Published
4 years ago on
May 30, 2019
Bitcoin (BTC) has been on a roll since the beginning of last month when the price embarked on a parabolic ‘rally’ that has yet to see any signs of a slowdown. This has led to a lot of people calling that the bottom is in or the next bull run has begun without realizing that it is the dumb money leading the charge here. That never happens when we see a trend reversal. Throughout Bitcoin (BTC)’s own trading history as well as in other financial markets, it is always the smart money that leads the charge. When does smart money lead the charge? When the dumb money is completely exhausted and knocked out. The only way that happens is when the market inflicts such pain on retail bulls that all hopes of a bullish reversal are shattered.
Interestingly in the case of BTC/USD, it has also inflicted some serious pain on retail bears most of whom are already dead or close to dying. Retail bears started entering short positions after the first pump in early April. As we can see, on the chart, this did not bode well for them and no doubt the vast majority of retail bears were wiped out in the weeks that followed. This is what happens when you get in the way of a parabolic ‘rally’. Now, the retail bears seem to have learnt their lesson but the retail bulls are making the same mistake. In case of the bears that are less gullible and more stubborn, they do not often listen to what most other people have to say about where BTC/USD is headed. However, the retail bulls that are more gullible and delusional often fall for the words of influencers on different media platforms. This is why the pain that the bulls experience is always worse than the pains that the bears experience.
There are some charts that you may not find anywhere else or see anyone talking about because the bullish bias of most traders and analysts has made them oblivious to reality. The worst kind of trader is a desperate trader and that is exactly what we have right here. The retail bulls are hoping the price would break past $10,000 and then advance to $13,000 or $20,000 by year end. If we look at the daily chart for BTC/USD we can clearly see what is about to happen next. Falling wedges see the price break to the upside and rising wedges see the price break to the downside most of the time especially when conditions are this overbought.
Retail bulls still have a change to take their profit and sell at current levels but most of them won’t do that. They will wait to see the price rise towards $10,000 before they sell. The bulls are waiting for the price to rise towards $10,000 so they can sell their coins while the bears are waiting for the price to rise towards $10,000 so they can short sell. While line and patterns on a chart are important, sometimes it all comes down to psychology. There is desperation on both sides to see that $10,000 mark which is why it is highly probable that it may never happen. The price of Bitcoin (BTC) is still likely to touch the 38.2% Fib retracement level around $9,273 before it begins its downtrend, but that again would be too obvious to happen at this point.
