Past performance is not an indication of future performance. On the other hand, those who do not learn from the mistakes of the past are doomed to repeat them. Make of that what you will, but we wanted to take a look at previous capitulation events in the bitcoin market to get some sense of what we might be in for…
This does not constitute financial advice. Trading is risky and trading bitcoin is very risky. Loss of capital, reputation, self-confidence and spouse are likely.
After the stellar rise to $20k a year ago, bitcoin has spent all of 2018 in correction mode. Just as the question in 2017 was ‘Where will this top out?’ the burning question today is ‘Where will this end?!’
You can read plenty of technical analysis that points to support around $3,000, $2,500 and potentially a lot lower. What we’re interested in here is that last, convincing move the market makes to the downside at the end of the bear cycle, shaking out the last of the weak hands in a panic of selling and immediate frenzy of buying when the ultimate low is established: Capitulation.
Put simply, the market heads lower, and lower… and then it all-out dives. Traders are taken by surprise, they exit their positions in utter terror, and then – just as quickly – sentiment turns. Fear becomes greed. The movement reverses, with the chart painting a characteristic ‘V’ shape. The lowest prices never last long, perhaps hours or even less, but those who put their buy orders in the right place profit handsomely. So: where will it start, and how deep will that capitulation dive be?
No comments:
Post a Comment