When you’re new to Bitcoin and just bought in at $50K, and didn’t get a heart attack already, welcome to the wicked world of Bitcoin where volatility rules.
This article is a warning shot for becoming too opportunistic and has some advice for when to sell, although I am not a financial advisor. Bitcoin is my hobby.
Bitcoins 2 weeks of teasing traders and rekting rookies is slowly coming to an end.
It seems, Bitcoin is coming out of its 30% correction phase, coming down from it’s $60K latest all-time high made on February 21st, to a $43K correction a week later.
Corrections are normal and healthy in a bull market, nothing goes up forever except inflation and Bitcoin is solving that
Bitcoin did a dance with the 20-weekly moving average, and now as a Ballerina, this line is her support. For now.
In other words, your money is still there, time to breathe, and when you’re lucky, we’re going for the next moon shot. $60K? Most Likely. $65K? Probably.
$70K? Get the hell out?
Let me give you some advice while zooming out and looking at the former bull market corrections.
When to sell?
Here is the difficult part. Speaking with Bitcoin newbies for the last few weeks, most believe a $100K Bitcoin in a few weeks is normal. Meaning, why would I sell when Bitcoin hits $70K in a week? I ‘only’ bought in at $50K.
Because it has been orbiting $6K for around a year, that’s why. Let that sink in for a moment.
Find older Bitcoin friends around you that have scars on their face and grey hair from the last severe crypto winter. They’ll be happy to tell you how special this time is for Bitcoin.
You’re privileged to come in at this lifecycle of Bitcoin. A time when an $8000,- move is made in a day. It took Bitcoin 6 years to reach a price of $8K, to bring things in perspective again.
The newbies don’t have this perspective. And there is danger in there. All you maybe see is a Bitcoin going up like mad max on coke from $20K to $60K in less than, well, 2 months.
And you believe this is business as usual. Believe me, it's not.
It took Bitcoin an almost 10-year lifecycle to get to $60K. It took the world to go crazy to get there. It took the FED money press to go BRRRR every freakin day to get there. It took Elon Musk to become a Bitcoin Maximalist to get there. And I can go on.
These are ultra extraordinary times, and they are good for an asset that is scarce, not owned by crooked states, and has the promise of the money of the future.
Zoom out — and you’ll be alright
Although nobody has been able to predict COVID and our wild west economy on the loose, zooming out on Bitcoin will show you that a $100K Bitcoin in 2021 was in the cards just the same.
Looking at Bitcoin’s short term extreme price moves obscures it’s very steady gradual rising trend the last years.
There are many important metrics floating around in crypto space that predict Bitcoin to reach a half-million US$ price. I will pick the easiest to understand for you. The most important one; historic price action.
Bitcoin has bull and bear cycles, meaning periods of rallying, expansion, going parabolic, reaching for the moon. Followed by the inevitable period of correction, and extended periods of cooling off, contraction and correction.
It's like breathing in and out.
It is important to understand that, for sure, Bitcoin is correlated to world events, but at the same time it breathes and moves in its own universe.
Here is the chart that shows that universe. It’s called the rainbow price chart. Follow the rainbow to your own pot of Crypto Future Gold.
I use this chart since it’s made half of 2019 when the price was around $6k.
The boring Crypto winter, remember? Never forget Bitcoin had a $0,06, $0,60, $6, $60 and $600 price in it’s history. All celebrated with emotions and hope for a glorious future.
And loads of people selling their Bitcoin for some profit, now pulling their (grey) hears from their heads.
Interestingly enough, when you get yourself a marker and put it on this chart at the end of the 01–01–2021 part, you’ll see the top of the rainbow is somewhere between $50K and $100K. I admit, a wide range, but we’ve just entered the $50 to $60K range with Bitcoin.
Does this mean that after the last 30% pullback, it is likely to reach the $100K mark this year? According to this chart; Yes.
Correction is the name of the game
In each Bull market, Bitcoin corrects itself, or the market corrects Bitcoin.
In general, remember this: When the price goes up too fast, the pullback is also more severe. It's like throwing a baseball high up in the air. The higher you throw it, the more fierce it will hit the ground or burn your glove when you catch it.
When price moves up steady, a stronger foundation is created, there is less emotion in the market. Bitcoin’s fundamentals are laid for a next rise up.
When it makes an $8K move in a day, this is almost always the result of something impactful in the real world out there happening. Like Elon getting exciting in his Muskonomy. (A new term for Economy). This is not necessarily good for the price building up gradually. It will come down fast just the same. Pump and Dump alike.
The good thing about the last 2 weeks correction is the cooling down of Bitcoin. Quieting emotions around the market, no crazy Tesla moves, just a normal contraction of price.
What we see now, after the 20-week moving average got tested a couple of times, that the gradual rise continues. The momentum is picked up again, but not the intense parabolic moves.
This is actually good for Bitcoin. I predict from this that we can reach for, lets say $75K, before another correction sticks its head around the corner. That would be the 4th one.
Remember one very important thing.
The last 2017 bull market had 6 major corrections, stretching from 29% all the way to 39%. Correction into the high 30% occurred 4 times, corrections close to 30% only twice. Our latest correction was only 30%.
Expect more bigger correction firework after the next peak.
When this pattern repeats in the current bull trend, this means we are only halfway in correctionland. By the way, the most optimistic estimations are Bitcoin reaching the magic $100K in May.
The 1 million dollar question: When to sell?
I showed you the $100K Bitcoin is expected this year. I hope you’ve learned that Bitcoin hitting $60K was very, very, very special. It doesn’t mean it just pumps further to $100K in the next few weeks.
Bitcoin is not here to make you rich quick, easy, or without stress.
You need to keep your eye on the game, educate yourself further while the ride continuous. And don't start using leverage
How I lost One Bitcoin with Leverage Trading
This is how you can recognize red flags — and get the hell out
I hope you’ve learned that more corrections will, and must, occur.
The bigger ones we haven’t seen yet. So be prepared.
The most important piece of advice I can give you right now is: Make a profit target that brings a huge smile to your face. A profit that buys you a bike, a car or a house, and leave the market for a while when this target is hit.
Enjoy your money. Maybe give some of it away to people that really need it.
When Bitcoin hits $75k, or $85k, or even a $100k, a major drop probably occurs. This drop can happen in an hour, and can turn your profits, and even your initial investment, to dust, before you get to the end of this article.
But is also just might be the healthy correction. In fact, it will probably be the first ‘approximately’ 38% correction, that we haven’t seen yet.
For example, when Bitcoin hits $70K, the drop will take you $26,6 down to $44,4. Funny enough around the low of the last correction. By the way, a $44,4K moment after hitting $70K is called a buy the dip moment. But you can only buy when you sold at the right time.
When you bought in for $50K, put your champagne ready and cold for the $100K Bitcoin party and you didn't take my advice and sell at your target, you’ll find yourself suddenly in the red.
Don't panic sell, read this story first;
The main take away of this story; Bitcoin remains dangerously volatile. Taking profits is super important in Bitcoin land.