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James Hyerczyk
bitcoin

Cryptocurrencies are down sharply across the board on Monday, with Bitcoin dropping more than 15% to a one-week low. Some traders are saying rising U.S. yields are hurting the non-income paying assets. Others are saying the bubble has burst on its parabolic rise, putting it in a position to plunge substantially.

At 07:25 GMT, Bitcoin is trading 33850, down 5670 or -14.35%.

Before I go on, I just want to mention that I don’t own Bitcoin at the moment and in fact, I don’t and never have owed any cryptocurrencies. I mention this because I want to give those who think I’m not qualified to comment on the market since I don’t have any skin in the game to stop reading any further.

I don’t analyze Bitcoin on a daily basis, but since it is a competing asset with stocks, bonds and gold to name a few, I am aware of the price action in the market. So I wouldn’t call myself completely naïve to its movement.

In 2020, I wrote only one article on Bitcoin. It was published on October 23 on FXEmpire.com. I didn’t just wake up that day and decide to write about. I saw some movement in the market on the chart that raised my interest and I decided to investigate it further.

I concluded at that time that PayPal’s entry into the cryptocurrency market was behind the move. This wasn’t a guess, but rather my knowledge and experience behind what moves a market. I am mainly a technician, but after years of experience, I think I have a good grasp on how the fundamentals and technicals work together.

I believe the technicals precede the fundamentals, which is why the 5% spike in prices encouraged me to delve into the fundamental reason behind the move.

What really surprised me about Bitcoin wasn’t the price action, but the lack of really good technical and fundamental analysis. I acknowledge that I’ve seen the articles on halving and mining, and such, but I’m confused by most of the analysis.

I read comments and analysis but I don’t know if these experts are long-term investors or short-term traders. I do know this, just about every Bitcoin analyst slaps a few percentage retracement lines on a chart and thinks they are helping an investor decide what to do. But my biggest beef is that very few every day analysts are telling me if I should buy it or sell it. But mostly, what’s my exit if I’m wrong.

Prior to the big rally from about $12,000 to $42,730, there were very few fresh articles published on FXEMPIRE, but once it started to climb sometimes thousands of dollars per day and it took out the $20,000 level, many articles were published. And of course, the obligatory $100,000 target pieces were written.

What I’ve concluded is that Bitcoin analysts love momentum when its breaking out to the upside, but when it comes to sell-offs, very little is written. I mean, who doesn’t like a volatility breakout when all you have to do is throw out targets.

Daily Bitcoin

The Challenge

As of early Monday, Bitcoin is down more than 20% from its top. My question for Bitcoin experts, are we in a bear market? I mean on the way up, you seem to think conventional technical analysis works so why wouldn’t it work on the downside. Do you have the courage and conviction in your analysis to say that Bitcoin is now in a bear market since it has corrected more than 20% from its top?

Maybe 20% isn’t the figure. Perhaps it is 30% or 40%.

My point is, it’s easy to whip out the Elliott Wave when Bitcoin is rising. It’s easy to make predictions like it’s going to $100,000 when it’s moving higher exponentially, but what about the downside when investors need you most.

Where are the longs wrong? If you think Bitcoin is overvalued, where is the value zone for the next buy? Does technical analysis really work for Bitcoin since it is supposed to be such a unique financial instrument?

I don’t have the answers, but if I was pressed to make a prediction, I would say that $24203 to $19830 is a good place to start looking for value.

Bull market or bear market, it doesn’t matter to me, but what I would like to see is some decent analysis when Bitcoin is going down, not just crickets.

For a look at all of today’s economic events, check out our economic calendar.

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