A Case for 3K Bitcoin
Just like the title says, this is my case for a $3,000 Bitcoin. Lets get right into it.
To explain the chart above, I have plotted out important support (blue) and resistance (red) levels. As you can see, Bitcoin has broken down, out of the triangle pattern and has made another bottom around the $6,000 level. The price has made a slight recovery but it has all been on weak volume, while red days are showing higher trading volume, suggesting that the bears are still in control. Bitcoin may see a small relief rally but I doubt it will last long.
5K is the next support level if the 6K support fails. There is past support/resistance built at this level and will probably provide another bounce, but I don't see this level holding long. Ultimately I think the bottom will come in around $3,000. There are a couple main reasons why I think this will be the magic number. First, 3K was the support level for the crash from 5k, and held the price up with the biggest trading volume day Bitcoin has seen in almost 2 years. And second, 3k would equal around an 85% drop in price from the high, similar to the 87% drop during the 2014 crash. Markets tend to repeat themselves and Bitcoin has been repeating a similar cycle since its creation.
Oh, and it costs about $3,100 to mine a Bitcoin in China, the most popular place to mine. This part isn't as important in my opinion, but does offer some fundamental backing to the price.
CAPITULATION
Ultimately though, I don't believe everyone who will sell has sold quite yet and what I am looking for to identify a real bottom is capitulation. There needs to be a day with massive trading volume and a sharp bounce in price to indicate the sellers have left. This indicator has identified every bottom for the price of Bitcoin in recent years, take a look at the chart below.
Check out that insane volume in 2015 when Bitcoin was bottoming from its previous bull run. It dwarfs any of the trading day prior and perfectly identified the bottom. There are also big volume spikes during the 2017 bull run, matching the corrections and identifying each reversal. I think this will be the most important indicator to watch for to identify the true bottom moving forward.
Let me know what you guys think. Where do you see the Bitcoin price going?
*This is not financial advice. For entertainment and educational purposes only.
-Brad
To explain the chart above, I have plotted out important support (blue) and resistance (red) levels. As you can see, Bitcoin has broken down, out of the triangle pattern and has made another bottom around the $6,000 level. The price has made a slight recovery but it has all been on weak volume, while red days are showing higher trading volume, suggesting that the bears are still in control. Bitcoin may see a small relief rally but I doubt it will last long.
5K is the next support level if the 6K support fails. There is past support/resistance built at this level and will probably provide another bounce, but I don't see this level holding long. Ultimately I think the bottom will come in around $3,000. There are a couple main reasons why I think this will be the magic number. First, 3K was the support level for the crash from 5k, and held the price up with the biggest trading volume day Bitcoin has seen in almost 2 years. And second, 3k would equal around an 85% drop in price from the high, similar to the 87% drop during the 2014 crash. Markets tend to repeat themselves and Bitcoin has been repeating a similar cycle since its creation.
Oh, and it costs about $3,100 to mine a Bitcoin in China, the most popular place to mine. This part isn't as important in my opinion, but does offer some fundamental backing to the price.
CAPITULATION
Ultimately though, I don't believe everyone who will sell has sold quite yet and what I am looking for to identify a real bottom is capitulation. There needs to be a day with massive trading volume and a sharp bounce in price to indicate the sellers have left. This indicator has identified every bottom for the price of Bitcoin in recent years, take a look at the chart below.
Check out that insane volume in 2015 when Bitcoin was bottoming from its previous bull run. It dwarfs any of the trading day prior and perfectly identified the bottom. There are also big volume spikes during the 2017 bull run, matching the corrections and identifying each reversal. I think this will be the most important indicator to watch for to identify the true bottom moving forward.
Let me know what you guys think. Where do you see the Bitcoin price going?
*This is not financial advice. For entertainment and educational purposes only.
-Brad
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