Bitcoin on the Verge of Collapse or Explosion?
Depends on how you look at it
Do you believe bitcoin’s price will drop to $20,000 soon?
Or do you think it will complete a "Wyckoff accumulation” and burst into a supercycle by the end of the summer?
Perhaps crypto will spend the next year in a bear market? If so, what will happen to the stock-to-flow model? It demands bitcoin’s price must rise immediately.
If this seems like a confusing and scary time, that’s because it is. Nobody knows the direction of the market even when it seems like everybody does.
Let’s look at some of the trading signals people throw about. Can we find some clarity in this data?
Fear and greed
Bitcoin’s Fear and Greed Index hit “10” a few times over the past few weeks. A “10” reading is extreme fear. People say that you should buy when this happens.
Look at all the times this metric has hit 10 or lower:
Sometimes, you’d buy and the price would have gone down further for months. Other times, you'd buy and the price would have gone up forever.
Is that bullish or bearish?
Cross of death
Bitcoin has a death cross when its 50-day moving price average goes below its 200-day moving price average.
People say you should sell the death cross because it always leads to a bear market. Look at all the moves bitcoin made immediately after a death cross:
Four times, bitcoin’s price went immediately lower. Three times, it went immediately higher. This time, it’s essentially flat.
Is that bullish or bearish?
Everything else
A slew of data shows HODLers, whales, and OGs accumulated bitcoin en masse at prices in the low $30,000 / upper $20,000 regions while the number of new addresses dropped and new buyers sold.
We see this during consolidations—newcomers leave and speculators capitulate while true believers and smart money buy their crypto at steep discounts.
Bullish because strong hands retake the market, or bearish because new money disappears?
Altseason ended. Depending on how you define the term, we’ve had at least six altseasons before this one, but only two came at the end of bull markets (2013 and 2017).
Is that bullish or bearish?
Low gas fees, exchange flows, Wyckoff patterns, transaction volumes on OTC desks, pretty much every bit of data you can find—it all paints a bullish or bearish picture depending on how you choose to interpret it. There’s a fractal for every price move, a counterpoint to every point.
Every trading chart shows conflicting and contradictory signals.
Does it even matter?
Would you freak out if bitcoin’s price doesn’t get back to $65,000 until December? If you *only* double your investment in the next six months?
What if it takes until next spring? Would you feel bad about buying bitcoin down to $20,000 or lower and buying altcoins at 90% discounts, then waiting for everything to go back up? Why does a potential +200% return feel so bad?
In the real world, cash is being devalued at an alarming rate. Safe investments are now guaranteed to lose money. High-yield investments don’t compensate you for the extra risks you take. Dividends are at an all-time low and bond prices are near all-time highs.
And you’re worried about bitcoin?
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio.
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It's true that big hands collect bitcoin and small new investor sells in the market with fear and panic, it's always the same scenario.
Is it the right time to buy bitcoin?
I always said it was true. But I think now is the right time.
all central banks are printing money wildly and the markets are shrinking with the effect of the pandemic.
This abundance of money will cause us to move towards an inevitable end.
if we are looking for a safe investment vehicle, bitcoin is the best option for it
thanks for the great article
I am holding Bitcoin since 2016 and i bought some more in the last dip and in my view i am not that worried but Everyone should be ready to face anything in this world cause you don't know what is planned for you and if it is bad or good.
In my opinion Better be safe and DYOR whenever investing anywhere if it's Bitcoin or any other projects
Nice Article Mark :)