Everybody be welcome to the 5th Bitcoin Correction since 2012
In today's post, I will do my best to bring an objective analysis of the current situation compared to all the available data we have on BITCOIN!
Let's start with the current situation. How can we describe it?
- On the 21 of April 2021, the bearish market started. From that point, Bitcoin never made a significant movement above that level. That's why I consider it the beginning of the correction.
- 427 days have happened since that day (time flies, doesn't it?)
- At the moment, the price is 74% down from All-time highs. That means that 10 thousand dollars bought on the top would be 2.600 dollars now (that hurts, for sure)
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But how new is this situation? The answer is: not new at all!
- Since 2012, Bitcoin has experienced the same cycle over and over again! which can be described as massive euphoria followed by massive fear, on a dance that, at the moment, keeps repeating.
- To be precise, Bitcoin has crashed 80%+ more than 4 times since 2012, and we are about to reach the 5th if the price keeps falling a little bit more.
- The good news! is that every time that happened, the price went back to the cycle of massive euphoria. That's why I'm writing this post because I have two assumptions that I would like to share:
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Assumption number 1 (my least favorite): The cryptocurrency market is a massive Ponzi scheme that has been developing since 2012, and there will not be another time the price will make a bullish parabolic movement like the ones we saw in the past. Period, end of the story. If you are an investor, you are totally F, and if you are a trader, I hope you have a stop loss. (Alright, this is too dramatic, and I don't think that is the case, but hey! Maybe it is. Now let's go to my 2nd assumption).
Assumption number 2 (The one I love): This is another correction of a cycle that, based on past behavior, I expect to keep happening. So, a bullish opportunity may be close based on the levels we are currently are. And there is a lot of money to be made if we are able to develop good setups. I will expand this idea with some charts.
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I expect the bottom of this correction to happen in a range from current levels (75% decline) to a final decline of around 90%. I will use an old but effective way of detecting clear changes in trends: using trendlines (you can use the one you like the most, darling). The key aspect here is that I'm not trying to catch a falling knife, but I will be waiting for clear signs that a new trend has started.
As you can see on that chart, I have defined the current situation and also the 85% and 90% levels. From any of those 3 scenarios, if I see the current descending trendline broken, I would say, "Hey, that's the first sign that a change in trend may be happening! (But I will not trade yet, because I'm not a FOMO trader) Let's take a look at the 2nd filter.
The price must make a clear correction, as you can see on the chart after the breakout of the trendline. If that happens, I will set pending orders as I draw them on the chart. That's how I plan to trade, the next bullish movement. And suppose the bullish move never happens because Assumption number 1 becomes a reality. In that case, I will avoid getting exposure to the market, and in the worst-case scenario, I will have a stop loss in place.
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Lets Recap.
a) This is the 5th time this type of BIG correction has happened since 2012
b) There are 2 assumptions to make: One is the apocalypse of the crypto world, and the other is betting on the cycle repeating.
c) Assuming the cycle continues, I will wait for the breakout of the trendline followed by a correction before trading. Otherwise, I will not engage in any setups.
IF the price starts evolving as expected, I will bring more details regarding risk and all the elements regarding the execution of the setup.
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Thanks for reading! I wish you all a great week, and of course, I love to read all your comments, whether you agree or don't.
Let's start with the current situation. How can we describe it?
- On the 21 of April 2021, the bearish market started. From that point, Bitcoin never made a significant movement above that level. That's why I consider it the beginning of the correction.
- 427 days have happened since that day (time flies, doesn't it?)
- At the moment, the price is 74% down from All-time highs. That means that 10 thousand dollars bought on the top would be 2.600 dollars now (that hurts, for sure)
----------------------------------------
But how new is this situation? The answer is: not new at all!
- Since 2012, Bitcoin has experienced the same cycle over and over again! which can be described as massive euphoria followed by massive fear, on a dance that, at the moment, keeps repeating.
- To be precise, Bitcoin has crashed 80%+ more than 4 times since 2012, and we are about to reach the 5th if the price keeps falling a little bit more.
- The good news! is that every time that happened, the price went back to the cycle of massive euphoria. That's why I'm writing this post because I have two assumptions that I would like to share:
----------------------------------------
Assumption number 1 (my least favorite): The cryptocurrency market is a massive Ponzi scheme that has been developing since 2012, and there will not be another time the price will make a bullish parabolic movement like the ones we saw in the past. Period, end of the story. If you are an investor, you are totally F, and if you are a trader, I hope you have a stop loss. (Alright, this is too dramatic, and I don't think that is the case, but hey! Maybe it is. Now let's go to my 2nd assumption).
Assumption number 2 (The one I love): This is another correction of a cycle that, based on past behavior, I expect to keep happening. So, a bullish opportunity may be close based on the levels we are currently are. And there is a lot of money to be made if we are able to develop good setups. I will expand this idea with some charts.
----------------------------------------
I expect the bottom of this correction to happen in a range from current levels (75% decline) to a final decline of around 90%. I will use an old but effective way of detecting clear changes in trends: using trendlines (you can use the one you like the most, darling). The key aspect here is that I'm not trying to catch a falling knife, but I will be waiting for clear signs that a new trend has started.
As you can see on that chart, I have defined the current situation and also the 85% and 90% levels. From any of those 3 scenarios, if I see the current descending trendline broken, I would say, "Hey, that's the first sign that a change in trend may be happening! (But I will not trade yet, because I'm not a FOMO trader) Let's take a look at the 2nd filter.
The price must make a clear correction, as you can see on the chart after the breakout of the trendline. If that happens, I will set pending orders as I draw them on the chart. That's how I plan to trade, the next bullish movement. And suppose the bullish move never happens because Assumption number 1 becomes a reality. In that case, I will avoid getting exposure to the market, and in the worst-case scenario, I will have a stop loss in place.
----------------------------------------
Lets Recap.
a) This is the 5th time this type of BIG correction has happened since 2012
b) There are 2 assumptions to make: One is the apocalypse of the crypto world, and the other is betting on the cycle repeating.
c) Assuming the cycle continues, I will wait for the breakout of the trendline followed by a correction before trading. Otherwise, I will not engage in any setups.
IF the price starts evolving as expected, I will bring more details regarding risk and all the elements regarding the execution of the setup.
----------------------------------------
Thanks for reading! I wish you all a great week, and of course, I love to read all your comments, whether you agree or don't.
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