We're Going Up, But Can it Stick?
Bitcoin Data Newsletter
Hello Everyone!
In the last Bitcoin Data Newsletter, we talked about “To Lower High, or Not To?”
There I showed a fractal comparison of 2023 to 2020, something most people weren’t looking for.
I mentioned that I did not think a lower high was in and that Bitcoin looked like it could continue, but it needed to reclaim the important support of the Short-Term Holder Realized Price.
Since then we have seen an additional rise that confirmed there was no local top there, albeit amidst fake ETF approval news.
Price is hovering just above $28,000, but can it stay that way?
That’s the question we’ll be answering today.
We’ll also be talking about resisting the urge to think shorter-term when the market goes sideways, very important to lock in those long-term gains!
Let’s dive right in!
This Newsletter Will Cover….
Short-Term Thoughts - Downtrends Broken
Market Comments - My ETF Thoughts
Long-Term Analysis - At Cycle Bottom Levels?
Investor Psychology - Fighting Short-Term Urges
Short-Term Thoughts
Downtrends Broken
I think the thing that keeps people most skeptical about the latest rise of course is that the pump came after the fake ETF news release.
However, take note that our most recent breakout and retest of the local downtrend happened before any of that took place, and as you can see from every example here, Bitcoin loves breakouts!
Remember last newsletter, I mentioned that many have the October 2019 (red arrow) image burned in their mind, but see the difference? The downtrend was not broken there and instead acted as resistance.
In every example, these downtrends are always based on the topmost wicks of the local highs.
The biggest breakout failure we see here is in August 2021, where Bitcoin continued to correct for some time even after the retest. But this was a completely different point in the cycle.
Some of the examples retested their downtrends (green circles) and some did not (green arrows). But this doesn’t make them any more or less bullish.
I like here as I said, that this retest is outside of the news event, and does give credence that we may still see continuation from this point.
Here are some other things to consider though for the short-term. There is a small open CME gap located around 26.2k that is unfilled, alongside a pile of liquidity according to liquidation heat maps.
Will we return there? Maybe, but I still think the overall direction should be up and new lows (below 25k) are not necessary, in my opinion.
Market Comments
My ETF Thoughts
Let’s talk about the fake ETF news. Does this give us an idea of what we can expect when the real news hits? Maybe…
After gathering thoughts from around the X space, there’s some things to consider here.
Since the news was fake, obviously the pump was pure speculation. People think, “An ETF is good so I will buy”. In no way were there fundamentals to back this.
We also have no idea if the news was fabricated for a preordained liquidation event. Cointelegraph has told us that this news was just a rumor that got out of hand, but who knows what the truth is?
Either way, the only thing we learned from this experience is that there will probably be some sort of speculative rise from this news when it comes in the future.
But then you must think, how long will this go on until investors see a potential for take profit? In Bitcoin land with positive news, it’s usually not long at all.
News events like the CME Futures launch in 2017 and Coinbase IPO in 2021 sounded great in theory, but both marked cycle tops. I will be paying close attention to the date the ETF is approved.
Another point that people like to make is the price of gold after its ETF launch, but think about this…
Before the gold ETF, there was only one way you could invest in gold, and that was by having it. You had to store it, maintain it, and not to mention the trouble of selling it at market value promptly.
The ETF turned gold, digital, making it much easier to buy, sell, and invest. Bitcoin on the other hand is readibly available to buy on almost every major trading platform. You can even get it at gas stations and kiosks.
If you want to sell it, put it on the exchange and click the button and it’s done. Michael Saylor has already proved this can be done on a larger scale.
Does the ETF make it easier for institutions to invest, yes! but consider to what degree, which I think is not much over the avenues already available.
The point here is, that I do think it will be good for price, but not to the level where it will break most conservative models to the upside. I think we will have a better idea of what is true when it comes closer to time.
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Let’s get into our long-term analysis!
Long-Term Analysis
At Cycle Bottom Levels?
Now I could of told you that Bitcoin is undervalued, but some metrics like this one say we’re as undervalued as a cycle bottom!
The hype cycles is a measure of how long coins less than 1 month old are being held.
When the indicator is rising, it implies shorter-term holders are spending their coins, and when it’s falling it tells us they are holding onto their coins.
Our current point now equates to the lowest this metric has been for both this cycle and ever. Even short-term holders aren’t budging.
This seems like a likely place for this metric to pivot, as the curve has now flattened at the latest arrow.
For a brief time in early 2023, the metric climbed above the green zone, but as seems standard each cycle, Bitcoin makes a “bottom after the bottom” on data where metrics return to cycle low points, but not always reflecting on price.
This doesn’t say we can’t move a bit lower in the short term, but it does say that this general move could be a last-chance opportunity in my opinion.
Investor Psychology
Fighting Short-Term Urges
I am not a trader, I have had my own experiences with it and I know that it is a fast-track way to lose a lot of money.
Fortunately in my journey, I was able to discover that this is not the way very quickly and shift my focus to a long-term perspective where I found the secret to success.
Earlier this year, I tackled the subject of trading in-depth, warning of the harsh statistics that plague traders. Far lower success rate than 5%. You can read that article here.
I caught myself not long ago thinking of the excitement of trading, “let’s just play around a bit” I thought.
Yes, I have these thoughts too, and especially after seeing nothing but sideways price action for almost 9 months, it’d be nice to try and be a more active participant.
But as I reflect on my journey, I remember where all of my success was found, thinking long-term.
I then took the time to allocate a few more resources to some coins I had bought for this cycle, to hold until the cycle end.
It is easy for short-term thinking to seep over into your long-term thinking. You may decide to use some of your long-term stash or get too emotionally involved when the correct thing to do is just wait.
Trading can become a disease, the thought of all traders is that they will be in the 1%, and rich out of their mind. It is a losing battle, if this is the thought you will surely lose everything.
The truth is, trading strategies that work only work sometimes, and they’re boring, just like long-term thinking.
I think staying away from trading is one of my keys to success and something I think almost everyone could benefit from.
Stop trading now, and thank me later.
That’s all for today’s newsletter, I hope you enjoyed! If you did, be sure to leave a like on this post, it helps me out a lot.
I hope you all have an amazing week, and I will see you next time!
Best wishes,
CryptoCon
It is indeed so easy to tell yourself that you can be that exceptional trader that can make a consistent profit. After trying a few times, I know I’m not hahaha long term strategy is the way to go. Way less stressful too
I think I’ll just sit tight for the long term. Too many egos and arrogance with a lot of the traders. And..... I don’t know enough nor have the time to do that. Thanks for your insights and encouragement.