Bitcoin (BTC) has declined below to a four digit price as we expected. We predicted this in our last analysis on BTC/USD. The price was trading around $10,830 when that happened. Soon after we posted the analysis, the price declined to a four digit price i.e. below $10,000. Similarly, we also said in our last analysis that “Ethereum (ETH)’s decline below $200 is inevitable”. The price declined exactly as we expected and touched the 61.8% mark. The market has now completed an important correction and we might see a temporary relief rally to the upside. If we take a look at the daily chart, we can see that the price did close below the 50 Day EMA but it respected the 38.2% fib retracement level form the all-time high as well as the 38.2% fib extension level from the December, 2018 temporary bottom.
As these are important support levels that the price has held, the bears have nothing much to worry about just yet especially now that the price has completed a major correction. We saw that when the price topped out and closed below the 50 Day EMA during the parabolic uptrend of 2017-18, it still managed to rise above the 50 Day EMA and then the 21 Day EMA before it began its next downtrend. We can expect the same thing to happen this time because the price is now oversold on smaller time frames. The support that the price has found short term is strong and we could see a relief rally to the upside from here. This is a good opportunity to be temporarily bullish on Bitcoin (BTC).
There is something called contrarian investing and these are investors that do the opposite of what the crowd is doing. Generally, most good traders do this but with proper risk management because you do not want to go against the trend either. Baron Rothschild, one of the early members of the Rothschild banking dynasty is credited for saying, “Buy when there is blood in the streets even if the blood is your own”.
If we take a look at the Fear and Greed Index, the index is down to 34 (fear) which means investors are panicking and there is blood in the streets. Warren Buffet who is considered one of the best investors of all time says that if everyone agrees with your investment, then it is most likely not the right one. So, it is quite clear that this is a good opportunity to buy Bitcoin (BTC) and other cryptocurrencies short term but it should not make us oblivious to what is happening on longer time frames. The price has yet to decline below $3,000 towards its true bottom and we are a long way from entering the next bullish cycle just yet.
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