Bitcoin: 5th Wave Completion?

3 mar

Bitcoin has rallied over 10K points from the 52K break out level that I wrote about in my previous article and refuses to deliver a meaningful pullback. In situations like this, you must not give in the the hype and fear of missing out. I see talk of 100K, etc. and all the video titles popping up on my feeds. What you should be focused on is how to best participate in this while acknowledging the magnitude of risk that comes along with it (no one talks about the risk).

My chart now shows the label Wave 5?. Clearly 5 waves can be counted which makes this the 5th of a 5th wave. Within this 5th wave, there appears to be 4 subwaves which implies one more leg higher (see higher low consolidation between 60,300 and 63,500). This next bullish leg can test the 64,500 resistance or even the 69K all time high. This is also where MOST retail traders will think this market looks the greatest, and has the most potential, especially when the herd mentality hype machine pushes this idea. In reality, the opposite is true.

What most traders do not realize is that corrective structures tend to follow 5th waves. In this case, it would be a broader corrective move that points to the potential scenario of price testing the 50K or even 40K level. This is NOT a forecast, this is the potential RISK that no one it talking about. Such a bearish scenario can take weeks or months to unfold so it is no something to expect tomorrow.

Many traders are frustrated because they missed the home run, and they are not sure how to go about participating in this. Here is my suggestion: day trades only, long side only. Look for a pullback or break out on smaller time frames like 30 minute. For example, right now, the 63,500 range high is the next break out resistance. If price pushes through, that can qualify as an aggressive long day trade with the expectations of testing the 64K area. Expecting more puts you at greater risk of getting caught in a broader retrace.

The ones who will get caught in this are the ones who believe whatever they are told. While anything is possible, it is the potential risk that will eventually be realized. All those who bought at 50K now "feel good" because the market has reinforced this high risk behavior. When the broader correction unfolds, it is these same people who get stuck because they are caught between greed and the fear of missing out. Broader corrective moves begin OUT OF NOWHERE. Usually coincides with some unexpected news. Do you remember what turned this market around the first time at 69K?

Markets tend to move in cycles NOT in straight lines. Growth is followed by corrections, but there is no way to know how long or how far each cycle will persist. What we can measure is the potential risk, and that is what the basis of your judgement should be, NOT "100K is next!" because Bozo the Youtuber said so. In these situations it is more effective to take profits at highs, trade smaller and on lower time frames and expect LESS. Things always look the greatest at the top.

Thank you for considering my analysis and perspective.