Why buying bitcoin at 17k shouldn’t matter to those waiting for 13k?
I’m not your financial advisor and every word I say and you read in this article should be taken with a grain of salt.
I’m writing this article for those out there who are planning to buy bitcoin (for the long term and spot buys) but waiting for lower prices. There are price targets of 13k and 10k or even lower. But we should also know whether we will get to see those prices. Here we will explore the probability and the technicals of the market and also talk about the possible future of bitcoin.
I’ll not go much in to the origin story of Bitcoin but will basically look at the macro view because I like to zoom out things and have a bird eye view of the entire timeline.
So here I’ve a monthly timeframe chart of BTC (data from 2011 to current date). When you look at this chart it is very clear that I’ve made some markings (4 green vertical lines). Well, these lines mark the halving dates of bitcoin when the mining rewards get halved. The last 3 halvings have been marked and the upcoming halving sometime in March, 2024. Halving occurs approximately every 4 years and this decreases the supply of bitcoin. So the halving event makes bitcoin more scarce which already has a limited supply of 21M of which 19.25M has already been mined.
Unlike our traditional financial system, the dollar or the rupee which is inflationary and can be printed to an unlimited number, bitcoin is fixed.
If you ever feel that there’s something wrong about the financial system then that’s because there actually is and we will talk about that in some other article as that’s a whole different discussion and out of the scope of this one. But this one will get even more interesting in a bit.
So since you’re thinking of buying bitcoin or you’re reading this article I’ll consider that you somewhat known the basics of the world of crypto or the financial markets in general. We all know how bull markets and bear markets work. During the early phase of a bull market investors want to buy and during the start of the bear market they want to exit the market. Remember, nobody can time the exact top and the bottom.
Now let’s zoom in to the above image once again but with some new markings.
You can see that every halving sees a bull run even before the actual event and then we see a bear market within that 4 years and also the start of the next bull run before the next halving date. So can we anticipate that the 2024 halving might give us the start of a bull run in 2023? Why not, right?
So what does the technicals say?
I’ll not go in to the on-chain analysis today but let’s talk about the technical analysis based on the price of bitcoin as that’s the topic of this article.
We will keep this very simple.
So we get the yellow line when we draw the support and resistance based on 2017 monthly closes and 2019 resistance. And this level comes at around 13.8k and that’s the reason why many investors are waiting for the 13k level to buy bitcoin. This is definitely a logical thing to do but is it probable? What if the market doesn’t give us 13k and just keeps going up? When do we know that we are wrong and should get in to the market?
Keep that thought!
Let’s look at a weekly level now.
The white line at 19.2k is a very important level as it comes from December, 2017 and December, 2020. This is the very level where BTC had it’s last weekly candle close before starting the bear market and also the successful weekly candle close above it after 3 years to continue the 2021 bull run. So, this level is important. And we truly lost this weekly level to the FTX debacle.
But what if we take this level back as support?
I think then the chances of us seeing a 13k bitcoin will be very thin.
But why is bitcoin bouncing from where it is bouncing?
Do you see it now?
Yes, the mid point!! BTC tends to work a lot well with mid levels and 16.2k is a mid level of this 13.8k–19.2k range and this level too has historical importance. So in short, bitcoin is bouncing from levels it’s expected to and multiple weekly candle closes above 19.2k can signal an uptrend. In the same way candle closes below 16.2k can also take bitcoin to the prices of 10k-13k. But so far it is acting as a strong support.
What makes the 19.2k level even more significant?
The weekly 21ema (exponential moving average) comes there and you can see that after losing it on November, 2021 we didn’t get multiple weekly candle closes above it. We did get one in March, 2022 just to lose it right after.
What else?
The weekly ichimoku shows that the tenkan also comes at the 19.2k level and closing multiple weekly candles above that can give us a c-span trade from the tenkan at 19.2k to the kijun at 37.5k.
What will be the big tell for all this to happen?
We all know the importance of 200ma (simple moving average) from past market cycles, you can see the above image. Price has often found support on the 200ma and bounced off. My thesis is that the 200ma comes at 24.7k and this level is also a key resistance level. BTC closing weekly candles over the 200ma can give us a smooth run to the 37.5k level.
Ok. So all these as the perspective of a trader but why are we actually buying bitcoin?
Bitcoin is a programmable currency. We can read its source code. However we can never read the minds of our finance ministers and central banks that run the economy. We don’t know what Powell will announce in the next CPI meeting. But we know one thing that we can trust math and the world’s biggest computer network. We know that today we have an instrument that we don’t even need to account the trust factor.
What a future and world we live in, only having a trustless system is what we can truly trust in.
Now coming back to the price of 13k, should we wait for that?
At least now we know when we will be wrong on the waiting.
But if bitcoin is your investment in the future and you believe that bitcoin has years to go then one day when bitcoin will be trading at 234k the buy sell spread will be of 4k and this dilemma of whether to wait for 13k or to buy at 17k won’t seem so trivial, will it?
It’s a trade.
You might lose 17k or gain the profits when BTC trades at 234k if you take the risk now. Always check on your risk to reward ratios. So risk what you’re willing to lose as I’m just a mad man you don’t even know talking about some magic internet money from his secret cave. Just kidding, but only the last part. ;)
