Bitcoin continued the rally again this week, as we continue to stay in a very parabolic state. Because of this, caution is advised but obviously selling is all but an impossibility.
Bitcoin rallied again during the week, reaching as high as $18,000 before pulling back slightly on Friday. The market looks to be very parabolic at this point, so buying Bitcoin and hanging onto it might be difficult as a corrective pullback is absolutely necessary. In fact, a simple 50% Fibonacci retracement pullback could send this market as low as $9000 or so. I suspect that most of you would not be able to hang onto a trade if it lost that type of value, so the longer-term trading of Bitcoin is almost impossible from a technical analysis standpoint. That being said, it’s likely that longer-term investors are simply holding onto Bitcoin and not paying attention to the charts anyway.
I personally like buying Bitcoin on pullbacks, but I would need to see Bitcoin lose several thousand dollars to be enticed into putting a longer-term position on. There is the never-ending discussion as to whether Bitcoin is in a bubble, and I think this chart pretty much points that out. However, bubbles pop, drop drastically, and then give traders the opportunity to pick up value at lower pricing. That is what I expect is going to happen over the longer term. In the meantime, short-term buying the dips probably makes the most sense out of all of the trading strategies that I can employ. Quite frankly, even though I think this paired does need to drop drastically, it’s difficult to point out when it should be shorted and quite foolish to try and do so with this type of momentum. Longer-term this will happen, but quite frankly I suspect that timing that move will be almost impossible. That being said, if you could, you would probably walk away from that trade rather wealthy. For now, though, it looks as if the bubble continues to inflate.