Should I Buy Bitcoin Now?
After seeing Bitcoins run up this past week, it’s pretty likely that you’re feeling some FOMO (Fear of Missing Out). You might be asking yourself “Should I buy Bitcoin Now?” Well I’m here to tell you to wait a minute and read this post first.
Disclaimer: This Is Not Financial Advise
Bitcoin managed to climb 100% since April 1st. It was able to make it all the way to $8400 while blasting through all resistances we had built in 2018. The bad news is you probably missed out on a chance to make some good profits. The good news is you haven’t missed the chance to make life changing money. Let me explain why.
There have been very interesting developments that have taken place over the past month. There are numerous factors that contributed to the rise in Bitcoins price. I think that a lot of it has to do with Tether but there has been a lot of positive news coming out in favor of Bitcoin lately too.
We’ve had positive news headlines such as:
- “Bakkt Bitcoin Futures Could See Green Light In Just 10 Days”
- “$7 Trillion Asset Giant Fidelity to Launch Bitcoin Trading Within Weeks”
- “TD Ameritrade Exec: Tens of Thousands of Our Clients Are Interested in Crypto”
Those are just a few examples to give you guys an idea of the kind of news that is helping to drive this price action.
As most of you have probably heard by now, Tether has gotten into some trouble. A legal petition has been filed with the Supreme Court of New York. There has been a request for a court order to investigate Bitfinex as well as any other inter-related companies which includes iFinex the parent company to Bitfinex as well as Tether Holdings Ltd. for “Ongoing”fraud in relation to the $850 million that went missing. (https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=vIexA1b0spKOnK_PLUS_ZUGTJ3A==&system=prod)
This caused a little bit of a scare in the market, people thought Bitcoin would fall after the news came out. So much so that people started shorting Bitcoin, I’ll get into more detail about what the means shortly. I believe that the people who are involved in Tether and own a fairly large stake in it know that Tether might come crashing down soon. What exactly does that mean? Well the people who are holding a large amount of Tether are beginning to cash out. How does one cash out from Tether? You buy Bitcoin. That’s one piece of the puzzle.
Around the same time the Tether FUD (Fear, uncertainty & doubt) came out we saw an increase in Bitcoin shorts. For those of you who aren’t familiar with shorts, it’s basically people putting in orders to “bet” against the price of Bitcoin going up. There’s a lot that goes into reading the shorts & longs charts but simply put, there was a lot of money to be made by liquidating the short traders.
So long as the shorts kept climbing we were going to keep going higher. When we reached around $6400 the short positioning began to fall. People either began to exit their short positions or got liquidated.
Below is a image of the long positions. We now have a situation where the longs are beginning to climb. Longs are people “betting” that the price will go up.
Here’s one reason why I believe we’re going to be eventually going down. The longs are slowly climbing meaning there’s an opportunity to liquidate the longs by going back down. The market will play with your head & make you feel like you’re missing an opportunity. It’s a game of emotions & psychology.
The people who aren’t aware of all the moving pieces often get taken advantage of, I would know I was one of them. You’d be surprised how many people get burned by playing this game, it’s a vicious cycle. Here’s also another indicator I keep my eye on.
The last time we were near these levels was around February 2018, the beginning at the bear market. This indicator alone doesn’t say much, but paired with everything else going on the market it begins to add up.
Bitcoin Market Structure:
We’ve seen all the news by now, institutional interest is here. However, they aren’t interested in buying Bitcoin at $8,000. The last Bitcoin bottom in 2015 lasted 10 months, this one barely lasted 3 months. There is absolutely no signs of a reversal pattern that shows up on the Bitcoin chart. Market structure is extremely important if we’re too see moves past $10,000.
We should be seeing one of two things:
- Accumulation (Side-ways movement)
- Reversal Pattern (Head & Shoulders)
It’s possible that we might see the implosion of Tether which might bring some short term pain to the market. We also might not, but we definitely need to create a market structure that makes sense otherwise institutional investors won’t be interested in entering the market.
“Should I buy Bitcoin now?” My answer is no, we’ll most likely see Bitcoin revisit the $4,000 area. That’s where I’ll begin buying in & if it happens to go lower I’ll be adding onto it. I think blockchain technology is here to stay because it has the potential to change the world just like the internet did. It could also help a lot of us reach financial freedom. It’ll take a lot of patience from our side, but so long as we don’t fall prey to the psychological pitfalls of the market I think we’ll be able to achieve that dream.
The only trade that I currently have open is Ethereum. I made a post on where I think we could be headed last week as I believe it could potentially follow Bitcoin. If you’re interested and haven’t checked it out here’s the link:
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