Bitcoin Price Setting Up to Disappoint the Bulls
Bitcoin was the hot topic a few months ago. No matter where you looked or who you talked to, the cryptocurrency was getting a lot of attention. In the midst of this, there were a lot of calls for the Bitcoin price to go much higher.
We were even told that Bitcoin would hit $1.0 million!
Well, those predictions were very wrong; the cryptocurrency now trades at $6,734, which is 64% below its highs of around $19,000.
Here’s the thing: those who were predicting that the Bitcoin price would soar were forgetting that the cryptocurrency was getting into bubble territory. They forgot that a bubble could go on for a while, but when it ends, it’s never good.
With this said, please look at the Bitcoin chart below. It shows exactly what has happened with the cryptocurrency, and where its price could be headed next.
Chart courtesy of StockCharts.com
Between June and October 2017, we had the so-called smart money coming in. The Bitcoin price was relatively stable. There wasn’t panic buying or panic selling.
Then, at the end of October, we got into the greed-and-delusion phase, which continued until mid-December. This is when Bitcoin started to skyrocket and there were outright unhealthy moves. The cryptocurrency’s price went from $4,000 in October to $19,000 in December.
That was way too rapid an increase, given that the fundamentals weren’t strong. We had a lot of regulation talks, and countries were discussing how Bitcoin will be taxed, and whether it should even be allowed to trade.
In late December, there was a sell-off.
Instantly, after the Bitcoin sell-off, we had buyers come in. They bought thinking that the cryptocurrency’s price would bounce back. This is what you call a bull trap; it’s when price action lures investors in. They start to think it’s stable and that it’s time to buy.
Now, we are seeing sellers’ capitulation.
How Low Could the Cryptocurrency Go?
As I said earlier, when a bubble pops, it never ends well.
Just by looking at the charts, it seems like the Bitcoin price could go much lower. Just recently, it broke below a major support level that was placed in February. This means that sellers are present and bearish sentiment prevails.
Now, remember this: once a price breaks below a support level, it tends to fall to the next big support level.
The Bitcoin bulls may not want to hear this, but the next support level for the cryptocurrency isn’t until around $3,500. That’s roughly 50% below where Bitcoin currently sits!
What’s the Lesson Learned?
Dear reader, we have a lot of examples of bubbles forming, popping, and causing a lot of damage to investors’ portfolios. Bitcoin was just another bubble that’s popping.
Don’t be shocked if the Bitcoin price drops much lower; all the signs are pointing toward it. Obviously, with time we will know more.
The lesson here is very simple: never get lured by the noise and the hype.
Beyond all this, I continue to pay a lot of attention to blockchain technology. It can’t be stressed enough how useful this technology could be in the coming years. It could really change the way we do a lot of things. It’s still in its early stages, but we could see a significant number of opportunities as it develops.