In our view, it is important to understand why Bitcoin burst higher to $13,000.
In December of last year, we published a piece laying out a theory for a move in Bitcoin (BTC) to $13,000. The theory was based on the fact that major institutional investors were going to get forced to buy Bitcoin (BTC) because of the way it boosts a portfolio’s performance.
As it turned out, with stocks stuck near all-time highs and a debate over whether the Fed will raise or lower rates, portfolio managers were forced to buy Bitcoin (BTC) because it exploded above $10,000. As our piece indicated, this is a classic case of monkey see, monkey do. We also think these players delayed purchases assuming they would see a dip. That dip never materialized.
Looking at a chart of Bitcoin (BTC) on BitMEX, we can see that XBT found resistance near a Fib speed line at $14,000 and support at another Fib speed line at $10,000 (Figure 1).
We also looked at Bitcoin (BTC) on a hand-drawn chart (Figure 2). Drawing charts by hand was a famous technique of William Gann. Gann was a well-known trader in the early 20th century. As one of our traders put it, drawing charts by hand is a “lost art.”
Like the Fib speed angles, Gann angles show that Bitcoin (BTC) may consolidate wildly in a range between $11,000 and $14,000.
This technical read is also backed by a bit of common sense. People are now awake to Bitcoin’s (BTC) upside potential. So that will create buyers near $11,000 as it did last night. $14,000 may act as a resistance, particularly if central banks start saying negative things about Bitcoin (BTC).
Electronic money is an embarrassment to those who control fiat currencies.
Bottom Line: While the rally was spectacular, some range trading may be needed to fuel the next really big wave up. Bullish sentiment is likely very high, so sideways action could be healthy. That said, you have to buy the dip when you can. Don’t chase at this stage.
There has never been a better time to get involved in crypto. The Crypto.IQ Trading Desk is the place to be to make money off the next stage of the mega rally. It may be the only place to be if you want professional trading assistance.
Join me there.