The recent past two days have been manic to say the least, particularly for crypto enthusiasts as Bitcoin seems to have reached the peak of its parabolic run up to an incredible $14 000, give or take a penny, depending on which exchange you’re looking at. Prices have gone into spasmodic mode, ripping up and then down like a yoyo.
This upward move has been going on for months and it seemed to have no end, but experts were saying that it was overdue for a correction, and now it appears to be arriving. Based on the Fibonacci patterns, the 0.618 point has been hit on the button, like a perfect work of art. If you draw the Fib extension tool on the Bitcoin daily chart on tradingview.com by taking the top and near $20 000 and connecting it to the bottom at $3200, you come out with the 0.618 or the golden ratio level at just under $14 000, and that is exactly where Bitcoin price has now topped out and had its massive pullback in the last 24 – 48 hours.
This has been a long time coming, but when you’re in the middle of your trades and suddenly the price slaps back down $2000 in a matter of minutes, taking the alts down with it, you find yourself scrambling to avoid any losses. I was up way after midnight the past two nights, which is unusual for me since I wake up early generally if possible, as it’s getting light or sooner now in winter in the south. The euphoria of the peaking Bitcoin price, juxtaposed with the devastating crash back down, is emotionally and energetically exhausting.
Even some of the top exchanges, like Binance and others, couldn’t keep up and appeared to stall, or almost crash under the volatility. Price shooting up or down in such sudden swings, through thousands of dollars, means that millions of dollars worth of trades are being liquidated or filled or stopped out instantly. No exchange can keep up. I made a quick sell on one trade when I saw what was going on, but it never registered on my account completely, so I pressed the sell button again, only to realize later when the dust had settled that both trades had in fact been made.
It wasn’t a train smash luckily, only a minor mishap, which amounted to a break even at worst, but it must have been hectic for some other traders with larger positions or other exchange breakdowns in the middle of their trades. It’s hard to look away from the charts during this kind of volatility, especially if you have trades open, or if you’re looking to buy or sell at an opportune price. So sleep evaporates and the usual “Cryptosomniac” mentality takes over in this somewhat addictive pastime.
Bitcoin price has had a massive 30% correction or pull back down from $14 000 to around $11 000 as of writing, and the speed of it was legendary. In fact the parabolic 20% move up the day before and the drop back down were both epic and frothy to say the least. This could be the start of the major correction in price down still further, so I’m waiting on the sidelines at this stage rather, until the dust settles and the price stabilizes.
Remember that price has not yet even come down to touch the 21 Day EMA, which is around $9480 on Binance exchange. That would be the minimum that Bitcoin will fall to. Then if needed it could fall further to the 50 Day EMA at $8400. I personally think it may even fall to the 100 Day EMA around $6900 or slightly above, considering how fast this uptrend has been as well as the fact that we have had so few retracements in the past three months.
That would be a healthy swing down to capitulate and consolidate so that we can all buy back in at a lower price and then continue this bull run back upward toward $20 000 and beyond into uncharted territory, pun intended. So this pull back is fine. It has just been like a rollercoaster and left me needing some rest. There are some traders that may have got “rekt” in this volatility, especially those on margin or trading with 10x leverage for example. Bit then that’s what stop losses are for I presume. I prefer not to use a stop loss because I don’t like to lose. I will rather hold the crypto and just ride out the volatility, endure the dips and wait for the price to come back up to my original buy in price before selling again. It just means that I have less capital to trade with until then, but hey, I still hold some neat altcoins or Bitcoin. I have tried to stay away from the smaller cap cyrptos, and just trade in the top 20, so that I’m sure they will do well in the long run.
And this could well be the long-awaited “alt season” now that Bitcoin has finished pumping and is retracing. Now the alts can catch up and have some big moves upward in price, so keep an eye on CoinMarketCap.com to see which alts are pumping and see if you can catch a few percentage gains here or there. Don’t be too attached to the coin itself, but rather look at the technicals and find the opportunities to make profit, regardless of the coin.
That being said, stick to the top larger cap coins so that you are sure they will perform in the long run and you aren’t throwing your money into an outlier that goes nowhere. Technical analysis works, even for cryptocurrency because nature is the same everywhere, and these price moves are moving like clockwork, in Fibonacci sequences and cyclic patterns – generally speaking, most of the time, barring the odd anomaly or manipulation by the whales. The patterns play themselves out, so learn pattern recognition and you will see the price swings emerge before your eyes.
Start with some small investments at a time, and with some “skin in the game”, so to speak, you will quickly learn from experience directly what it takes to buy and sell with expert timing and build your way up to bigger amounts of cash on each trade. You never lose if you have the right strategy, you just gain more crypto. At the worst you lose some sleep or some time as you wait for your investment to mature so you can sell it at a profit, but you don’t have to sell at a loss. Just “hodl” and all will be well.
