The unpredictable nature of the Bitcoin market is causing panic movements as only this can trigger. And every time it loses more than 6% or 7%, thousands of investors rush to their accounts to… give in to a new collective and speculative hysteria. Yet it is well positioned as one of the best investments to escape the high volatility of the cryptocurrency market. Because BTC offers a stability - certainly relative - that most altcoins do not offer. But that doesn't stop him from yo-yoing with the fragile hearts of his most stressed traders. And its recent decline earlier this week is clear evidence of that.
It must be remembered that panic is for cryptocurrencies what it is for the rest of human activities. The best way to make a mistake. And in this case, the most likely option for losing money. With investors at the center of it all who decide to trade on a whim. This is while ignoring any strategy that has been put in place previously… if there was one. And most of the time, they improvise traders at the worst possible time. And most of the time, they did it at the worst possible time… when their investment was done with a long-term strategy in mind.
Because the first rule of the Bitcoin Club is not to fixate on the price in real time. This is especially true if the position taken is meant to last more than a few weeks at least. A setback that is calculated according to each strategy. But also as regards the ability of each to accept the high volatility of his market. Because even though it is (still) part of a long-term uptrend, BTC remains unstable in daily time units. It could also be close to a return to the downside, which for the moment is no reason to expect anything other than a short-term trend.
Towards $ 42.000 and under?
It will not have escaped anyone that Bitcoin has just experienced a significant drop in the past 24 hours. A movement that can be described as significant in daily time units. And that shows (for the moment) losses of 8,6% on this day of September 20 still far from over. This is with the price currently peaking around $ 43.400 at the time of writing. And a $ 42.000 level which is the tipping point to look at as a support on fire. Especially since the $ 44.000 area has been violated, which should curb the possible return to the downside.
A break of the $ 42.000 support would signal the start of a more significant downtrend. A movement that could go to much lower levels, located around $ 38.000. But this remains a pessimistic hypothesis for the moment and should be considered in the short term. Because this fall can also be placed in parallel with the one recorded at the beginning of this year 2020. A 30% drop that also took place in two stages. And that saw the price of BTC drop from $ 42.000 to $ 29.000 in just three weeks. That was before it rose to its last all-time high of $ 65.000.
Don't panic before $ 38.000
Knowing that for the moment, the current decline, halted at $ 42.000, would represent “only” 19% from its local September 06 ATH. And that to do "well" as in January, the $ 38.000 level corresponds exactly to this 30% drop. This does not constitute advice or a forecast for taking a position. But simply an observation that allows us to consider that before this threshold panic can remain legitimate. But it doesn't validate a Bitcoin crash or an end to the bull market that doom enthusiasts love to tout.
Of course, this type of setup requires you to secure your locations, if not already done. And to breathe quietly through your nose waiting to see which scenario will win in the end. Knowing that no strategy is bad if it involves taking profits. And that sometimes it is better to take profits even if they are smaller than expected than to end up with losses.
It is possible to enjoy the benefits of the cryptocurrency market without undergoing these kinds of unnecessary questions and stress. This can be done by subscribing to the option copy trading A 100% automated algorithmic coin trading tool. A tool that allows you to optimize each investment by applying a strategy built by experienced traders. All this to take advantage of market rises while staying out of the current turmoil.
This article is about the current state of cryptocurrencies. It is not intended as a financial investment advice. Any stance taken must be accompanied by personal research and requires crossing several sources before jumping in. DYOR!
