It was a pretty uneventful weekend for crypto traders. While we saw a decent bounce off the lows for Bitcoin, Ethereum and alts, many crypto traders are still on the sidelines trying to make sense of what the heck happened. Stories of moon, lambo and riches have instead turned to depression, anxiety, and fear.
As a student of the markets and coming from traditional finance, we admit that it’s very difficult to put a true valuation on Bitcoin, Etheruem or alts. Cryptos are only worth what the market is willing to pay and the price action is dictated more by human emotions than anything else.
That’s what frustrates us the most about so-called experts like Tom Lee from Fundstrat, John McAfee, or “BK” Brian Kelly on CNBC. All they do is throw out predictions to keep the public interested in crypto. We all remember how “BK” ran the tutorial on CNBC on how to buy Ripple XRP. He did so at the very top and that segment has resulted in billions of dollars of losses.
But our favorite schiller is John McAfee. Who can forget “if Bitcoin does not get to $1 million, I will eat my d@#k.” His self-promotion only helped John McAfee get tons of airtime and attention. The sad part is that it got many nobs buying Bitcoin at higher prices looking to cash in one day on $1 million.
Bitcoin traded sideways for most of the weekend. We had an attempted breakout above 6600 that failed pretty quickly. The market is now consolidating in the 6200 to 6500 region.
We don’t think the play here is to be short. There is a ton of support between 5800 and 6200. Every time Bitcoin has tested that region, the dip buyers have come in. We believe that the next $1000 move in Bitcoin will be to the upside. To do so, Bitcoin needs to breakout above 6620, 6640 and 6650. A break above 6650 will get the shorts covering and add some gasoline to the rally. There is still a heavy Bitcoin short position.
Ethereum has gotten crushed this year. Most have said that the cause of last week’s selloff was ICOs rushing to sell the ETH they raised at $1000 or higher. While there is some truth to it and some ICOs did indeed do that, we don’t believe they panic sold at these levels. ICOs had plenty of time this year to sell. Matter of fact, we believe that many of the scam ICOs have been dumping all along and the founders using the proceeds to fly first class, buy lambos, and enjoy a jet-set lifestyle off their investor’s ETH.
We argue that the ability for more investors to go short has had the devastating impact on the market. Like we saw last year with Bitcoin futures, the ability to bet against cryptos was too enticing for deep-pocketed Wall Street investors to sell into. It is far too coincidental that Bitcoin topped out right around the time Bitcoin futures were introduced by the CBOE and the CME.
For many crypto traders, the ability to go short is easily done on BitMex. Have a look at the ETHUSD daily chart on BitMex. What does it tell you?
The selling pressure has been relentless and driven the price down. Judging by this chart, we believe a strong bounce is bound to occur and send ETH to the $360 to $380 by just using simple Fibonacci retracements.
We are big believers in price action. Without any proper valuation tools, that’s all crypto traders can really go in. While we see many chartists using complex theories, we prefer KISS – Keep Things Simple Stupid. Use basic support and resistance levels and remember that cryptos are all about momentum. Buy high, sell higher. Sell lower and buy lower.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer. This author is long Bitcoin and Ethereum.
Image courtesy of Pexels
Charts courtesy of tradingview.com
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ur welcome pic.twitter.com/e2KF57KLxb
— Elon Musk (@elonmusk) February 4, 2021
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Hong Kong, Hong Kong, 25th January, 2021, // ChainWire //
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