Bitcoin (BTC) Could Still Go Back Above $10,000 But Bigger Threats Loom Over

Bitcoin (BTC) Could Still Go Back Above $10,000 But Bigger Threats Loom Over

Bitcoin (BTC) is trading around $400 dollars below $10,000 but it could soon shoot back above $10,000. The real question however is, “How high will it go above $10,000?” To answer that, let us first analyze what has just happened in the past few months. BTC/USD began its parabolic uptrend in December, 2018 which has now come to an end as the price topped out last month just below $14,000. Back then it wasn’t as clear if the top was already in but now it is making a lot more sense. So, the market makers ended up shaking traders to both sides and then the price declined. When the price started to decline, every started to see that this parabolic uptrend cannot go on forever and we are soon to see a sharp move to the downside.

Now, to investors that just buy, hold and sell, this would have meant to get out taking their profits while protecting their investments from downside. However, to traders that do not care about a move up or down as long as there is money to be made, this was a very good opportunity to go short. If the price ends up falling below $3,000 and you are riding it down, that is a big move and to a lot of traders that is too tempting to ignore. Now, the problem here is that the market makers know this. They are masters of trading psychology having seen how people react at different turning points. So, they keep on selling the hope only to make it explode in their face soon afterwards. Please note that this is not the job of market makers in other markets. In other markets, market makers provide liquidity and that is where it ends but in this market, the market makers do much more than that in the absence of regulation.

So, should we be complaining that there is too much manipulation in the market? Absolutely not! Manipulation or no manipulation, the herd is going to lose to a small group of disciplined traders that have the foresight to not only see lines and patterns on the chart but also to see the intent and meaning behind them. Most people just look at lines and patterns on a chart and they say, “Oh this line is broken, that means we are going down”. Then when it does not play out that way they say, “Technical analysis does not work in crypto”.

If we take a look at the daily chart for BTC/USD, we see the price trading within a falling wedge having broken just below a large rising wedge. So, if the price breaks this falling wedge to the upside, we could see a move to the upside but we have to look at the play here. The game plan here is shaking out the bears that have their stops just above $10,000 and then trapping as many bulls as possible before the downtrend begins. Retail traders make money here and there, successful traders do it a lot better but market makers are the only people here making consistent gains and there is no use trying to beat them at their game. Like Sun Tzu says in the Art of War, “If you know yourself and your enemy, you needn’t fear the results of a thousand battles”. 

Investment Disclaimer
Related Topics: