Time To Buy Or Sell? Fundamental And Technical Premium Crypto Market Review
Something essential is not happening these days. Many of those who follow us have lost numerous and abject amounts of money in this first month of the year. There are several factors, but among those, we must emphasize: calculating your own risk on earnings is very important and beyond the technical and fundamental knowledge in stocks.
Unfortunately, math always wins and percentage guessing factors lose. For this reason, dear reader, if you have lost money in the cryptocurrency market, we can affirm that there is something you need to learn.
Never Buy An Overbought Asset
In addition to risk, another big problem that we generate excessive losses of capital is buying an asset that is technically overbought. This is exactly what is happening in Bitcoin and other cryptocurrencies today.
When this article was written, the price of Bitcoin was above 39.5k dollars and Ethereum was almost reaching the break of its maximum and historical price (ATH). With the above, we recognize that these days many traders are profitable, optimistic, euphoric, and in short, a number of synonyms for the real excitement in which the cryptocurrency market is.
As we mentioned in a previous post on our Telegram Channel, the stock-to-flow-model marks that by mid-May the price of Bitcoin should exceed 89k dollar. But as it is common and for health reasons, a price correction is necessary to continue towards that goal.
Correction No One Has Seen
Taking as a reference, then, Bitcoin, and as the main asset of the market, which by then had a dominance well above 72%, we see that its hourly chart (H4) simply shows a very dominant high channel since the last accumulation that it was made very close to 19.3k approximately and up to the current price of $39886 taken until the writing of this article and when you, dear reader, read it.
From the main point taken and to the point we are at, Bitcoin has only appreciated about 111%. Very little, don’t you think? With that, we want to remind many that price is one thing and valuation is another. We also see for this time graphics a small price overvaluation with average volumes compared to the last bull run that was seen since 2017.
The particular thing for those who make short trades within the named range is that they will not earn much. This is due to the periodic oscillation of the RSI, which has been going from 52 points to 82 points. So that there is no complete definition of trend or yes or yes, a desperation to buy an asset that will soon enter a new correction phase.
How Far Will The Price Go
Many take and study the volumes hour after hour, but if we look at the last daily trades, we see Bitcoin in a phase of euphoria within an Elliot wave 3, and surpassing the 0.7 of Fibo after the break of the ATH.
Indicators such as MACD, RSI (81 points), stochastic RSI, and among others, point to a price re-accumulation but a risk of correction. Exactly… they are bought, but it is not surprising that in the next few days there will be a profit realization before the end of the wave cycle of Elliot 12345.
Numerically speaking, so up to here and for this patarmar, there are two possibilities: (1) the price of Bitcoin can touch the 0.6 Fibo (after the break of the ATH) in approximately 44.2k of dollar; (2) or simply, traders choose to make the first profits of the year, causing the price to break the 0.7 Fibo at approximately 33.1k and making a possible correction towards approximately 19.2k and touching the EMA100.
So there is a very viable correction path between 24% and 51%, so as not to exaggerate so much and scare you. Anyway, that there will be a correction, we will have it.
A Lifesaving Study
On the other hand, and as you know, our community is not dedicated to day trading; or rather, we will call it “daystresstrader.” Basically, our investment studies are carried out on major charts, and within those, the weekly chart is one of them.
By the time this complete market study was done that is worth more than your first school salary (“laughs/D”), Bitcoin in its weekly periodization showed an upward trend but with excessive buying interest dominated by the feeling of being left out. A very basic fact when it comes to bull runs. However, pay attention to the following so that you do not come to insulate us for your loss of money (“sarcarm$D”).
If you know how to count, you see that our weekly chart is saying that Bitcoin is within an Elliot wave 5 overextended and above the breakout of the ATH and exactly above the 0.7 Fibo (36.5k USD), but the same can happen equally as we had explained previously. Either bitcoin touches 50k, or it can be retracted to 19k because there are no eminent supports that protect the price. It is clear that this is according to the optimistic projection that is had and very close to 100k as many bet.
But pay close attention to the RSI. Eureka, I must buy or sell Bitcoin right now. We imagine that is what many of you are wondering.
To answer that, simply look at the RSI, that normal thing that people don’t use. Yes, I’m talking to you about that. What does it show us? Studying this indicator, we can see that Bitcoin has surpassed 84 points, within the Fibo line of 0.2, and is now looking for 94 and 99 points. Points where we will specify something: (a) 99 points of the weekly RSI was the bull run of the year 2013; and (b) 94 points, it was the bull run of 2017. Are you starting to remember something?
Short Parabolic Motion
As a summary of this article, what we can affirm that keeps many firm in front of the great trillion dollars of market capitalization is the great wave one of Elliot and extensive that Bitcoin is doing on the monthly chart and of which we have I have been speaking since the creation of this community.
But do not get so excited, that parabolic curve will not last long, breaking past 92 RSI points and seeing what we already saw in 2013 and 2017 where many bought the mole and lost more than 40% of their capital.
40% then, is a theoretical number for the next market correction when it reaches the most desired price of 100k.
See you in another review soon! The Rubikav® Team!