For the past six months, Bitcoin has been on a tear—but in the past five days, the king of cryptocurrency has dropped from its all-time high. Here’s why.
What a crock…
When I signed on to take you on this crypto journey, Bitcoin was soaring and it seemed like nothing was going to stop its momentum.
But as I’ve watched the developments in the crypto world over the last five days, reality has begun to sink in.
That reality boils down to this: cryptos are just as susceptible to volatility as any investment vehicle.
In fact, they may be even MORE susceptible because there isn’t anything propping up their value save for the fact that we all agree that it’s valuable.
It seems the smallest things can affect the value of digital currency.
But the fact is, I don’t even think the experts truly have a handle on what makes cryptos move beyond a tweet by Elon Musk.
Seriously, when Elon Musk anything one way or the other, the crypto market moves in tandem, almost as if he’s the be-all-end-all authority on cryptocurrency.
I mean, I understand that the guy is smart, but the crypto world shouldn’t be thrown into chaos every time he decides to tweet.
But that doesn’t mean we’re powerless in understanding what makes crypto move – and the recent five-day slide seems to have some indicators active that show why this is happening.
Falling… In Slow Motion
So, let’s look at what we know:
As of the moment of this writing, bitcoin has lost almost 18% of its value – which comes DIRECTLY after it hit an all-time high of close to $69,000 earlier this month.
Now, luckily, there was a recovery – but it was a SMALL recovery, probably prompted by people thinking they were buying on a dip.
Now, things are looking like it’s going to move back towards that $68,991 high for a while.
However, there is hope.
Crypto investor and analyst Scott Melker said on his podcast, “The Wolf Of All Streets,” “Technical indicators are screaming ‘healthy correction’ rather than ‘new bear market’ for now.”
The thing is, how will we know when it moves from that correction to “new bear market”?
Will there be an indicator for THAT?
Melker continued. “RSI is hitting oversold on every time frame below the daily at the moment. Below $50k would give me some pause, for sure. I think $53k is a likely area for a bottom here if it continues down. But my expectation is that will be front run.”
So… $53K. That’s our indicator.
Playing The Game
Now it becomes a waiting game.
If Bitcoin stays above that threshold, odds are there’s another run coming.
If it dips below…we’re in a crypto bear market.
Seems pretty easy to understand, especially if you look at Bitcoin’s chart.
The problem is that upside momentum is continuing to slow down on the daily price chart, which could mean what we’re seeing is a little profit-taking.
But the relative strength index (RSI) on the daily chart is not yet oversold, which means we could see a further drop in the short-term.
The 100-day moving average, currently around $53,000, could attract buyers like it did on its recent run…but after that, it’s anybody’s guess.
Man, do you realize how much research I had to do to write this?
I hope you’re learning as much as I am, or at least that I’m conveying the information in a way you can understand it.
Remember, we’re on this journey together…
Like the Lord of the Rings… just less magic and Hobbits.
Does that make me Gandalf? I hope not… I already feel old.
Until next time…
“Ups and downs in life are very important to keep us going, because a straight line even in an ECG means we are not alive.” – Ratan Tata