BITCOIN - Don't Get Out of Touch With Reality
Hello everyone, rouzwelt here
Just take a look at the screenshot of Bitcoin daily chart below, almost 17X in a year. What does it tell you? Have you ever asked the question that why it should have risen this much? What's the reason behind it? Has it added additional 17X worth of value in 1 year? What fundamentals have actually changed during this time to cause such an uprise?
Well let me say that many people confuse Bitcoin with Blockchain (crypto tokens with blockchain technology), the point is that the real value, the real driver is not Bitcoin itself (tokens) but actually it is the Blockchain technology, that's where all the things are happening, that's where all the innovation are happening, tokens are just tokens, they don't add value by themselves, so in order for tokens' prices to rise higher you always need another person to pay a higher price than the last person, but there are not infinite amount of buyers of course and as price keeps rising higher their population decreases and also more possible buyers come short of the required capital to be able to buy at those prices. When the last guys buying at the top realize that price is not going to go higher for a certain period in time they start to sell and this initiates a chain reaction. Well in crypto there are a lot of HODLers who play a big roll in crypto massive pumps, but you need to pay attention that as the prices keep rising there will be less new HODLers, because it will be more difficult as they need to put away more of their total capital for lesser possible gains. All these things makes it harder to see higher prices in short period of time. And as you know Blockchain is still very young, we have not yet figured out how we will be using it in real world, the first impression was to replace it with fiat money, but that's not the case anymore, at least with Bitcoin, and about the ability to be store of value, well you can't expect a young asset like crypto to be able to deliver on that until it passes some real world test which happens over time, definitely more than a decade. So the whole speculation about the real world use of Blockchain is still not clear. We might be using it for a whole different purpose in 2050.
You can see in the screenshot that since the breakout of 2018 ATH, we only managed to see a increase in volume at 20 to 30K uprise, and we just saw decrease in volume to new ATH, that shows that the price was actually driven mostly by retails, and retails have limited amount of power, but after price reached almost 65K, you can see huge volume and supply entering market. that is where whales came to play, swallowing every little man on their way, and I don't think they're done yet. Believing that price can't fall lower from here is just a fantasy, as I don't believe the current price is anywhere near being balanced from mining and leverage perspective, but I don't want to dive deep on those issues here. (you can read my previous posts if you're interested in my take on those issues here: tradingview.com/chart/BTCUSDT/6ySmOdMv-BITCOIN-THE-KING-The-Bigger-Picture/) Another thing to mention is the zero to negative premium on futures market compared to spot market, which is an indication of lack of real interest from traders and speculators. When there is bull market there is always positive premium.
Anyway that was for a general look at the market, but now let's take a look at 1H chart (main chart). I've been talking about my possible short trade setup idea in my last posts which was about a possible entry after the breakdown of the yellow uprising channel and the blue down trend line. I've been pointing the lack of demand and volume at these short impulses up, and with time passing I was getting more confident that price will soon break the channel. Well it has happened now and I've opened my short position at 32850 (you can find my trade setup idea here where I talk about it in detail: tradingview.com/chart/BTCUSDT/9EZMEYfn-BITCOIN-It-s-Going-As-Expected/). You can clearly see the volume increasing as soon as the channel broke, again that's a sign of more supply entering. I should say that I hate to sound bearish, I hate the bear market, it's more difficult to trade but you always need to be balanced, and you need to know about bear markets so you can position yourself to be able to enjoy the next bullish market. So right now I believe that there is a good chance to break the 30k support level this time, because price was getting weaker every time it bounced from there, as it couldn't even reach to its last printed high. I believe that interests in current price levels have been decreasing slowly since we entered this 30/40k range, and as long as that is the case then testing lower levels to find more interests again is a great possibility. So be prepared and use the best tool you have to deal with it, which is risk and money management.
If you enjoyed reading this post then consider supporting me by hitting like and please write a comment if you have any opinion about it, and as always have fun and trade safe.
Just take a look at the screenshot of Bitcoin daily chart below, almost 17X in a year. What does it tell you? Have you ever asked the question that why it should have risen this much? What's the reason behind it? Has it added additional 17X worth of value in 1 year? What fundamentals have actually changed during this time to cause such an uprise?
Well let me say that many people confuse Bitcoin with Blockchain (crypto tokens with blockchain technology), the point is that the real value, the real driver is not Bitcoin itself (tokens) but actually it is the Blockchain technology, that's where all the things are happening, that's where all the innovation are happening, tokens are just tokens, they don't add value by themselves, so in order for tokens' prices to rise higher you always need another person to pay a higher price than the last person, but there are not infinite amount of buyers of course and as price keeps rising higher their population decreases and also more possible buyers come short of the required capital to be able to buy at those prices. When the last guys buying at the top realize that price is not going to go higher for a certain period in time they start to sell and this initiates a chain reaction. Well in crypto there are a lot of HODLers who play a big roll in crypto massive pumps, but you need to pay attention that as the prices keep rising there will be less new HODLers, because it will be more difficult as they need to put away more of their total capital for lesser possible gains. All these things makes it harder to see higher prices in short period of time. And as you know Blockchain is still very young, we have not yet figured out how we will be using it in real world, the first impression was to replace it with fiat money, but that's not the case anymore, at least with Bitcoin, and about the ability to be store of value, well you can't expect a young asset like crypto to be able to deliver on that until it passes some real world test which happens over time, definitely more than a decade. So the whole speculation about the real world use of Blockchain is still not clear. We might be using it for a whole different purpose in 2050.
You can see in the screenshot that since the breakout of 2018 ATH, we only managed to see a increase in volume at 20 to 30K uprise, and we just saw decrease in volume to new ATH, that shows that the price was actually driven mostly by retails, and retails have limited amount of power, but after price reached almost 65K, you can see huge volume and supply entering market. that is where whales came to play, swallowing every little man on their way, and I don't think they're done yet. Believing that price can't fall lower from here is just a fantasy, as I don't believe the current price is anywhere near being balanced from mining and leverage perspective, but I don't want to dive deep on those issues here. (you can read my previous posts if you're interested in my take on those issues here: tradingview.com/chart/BTCUSDT/6ySmOdMv-BITCOIN-THE-KING-The-Bigger-Picture/) Another thing to mention is the zero to negative premium on futures market compared to spot market, which is an indication of lack of real interest from traders and speculators. When there is bull market there is always positive premium.
Anyway that was for a general look at the market, but now let's take a look at 1H chart (main chart). I've been talking about my possible short trade setup idea in my last posts which was about a possible entry after the breakdown of the yellow uprising channel and the blue down trend line. I've been pointing the lack of demand and volume at these short impulses up, and with time passing I was getting more confident that price will soon break the channel. Well it has happened now and I've opened my short position at 32850 (you can find my trade setup idea here where I talk about it in detail: tradingview.com/chart/BTCUSDT/9EZMEYfn-BITCOIN-It-s-Going-As-Expected/). You can clearly see the volume increasing as soon as the channel broke, again that's a sign of more supply entering. I should say that I hate to sound bearish, I hate the bear market, it's more difficult to trade but you always need to be balanced, and you need to know about bear markets so you can position yourself to be able to enjoy the next bullish market. So right now I believe that there is a good chance to break the 30k support level this time, because price was getting weaker every time it bounced from there, as it couldn't even reach to its last printed high. I believe that interests in current price levels have been decreasing slowly since we entered this 30/40k range, and as long as that is the case then testing lower levels to find more interests again is a great possibility. So be prepared and use the best tool you have to deal with it, which is risk and money management.
If you enjoyed reading this post then consider supporting me by hitting like and please write a comment if you have any opinion about it, and as always have fun and trade safe.
Pubblicazioni correlate
Declinazione di responsabilità
Le informazioni ed i contenuti pubblicati non costituiscono in alcun modo una sollecitazione ad investire o ad operare nei mercati finanziari. Non sono inoltre fornite o supportate da TradingView. Maggiori dettagli nelle Condizioni d'uso.