45 million accounts.

So although the velocity and magnitude of the price moves are increasing, consistent wave patterns are still present and identifiable with meticulous mathematical chart analysis.

Once the market bounces near the convergence point, the safest high-probability strategy is to confirm the resumption of the uptrend with a series of 2 higher highs followed by higher lows.  Chart: coinigy.com, technical analysis: digitalassetuniversity.com

Once the market bounces near the convergence point, the safest high-probability strategy is to confirm the resumption of the uptrend with a series of 2 higher highs followed by higher lows. Chart: coinigy.com, technical analysis: digitalassetuniversity.com

Stairs Up, Elevator Down

Bitcoin takes the stairs up, and the elevator down - so when the price is rising fast, always expect a sharp, lightning-quick retracement.  These pullbacks can feel like free-fall for investors who bought at high prices and aren't accustomed to bitcoin's manic behavior, but they can also pinpoint excellent buying opportunities for smart traders.

Big Picture Thinking

Instead of panicking, the smart move is to take a step back and look at the big picture. 

The first step is to identify the long term trend, which in this case is obviously a strong uptrend since the retracement to $2975 on Sept 15th.

Next look at the short-term trend, which began after the SegWit2x fork was called off and bitcoin retraced to $5511 on Nov. 12th.

Is it fear, complexity, or shame? Get over it and start making money.

bitcoin takes the stairs up and the elevator down - so while it's fun to ride the wave up, the inevitable retracement can feel like free-fall.  while everyone else is panicking, the smart move is to step back and look at the big picture

Identify Inflection Points

Once the trend and inflection points are identified, we use trendlines and Fibonacci retracement levels - which are mathematical formulas that model and quantify human behavior - to identify bounce points in specific target zones.

The charts above show a convergence of support formed by a trendline and a major Fibonacci retracement level calculated from the intermediate term uptrend.  This is a high-probability bounce point in the $9150-$9200 range.

After bouncing off this convergence several times this morning, bitcoin started to move higher.  Ideally we like to see a series of at least 2 higher highs followed by higher lows before confirming a resumption of the long-term uptrend.

the neuroscience of bitcoin is written in the waves: investor psychology, which dominates all other fundamentals, can be demonstrated in the chart patterns that we have been analyzing on this blog.  mathematical formulas based on human behavior allow us to identify highly predictable and extremely powerful fibonacci wave patterns with almost pinball-like bounce points in specific, well-defined target zones. throughout the long term uptrend that started on sept. 15th at $2975, the mathematically predictable series of advancing waves carried powerful momentum while the fibonacci retracement zones provided almost pinball-like bounces after each retracement. chart: coinigy.com, technical analysis: digitalassetuniversity.com

investor psychology, which dominates all other fundamentals, can be demonstrated with mathematical formulas based on human behavior that allow us to identify highly predictable and extremely powerful fibonacci wave patterns with almost pinball-like bounce points in specific, well-defined target zones. throughout the long term uptrend that started on sept. 15th at $2975, the mathematically predictable series of advancing waves carried powerful momentum while the fibonacci retracement zones provided pinball-like bounces after each pullback. chart: coinigy.com, technical analysis: digitalassetuniversity.com

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