A common misconception in technical analysis is that bull markets are a nonstop party. They can be at the end, but at the beginning, it’s a different story.
In the beginning, nobody believes. Shorts look for a return of the bear that paid them well. HODLers are miserable as every drop looks and feels like the end of the world. People talk about buying dips and then walk away because the selloffs are scary.
Smart money, on the other hand, relies on high conviction and takes advantage of big dips.
We continue to believe that buying Bitcoin (BTC) and crypto when it “looks the worst” will pay off. The thing that gives us the most conviction is how little attention we got when we published a really bullish Wyckoff analog. If there is such a thing as loud crickets, we heard them.
Tactically, there is a case that the short term overbought condition in Bitcoin (BTC) will soon be relieved. We see Bitcoin (BTC) on BitMEX headed for an area near $5,300. That level has served as support all month (Figure 1).
Also, we see that market leader Litecoin (LTC) has reached $70. That is the 38% retracement of the rally from $25 to $99. $70 is also the location of the 50-day exponential moving average. Said plainly, Litecoin (LTC) is at important support (Figure 2).
Bottom Line: Looking at the sea of red in Bitcoin (BTC) and alts along with Bitcoin (BTC) futures expiration looming, we don’t blame anybody for thinking Bitcoin (BTC) is headed to $4,500. That said, we are sticking with our seemingly unpopular bullish thesis. We believe there are too many people who missed the rally in equities. The only way to have their portfolio performance catch up is to buy Bitcoin (BTC). The risk to this view is that equities go down and take Bitcoin (BTC) with them.
Until that happens, we are ok with being bullish and unpopular.
The Crypto.IQ Trading Desk knows how to take advantage of swings in sentiment, and they have done a great of taking theory and analysis and using it in practice.
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