Bitcoin - 2014 - 2018 Comparison Part 3

2 minute read

Today bitcoin has retraced to the .618 fib level as pointed out earlier in Part 1 of 2014-2018 correction comparison series. The difference we are seeing is, however, that this time the price has broken through the .618 level, most likely due to the large number of shorts that had to cover. If price can stay above the .618 level and confirm, then we may see a different path of correction than the one we experienced in 2014. If price falls and confirms below, then bitcoin will resume to the downside as expected towards 5k then eventually bottom out at 3k.

Closer look

Observe the triangular consolidation then a sharp move up to retrace and retest the .618 level during both 2014 and 2018 correction. The correlation has yet to break, and as long as it doesn’t, there is no reason to expect otherwise.

2014

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2018

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Death cross

Couple weeks ago we had the 50/200 daily SMA death cross. We will soon see the 100/200 daily SMA cross each other. When all the major daily SMAs fall under the 200, we are technically in bear territory, and the sentiment will turn just as fast as it did with today’s sharp rise in bitcoin’s price.

Short squeeze

Shorts were at an all time high expecting that bitcoin will resume selling. Institutions, whales, etc, always temporarily manipulate the market to cash in at these opportune times. This takes out two birds with one stone.

  • Get the shorts out of their positions. Automatically liquidate them due to margin requirements.
  • Get the retail investors to go long by giving the illusion that the trend has changed when it hasn’t.

Big money always takes advantage of the smaller investors, because they know human emotion, especially when it comes to money, is so easily manipulated. Once the bulls are trapped, the selling will resume, because the bottom was never in. This is the reality, and being aware of it will make you a better investor.

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