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.
Blowing Through The Thousands
Our prediction in Wednesday's post that bitcoin price would start jumping by thousands was right on the money, as was our projection that price was headed to $20K - we just didn't expect it all to happen in one day.
On Thursday, In a frenzy of manic volatility, bitcoin started blowing through the thousands with hurricane force, disposing of $14K, $15K, $16K, $17K, $18K, and $19K within a span of about 18 hours.
Disregard The Deputies of Doom
After a breathtaking run like this, prices are almost certain to retrace, and the bubble-boys and deputies of doom will come out of the woodwork and start writing bitcoin's obituary for the umpteenth time. But there are several reliable indicators that there is plenty of room on the upside for bitcoin to continue its historic rally.
"Bubble" Is So Easy To Say
The word "bubble" rolls oh-so-easily over the tip of the tongue and out through puckered lips. It's just too easy to say and anything with a price much higher than it was yesterday, or a month ago, or a year ago, can be called a bubble. Amazon was called a bubble for more than a decade. So was Facebook. Tesla is still being called a bubble.
Next-To-Impossible To Time
As easy as it is to say "bubble", it's notoriously more difficult, if not impossible, to time a market's top. It's one thing to say that it will eventually reach a top, which of course it inevitably will. Does that mean it will Stabilize? Retrace? Retrace and then stabilize? Retrace and then advance? Crash? Crash and stage a comeback? Nobody knows. Only one thing is for certain - calling that market top is next-to-impossible.
People were calling the market top when bitcoin was trading at $100, $1,000, $5,000, $10,000 ... well, you get the point. Now it's trading at over $16,000 and smart financial experts who were laughing at bitcoin a year ago are now saying it could have a six-figure valuation. $10K by Christmas sounded ridiculous even a month ago. Now it looks more like $20K.
Bearish (negative) sentiment is a meticulously studied and well-documented psychological indicator of market momentum - but not in the direction you might think. Studies actually show that when negative sentiment is high, there is a much greater potential for upside momentum.
What that means is that the more people who are crying "bubble", and the more people predicting an impending crash, the more likely the market is to go even higher. Only when the bubble-boys and deputies of doom are exhausted will we likely be near a top. Judging from the incessant outpouring of vitriol from the conventional banking establishment that day is still pretty far off.