Bitcoin (BTC) is down more than 70% from its all time high but many still anticipate further downside. If you think about it, this is no different than when Bitcoin (BTC) was at $19,000 and many still expected a bull run to the moon. It is easier to be criticized and called out when you are overly bullish in a bull market but people do not find being overly bearish in a nearly complete short term bearish phase as equally implausible. This comes down to the difference between euphoria and fear. While markets may take time to build up and gain support over time, it takes a lot less time to erase all those gains and for the price to nosedive once fear is instilled in the market.
Attempts to instill fear in the market have been deliberate most of the time. In 2014, there were big events that lead to the fall like the Mt. Gox scandal but in 2017, the fall was more systemic as fear was injected at every phase in the form of bans, restrictions and crackdowns. Those who have been around for long, know that markets work in cycles and after this grave phase of fear and uncertainty, a period of optimism and euphoria follows. However, most investors in cryptocurrencies are first time investors who find it difficult to recover from the fear. Furthermore, some of them sold at a loss and desperately want to make that coins back so they are now waiting for a fall below $5000 to buy again.
If you have been following the market for long enough, you would have seen that the price has recovered rapidly whenever it fell below $6000 or close. This is because there are other players waiting to get into the game. They are not first time investors, they are not traders who sold at a loss. They are people who have been in this system for decades. I’m talking about the likes of George Soros and Rockefellers who have recently expressed their interest in getting involved. These are not the people who buy the top. They buy when there is blood on the streets even if that blood is their own.
Looking at BTC right now, there isn’t much room for further downside. On short term, limited downside due falling out of the rising wedge to the downside seems likely but the chances of it going too far are limited. Most investors are carefully watching the price to break out of the triangle. This will remain to be the centre of focus for the remaining weeks to come. As for now, the RSI on the hourly chart looks overbought and this may be a time for a limited pull back. However, on the weekly chart, the conditions look very favorable for Bitcoin (BTC) as well as other cryptocurrencies to prepare for a new rally, breaking out of the triangle to the upside, putting an end to the short term bear market.