Bitcoin – Consider The Risk

Recent Hope

Bitcoin has been trading somewhat higher than the recent low of $17.637 which managed to flush out a lot of the weak hands. I was already out in 2021 and then sold off the last bit that I wanted to sell when BTC was above $30K. I have since been focusing on trading because this is where the money will be made from this point. So, I am still more than 50% in stablecoins and cash, of which I am currently trading with a portion. Months ago I wrote a post about preparing for failure. This is the reality of markets that seems incomprehensible to the majority, which is why the majority are currently “stuck”. There is no angle to play because everything is underwater. For those who made provisions, Bitcoin is however providing hope rallying more than 20% from the recent lows.

High Risk Of Continued Volatility

Despite printing a low at $17.6K, Bitcoin is by no means out of the woods yet. However, there was a fairly bullish sign from Bitcoin overnight. BTC printed a head and shoulders pattern that dipped below the neckline overnight, only to regain the $20K level above the neckline. This is actually more bullish than one may think. Usually, a bearish pattern that occurs in a bear market will play out and yet, for the moment, Bitcoin has refused to bow to this pattern. There is now simultaneously, an inverse head and shoulders pattern playing out, which is bullish. However, these are on lower timeframes, which means that even if BTC regains $21.500 or even $22.000, a retracement can trigger at any time. One needs to consider the environment and realize that any negative news can trigger a knee-jerk reaction from the market. Markets are fickle during uncertainty and that should always remain in the back of your mind.

What I Would Like To See

It would be great to see some more short-term upside for a couple of good long trades. However, I think this low needs to be retested, at least to the $18K level. This would ultimately create a double bottom formation, which would be a solid point to begin plotting further upside. A bottom is just a bottom but a double bottom is a reversal pattern, which would create stronger confluence. However, failure to bounce would trigger another heavy move down. I do unfortunately believe that one of these scenarios needs to play out before we can definitively move up.

Failure to hold $18K/$17.5K increases the risk to my worst-case target of $12K to $13K. These targets were plotted some time ago when BTC was trading above $30K. People didn’t really receive them at the time but reality doesn’t offer a choice, once a point is triggered, your belief means nothing.

Unavoidable

It seems as if further volatility is unavoidable, especially when you factor in the macro picture, interest rates, and the inflation crisis. There will only be a level of ease once a “message of stability” is delivered. It makes practical sense then to prepare for volatility while remaining level-headed.

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