Another week has passed in crypto with bitcoin prices sitting at the support levels. The irrationality in crypto markets is amazing.
Suddenly everybody turned bearish after the sharp drop in September days before CME futures expired. Also, tools that measure the sentiment on Twitter like the Fear & Greed Index have hit 12% on 26th September and now the barometer sits at 41% which is still bearish.
Altcoins too has taken a hit with the bitcoin decline but it seems that now some of them are bouncing.
However till now supports seem to be holding for bitcoin. During bull markets, bitcoin had repeated 40% corrections which have been proven as good buying opportunities. So what is different this time?
Bitcoin is down by 41% from the ATH this year but it is still 110% up compared to the lowest price in January. Which means that we are in a bull market.
People waiting for $6K $BTC keep forgetting one thing.
— Galaxy (@galaxyBTC) October 17, 2019
Also, this type of correction is very usual before the halving and it happened before. If we go down to $6,000 it would be a 56% correction which is unusual in bull markets, still would be recoverable.
Despite the bearish sentiment if we go back at this time in the past year bitcoin was sitting at $6,400 and now it is trading at $8,000 which makes things look better for bitcoin.
There are many points that sustain that the bearish sentiment is unfunded.
- We are in a bull market because bitcoin is still 110% up this year.
- Bitcoin retracements in bull markets do not exceed 45%.
- The halving is near the corner.
Also from the trading point of view going against the sentiment has proven to be a good strategy because when people fear usually is a good buying opportunity and when most of the people FOMO at is time to prepare your sell orders.
However, there are still the big players that frequently manipulate bitcoin prices, like CME for example which have been playing the game of the cat and the mouse with retail investors since December 2017 without even touching bitcoin.
Before 2018 we hadn’t this kind of players in the bitcoin market so it is to be seen how their behavior will play in a bull market, and how their suppressing price techniques will work. Till now they have been dumping the price days before the futures expire.
However, it is not possible to suppress the price under the production cost. For example, Gold or other precious metals have a fixed cost when it comes to production or mining.
Bitcoin has not a fixed cost because many parameters auto-adjust when it comes to mining, but hypothetically speaking if the bottom was $3,200 when many miners were forced to switch off their machines then after the halving the maximum bottom possible is $6,400.
I remember days at the ending of June and the beginning of July when many people would sell their house for an opportunity to buy bitcoin ay $8,000 again.
This is how markets work, Fear and Greed can be the biggest enemy a trader can have or the best friends.
Do you think bitcoin has still to retrace or we will never see $8,000 again?
Feel free to post your opinion in the comments below.