Bitcoin is the most famous cryptocurrency in the world. Launched in 2009, the initiative after 8 years draws attention of almost all speculators. The spectacular increase in BTC valuations, which with each new day sets new record values attract a lot of traders who want to benefit from this bull market. But did not we get too high?
The problem with new financial assets is that the history of change in valuation of a given asset is usually poor or impossible to obtain. Of course, Bitcoin is already a good couple of years with us, but current levels prevent any technical analysis of this cryptocurrency.
The second problem associated with such instruments as cryptocurrency is the lack of fundamentals. Bitcoin is a completely decentralized currency, devoid of influence by central banks or governments. The biggest advantage of BTC, can be at the same time the biggest trap for its users.
Since the beginning of this year, the BTC has gained more than $ 800, which means that over the past four months and eleven days, the buy and hold strategy has returned more than 80%.
Trend or bubble?
Undoubtedly, we are dealing with an upward trend, but it is worth asking whether it is still a healthy attempt to full valuation or maybe … speculative bubble. It is hard to say exactly what value one Bitcoin should have. It is hard to talk about fair values in case of financial instruments. After all, even in highly developed stock markets, it is rare for stock prices to accurately reflect the value of a company (deliberately omitting the consideration of different valuation method of a stock company).
Nevertheless, the current situation on the Bitcoin graph is more and more manic like. Madness of shopping – bubble. As in every bubble, the driving force of price is people. An increasing number of people who are tempted by high rates of return join the trend to peel a piece of cake.
Let’s use a tool that measures the popularity of keywords searched on Google. “Bitcoin trading” is now more popular than ever in the last twelve months:
Compare this chart with the BTC chart for the last twelve months:
Strangely, the January peak on the BTC chart, after which we recorded a fall in the valuation of the cryptocurrency by approximately 28%, corresponds to the period in which the popularity of bitcoin trading was greatest.
January’s correction on BTC/USD was deep and very dynamic. The fall lasted only a week, but cost holders of long positions over $ 300. The bear’s pressure was only exhausted at the level of 756.00. It was these neighborhoods that formed the local high from June last year.
If history were to repeat itself, the percentage drop of 30% would end in the 1280.00 region. The March peak test would probably be another buy signal for a large part of investors. Will it really happen?
It’s just a forecast …
I’m not sure if my point of view is correct. It seems to me, however, that buyers can not be certain of the current bull market trend. My pessimism drives both the record high percentage of buyers on the eToro platform:
As well as the lack of continuation of involvement of my signal provider in new Bitcoin positions. So far, MemoBeltran’s open positions have been closed and it looks like the trader in Mexico is not going to re-enter the BTC.
Until now MemoBeltran generated very good trading signals on both BTC and ETH. His declining involvement in both cryptocurrencies can be seen as another signal of impending depreciation. Is it worth to go short now?
Looking at the shape of the last candles – its to early for short positions. Maybe Friday will bring the signal I expect. I will watch the BTC moves also over the weekend. eToro is one of the few brokers to trade cryptocurrencies on Saturday and Sunday. So it is possible to catch the high and open shorts before most of the market.
I do not feel like an expert in the cryptocurrency field, and the whole analysis should be treated more as a loose thought than a recommendation. Just because of this (lack of relevant knowledge) I started to follow the Mexican trader and sympathizer of cryptocurrencies – nickname MemoBeltran. If you have a different opinion about the future of BTC – I invite you to discuss in comments in this article or to present your point of view in our User Generated Content.
