Bitcoin: Prepare For The Bear (35K).

10 thg 4, 2022

With the 45K resistance area still intact, the recent price structure (32K low to 48K high) can be considered a broader LOWER HIGH consolidation. Add to that the risks associated with the current economic environment and you have a recipe for a break of the 35 to 32K support area in the coming weeks. I am not saying a break is a sure thing, all I am saying is the current environment favors such a scenario. So how can knowing this help?

First, realize that an isolated chart does NOT represent the full reality. While a chart can provide important reference points to PREPARE for a particular kind of activity, basing a decision on a single chart will not help you in the long run. When it comes to Bitcoin and the alts, factors such as the S&P, the bond market, interest rates and the U.S. Dollar should be considered as far as judging the health of the environment, particularly if you are a long term investor. And these "macro" environmental factors at the moment support a bearish environment. That MEANS: Bitcoin and alt coins are NOT likely to participate in a sustained rally any time soon. (Stop listening to the 100K fake gurus). Macros provide a basis for REALISTIC expectations which then further shape trade and investment choices.

So all this means:

1. While bullish trends are possible, they are not likely to persist. Resistance levels are more likely to hold, while supports more likely to break. Longs should be taken very selectively and with very conservative profit expectations. Aggressive shorts are more likely to follow through.

2. Buying inventory should be skewed smaller, particularly if price is near highs. If a larger allocation is preferred, at least give the market a chance to test MAJOR levels like 35K, 32K or 30K.

3. HOPE is NOT a strategy. Buy and hope may seem to work in an easy monetary policy environment (while reinforcing BAD habits). If you are UNSURE, stay out. Anyone that pushes the idea that you are going to miss out is either clueless, trying to sell you something or both. Highly uncertain environments make more sense for smaller time frame strategies (day trade), but are not a good idea for novice traders (basic charts, oscillators, etc. are NOT going to help you).

Bitcoin at 42K is fluctuating around a minor support within a consolidation, NOT a trend. If anything price is gyrating around a mid point, which is a location that is highly random. Flipping a coin will perform just as well as your RSI.

Stop trying to figure out the "next" move and instead, let the market move to a level where an anticipated behavior is likely to appear (45K or 35K areas). Once a setup appears in such an area, risk can be measured and a trade with at least a slightly better chance of a profitable outcome can be considered.

As far as "magical" rallies go, nothing is going to happen until the Federal Reserve changes its story and it is just beginning the tightening cycle so prepare to WAIT a while. Rising rates put bearish pressure on markets.

Thank you for considering my analysis and perspective, I hope you find it helpful.