Bitcoin Is Crashing Again

By November 22, 2019 Bitcoin Business
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Bitcoin Cryptocurrency Value Goes Down : Illustration

(Getty Images)

Chesnot

Bitcoin is going down. It is in a bear market.

That is bad news if you are a short-term holder and good news if you are a long-term acquirer.

I reiterate, all you need to know is which way bitcoin (BTC) is going in the long term to develop a very profitable strategy. Get the direction wrong and you will lose. If you don’t “know” the direction, you are ill advised to play.

I believe the direction is up and significantly up, but for now in the short term it is down.

Now to get a view of how things can pan out it’s best to remove as much noise as possible. The easy way to do this is to use moving averages. The trouble is everyone is doing that, which tends to weaken the usefulness of that tool. Anyway, here is BTC with a 200 moving day average, which is the long-term indicator many watch.

The Bitcoin chart with a 200 movign day average
The Bitcoin chart with a 200 movign day average

Classically, the current breakdown would be considered bearish. I’m not a fan of moving averages because they change with the current price as it changes, so that leaves a misleading trail. They also tell you after the event that things are bearish. Now the moving average says the market is moving up on average and only gives a sell hugely below the high. In volatile markets this is a chronic problem.

So what I sometimes do is “doctor” the chart manually to de-noise it. The recent sharp rise and fall is pure noise:

The recent fall and rise on the Bitcoin chart is pure noise
The recent fall and rise on the Bitcoin chart is pure noise

Something hit the price then an event (the president of China spoke on blockchain) poked it up. These events are outside of “the trend” so let’s imagine they didn’t happen. Like a soviet political artist, let’s airbrush these inconvenient events from history.

You get this:

The Bitcoin chart with the noise removed
The Bitcoin chart with the noise removed

Now that’s a pretty clear picture. Bitcoin is tanking towards a capitulation. That bottom looks to be quite near in terms of time but the bottom is hard to call. Here are some ideas:

Some suggestions about where the bottom might be for Bitcoin
Some suggestions about where the bottom might be for Bitcoin

I think the high and low bounds are unlikely but you can’t really guess or for that matter buy the low because a capitulation, even though it looks important on the chart later, is often an ephemeral moment that only exists for minutes and trades little volume.

To reverse this trend will not take much but to do so will need a catalyst and there is none in sight at the moment. Instead there looks to be a hodlers’ opportunity to get some cheap coins coming up.

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Clem Chambers is the CEO of private investors website ADVFN.com and author of Be Rich, The Game in Wall Street and Trading Cryptocurrencies: A Beginner’s Guide.

In November 2018, Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards.

That is bad news if you are a short-term holder and good news if you are a […]

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