Its been a few days since I have updated and this is due to the fact I was at the Bitcoin conference in Miami, doing interviews and getting some good information and insight. Matter a fact I met several guys from TV there and it was a great time to say the least!
But here we are a few days later, and market sentiment seems to still be bearish. Now its not overly Bearish as it was but a week ago, but non the less its still Bearish. People are still calling for $5000 Bitcoin or lower, and only a handful of TA's are long. So have we completed the WXY correction?
Wave "W" and wave "Y", labeled above, are very similar in structure with the exception of time. What I mean by this is that the "W" wave happened extremely quick but the "Y" wave happened over a broader time frame (5days vs 10 days). This to me is a sign that the final weak hands have been shaken loose of their coins, probably at the most in-op time. Another interesting point is both waves corrected 47%. Its amazing how herd psychology appears in patterns. But there are two more pieces to the puzzle and that is the 150 day EMA' and the June 2-17 correction. Below on chart A1 we have the overall move since 2015 of BTC' with the 150 EMA. Note how the 150 EMA was a support level. In addition there are similarities between this correction and June 2017's correction. Both "W" and "Y" waves were very close to being equal percentage wise, and both corrections formed similar patterns.
If you look at the A2 chart below I have 4 different coins all with the 150 EMA. You can see its mixed as to where many are in relationship to the 150 EMA. Some coins have gone through a WXY correction and have recently hit the 150 EMA and some have not. So why if many coins have not corrected would we be BTC' bullish here if the market overall alt market is likely to pull back more? For that we have to look at the September correction and chart A3.
Note that the it took the major alt coins almost twice as long to recover as it did bitcoin. Dash was the quickest to recover but that was almost a month after bitcoin had already reached a new ATH'. So does money start flowing into Bitcoin' before the rest of the market while the rest of the market corrects? History shows this is definitely a possibility.
Back to the chart above and where I am. I still have the position I bought higher, but I am also sitting on a stack of cash. I'm looking to add to two coins, one being Bitcoin' and the other being Dash'. I am looking at the 11k level specifically to add to bitcoin or a bullish signal with a "Preliminary" target area of $15,700 to $17,200. Can we still correct to $5000? Sure, we can also correct back to $9000 to form a double bottom, SO I am looking at the $10,500 level to hold as verification we do not correct further. But at this point scared money is likely gone. I mean if your scared you don't continue to invest after being crushed twice. In addition market sentiment is starting to change. We are still seeing a lot of short calls, but we are also starting to see some long calls as well. As the herd is generally late to the game I am looking to add to my position for a longer term trade, keeping in mind that the market overall is still correcting, so we can still retest $9000 where I would be a buyer.
Its important to come in with partial positions and not all ins during corrections as market direction is never clear.
I firmly believe 2018 will be the year Bitcoin and a few others become "safe havens" due to overall market conditions outside cryptos which I will explain in a separate article.
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Its important to exercise patience during corrections which is the reason we use Fibonacci to get an idea of market sentiment. Note this is playing out in the same trend pattern with the same retracement levels of the previous pullback. We want to see consolidation here and price action that confirms we move higher before entering. Entering too early puts us at the mercy of the market. A breakdown of the $10,500 level (2-3 hourly bars closing under the 10,500) would have us look for a lower entry level to buy. Right now its risk off and we MUST exercise patience.
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I am going ahead and adding a half position here to cost average the previous trade. If we close above $11,500 I will add another half. This will be two trades on bitcoin but there is no other coin I want to be in during a market correction.
@EduardoCantelli, yes, except that there is nothing much supporting a recovery at 8K.
UnknownUnicorn995432
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Excellent chart and the comparison with June 2017 correction is of great importance. I just want to point out one thing. The June 2017 correction phase started from 12th June and we had the lowest dip on 16th July. 19-20 July was when 'Segwit' was enabled. We saw BTC having a rally at that point. The only thing we have now is possible 'lightning network' enablement. But I doubt it will push BTC to new ATH.
People say news do not play a role in BTC's price movements. I think they are wrong. Looking at BTC's charts since July 2017, the price rose higher on these occassions - Segwit 'activation', Segwit 'enablement' a few days later, the 'hard fork' fiasco, CBOE and CME futures listing. Price dropped on these 'news'; September - China banning exchanges, November - no 'hard fork', and after 'buy the rumor sell the news', we saw BTC on a nosedive from 17th December to 22nd December.
Governments have started to take a stance against cryptos in general. South Korea, France, Germany and many others. They will do everything to avoid money flow into cryptos rather than metals. Their so called 'regulations' will be targeting exchanges and mining at first, and then a blanket term 'terrorism is funded by cryptos'. We will see massive price shakeups during this time.
Germany and France will include crypto ban as their agenda in the 2018 G20 summit due in November. Of course a lot could and will happen before then.
We really need a massive good news for BTC. The only one I can/could think of is/was SEC approving BTC ETF. That hope is now gone after the article published on coindesk relating to SEC's reluctance to approve cryptocurrency related ETF. It may happen later at some point, but not likely over the next six months.
I think the entire cryptomarket is going to face a storm of the so-called 'regulations' over the next 2-3 months. Buying the dips and some short term trading can be done during this time.
This will be an excellent time to buy cryptos. As always, you are right about not going all in at the same time.
Thank you :)
downb4up
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@doctorkesh, afaik Germany and France want to regulate not ban crypto. Also SEC is reluctant because they want BTC ETF to fit with current regulations and bank terms. This will take some time but I'm confident they will find a solution.
IMO they will all follow China's path. Germany and France have been targeted by terrorists. Also, cryptos directly threaten their economic plans. They can control metals and gold, but not cryptos.
Please note that this is my personal opinion and I have been wrong before. You may be right.
Another disclaimer is that I was a long term bag-holder of several cryptos from 2013-2014. Bought LTC at 15$ and watched it fall down to $0.98 over the next three years. Bought BTC at $80 so not that bad. ;)
downb4up
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@doctorkesh, interesting find - I checked several news headlines and it seems the wording changes every time with "regulate" being the majority. I guess it depends how the newspapers are oriented. In my opinion if a country bans crypto it will have a negative impact for this country. So will see if they embrace a new opportunity for the future or decide to go back to the past.
Congrats on BTC @ 80$ ;-) I recently found calculations of a mining rig I planned (but never built) back in 2011. BTC was 20$ at that time :-)
India just started to ban cryptocurrency exchanges....
One of the G20 countries. China, India, South Korea, USA, UAE, Saudi Arabia, France, Germany, UK and other EU countries. One of the agendas in G20 will be to regulate/ban cryptos. I think by that time there will be not much left of BTC to ban tbh. I think ETH, NEO, XRP and in particular, IOTA, will succeed. We may see flippening, rippling, matrixing (NEO lol) and tangling by that time :) Just my personal opinion.