The Crypto Markets are Screwed Until This Changes
Dear Crypto Hodlers,
The past year was extremely terrible to you and 2019 is shaping up to be just as bad.
How do we know? Well, it’s not hard. For one thing, we keep going lower. Bitcoin prices have yet to make a “higher high,” which is when prices increase past the previous high. Instead, we’re stuck with flat markets and continued “lower lows.”
During the bull run higher highs were happening daily or within a few weeks. Now, we haven’t made a higher high since December 17, 2017, which by chance, was when Bitcoin PEAKED AT ALL TIME HIGHS! Exactly 423 days ago prices made their last higher high. When the next higher high will occur is no ones guess.
During the last Bitcoin crash, it took 586 days to make a new higher high. That puts us 163 days out if we follow the same schedule.
One notable thing is that the higher high in 2015 was only 75% lower than all-time highs. In 2019, this higher high could be significantly lower.
Prices will continue to fall until they become attractive to buy. We at Adara can say that there is a 99% chance that Bitcoin doesn’t go to zero now. Take off occurred for the second time in the last pump.
The next question to ask though is “What are these attractive levels?” The answer is MUCH LOWER.
The above picture is a visual representation of liquidity or orders sitting on the books. The colors represent how much relative demand there is at each level. Black is low, Blue/White is medium, Yellow is high.
The most noticeable thing on this chart is that there is almost ZERO demand above current prices which is EXTREMELY bearish. If this doesn’t make sense to you think about it like this.
In every market, there are buyers and sellers, but there are also makers and takers.
A maker is the person who offers to buy at a certain price. This price could be at 1000 per Bitcoin, but simply offering doesn’t mean he’s going to find a buyer.
A taker is the person who chooses to initiate the trade. They take the offer. Takers always get the price they want.
The picture above clearly shows that there are MANY Bitcoin makers and almost zero takers. This is bearish. Why? Well, price moves towards liquidity, or rather, takers find the closest, deepest makers. In this case, the takers are the sellers, who are having to take lower prices in order to fill their orders.
Delving a bit deeper into the picture, the deepest amount of maker offers are situated between 1000–1500. There is some demand at 2000 and also 3000, but in between liquidity is pretty sparse.
Until the book flips (until the makers switch to above the price), we will continue to go down.
The picture below is what flipping the book looks like. Notice how as the price of Bitcoin declines the orders follow it. As it makes new lows pockets of liquidity come in at 3600, 3500, 3450 and finally 3400, only to see price skyrocket through those four liquidity zones. Then the book flips and the orders are now listed below at 3580–50.
Now go back to the chart above and look, where does it look like the book is going to flip? Take a gander at a closer look first, then check your answer..
If you didn’t get it by now, the markets are most likely going down further. Simply, because no one is buying at these levels. Based on the heat maps from above, buyers are biding their time, waiting for prices to drop another $1000–2000, at which point Bitcoin would become extremely attractive.
There is a bit of game theory to be thrown in here. If everyone is placing their bids in at the sub $2000 range, then it should be expected that as the price comes down towards that level, a growing number of traders would choose to front run the bids and place higher bids, with the expectation to get filled.
Adara Academy will keep an eye on liquidity levels as we continue into 2019 and keep you updated.
In the meantime, head over to the Adara Academy and sign up for an account. There is a lot of good info coming there shortly and you will get first access to it there.
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