(Last Updated on January 31, 2021)
Bears -> Topped out at $42k and now slow bounce sell off toward a bottom near $12-16k this time
Bulls -> First ~30% pullback of the new bullrun – historically have 4-6 pullbacks before new ATH each cycle
Lots of hype this week surrounding the possibility that Tesla is adding digital assets to their treasury reserves. No confirmation of anything official yet and we have nothing more than speculation based off a few, recent, fairly random events. People are starting to think this Monday could be a very wild ride in all the markets with both Wall Street Bets and Bitcoin going off!
Many investors were caught off guard this week by both the Reddit/WallStreetBets craze and Elon Musk, Ray Dalio, and other legendary American investors jumping onboard the #Bitcoin train.
Elon Musk Updating Profile to #Bitcoin Hashtag = $6,000+ Pump and Dump
Elon just about launched us to new all-time highs by adding one simple #Bitcoin hashtag to his Twitter profile.
Thousands of tweets by major influencers and hundreds of articles from celebrity to financial websites erupted about the social media leader and now wealthiest man in the world’s “profile update”.
The quick pump and dump from $33,000 to $39,000 and back on Elon Musk adding #Bitcoin to his Twitter profile shows how twitchy the buy button is for many investors on the fence. There are a ton of retail and institutions sitting on the sidelines saying, “$30 to 40,000 dollar Bitcoin is too high!” while they are extremely fearful of missing out on the next space ship.
“Fear of missing out” or FOMO is a scary emotion for an investor.
Part of the reason these wicks happen is due to pure gambling by greedy, over-leveraged traders.
10x, 25x, 100x with liquidation prices that are a 2-5% move away from entry!
Willing to throw the dice and take a gamble at bidding that bottom long or top short. These markets are extremely fluid with fast moving liquidity that dominates small price cycles. Timing these digital assets is very difficult and is better adjusted for spot purchasing and lower time preference outlooks.
High leverage, high frequency cryptocurrency trading is for the brave, stupid, and/or expert only.
Liquidated over leveraged short squeeze on the ride up – then liquidated over leveraged longs on the ride back down..
And the Twitter feed instantly floods with liquidation notices going both directions in less than a few hours.
Have you ever heard of a “darth maul wick”?
It’s a crypto trader term haha.
But even these pumps and liquidations are becoming less of an occurrence in today’s Bitcoin market due to more regulation and limitations put on margin trading for U.S. exchanges.
If you want to survive longer than 1 or 2 days trading crypto, you should stay away from any leverage over 3x.
That is wise advice for any beginner crypto trader. Trade only what you can afford to lose, manage your risk, and keep leverage low. Better entry points mean better opportunity to survive in trades and profit off pumps.
Bitcoin = low time preference assets for a confident investor that will survive short timeframe volatility
If you do not research and understand these digital assets – then do not invest in them because you will not be able to survive the ups and downs that come through various market cycles.
They may have a few more chances in the high $28,000 to $29,000 range but it is proving more and more difficult to get prices down, even with consistent sell pressure as of late.
But the time crunch is coming as two major events are now looming over decentralized digital asset marketplaces and investors are speculating.
The Dogecoin pump startled many crypto traders who were caught off guard and missed out. Now they are watching intently on the actions of Wall Street Bets and the “reddit revolution” which aligns itself with many of the financial sovereignty and free market philosophies of Bitcoin.
Two major events for #Bitcoin going on now:
-> Where is all the Wall Street Bets momentum going? That’ll pump anything sky high.
-> When will the Federal Reserve print out another relief bill? And how much will it be? $1.9 Trillion?
So far the bottom has seemed strong in the $30,000 region with massive buy pressure creeping up to close above the $30k mark on the daily charts. Every time we see overleveraged investors get caught, major spot buying comes in slowly and shuts off the price rundown by flipping momentum back to the bulls.
Part of this bullish pressure is absolutely due to a higher percentage of HODLers or long-term holders of the digital asset class.
With HODLers on the increase and exchanges running into quickly limiting supplies, we could be on the verge of another leg up in price this next month.
This small altcoin run has grown profits for many small traders and that profit generally flows back into Bitcoin as market dominance starts to recover after each blow off top.
Market Sentiment Twitter Check for “Bulls vs. Bears”
(Analyst @woonomic believes it is the first, of a handful, of pullbacks we will see in this bull run cycle.)
(And the legendary bear @ThinkingBitmex thinks we are back on our way to zero. Elon Musk pump showing fake news and a over exuberant market)