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Bitcoin prices are deceiving

There is a phenomenon in market behavior. Most market participants buy at high price levels. Breakout trades are preferred. Why? The underlying psychological motivation is the need for certainty in an unpredictable environment. While otherwise, people hunt for bargains, look for deals, and buy cheap, they pay up in the markets. In addition, market players get uncertain about buying their favorite stock once it has declined too much. Trust in value is diminished, and fear keeps traders out of the market. Unfortunately, both behaviors aren’t principle-based. Once You identified a desirable trading object, it is low risk if purchasing it when it is cheap. Bitcoin prices are deceiving.

With more volatility, the risk gets higher to buy breakouts, and the fear towards market participation when prices decline is magnified as well.

Consequently, Bitcoin is, from an emotionally intuitive perspective, hard to trade.

Should you struggle with such emotions while Bitcoin is right now to be attained at a bargain, consider the following:

  • Bitcoin has had 15 corrections in 12 years, just like this one.

  • El Salvador, Paraguay, Panama, Brazil, Mexico and Argentina are heading for full Bitcoin adoption.

  • Altcoins hype is losing momentum, and that money flows into Bitcoin.

  • Gold and Silver prices are still suppressed by big players, leaving room for Bitcoin to move.

  • Paul Tudor Jones increased his Bitcoin exposure from one to five percent.

  • Bitcoin has a 200% annualized rate of return over the last ten years.

  • Fiat currency’s value loss in purchasing power is rapidly increasing.

  • Bitcoin reached a critical mass with its 150 million users, that could quickly expand into the billions.

Bitcoin/Gold-Ratio, Daily Chart, Performance versus insurance:

Bitcoin in US-Dollar versus Gold in US-Dollar, daily chart as of July 6th, 2021.

Gold outperforms inflation by about a percent over the last 100 years, but Bitcoin is necessary for your wealth preservation portfolio to not only have a basic insurance but also some growth. Looking at the Bitcoin/Gold-ratio daily chart above for the last 12 months, you can see how Gold flat lined over this period while an investment in Bitcoin more than tripled your trading capital.

BTC-USD, Daily Chart, Short term risk:

Bitcoin in US-Dollar, daily chart as of July 6th, 2021.

Bitcoin seems to struggle to cement price support above US$30,000, but the short-term perspective often gets overvalued. Price attempted three times to surpass its -1 standard deviation (white dotted line) but failed to reach the mean (blue dotted line).

We have a significant supply zone based on fractal volume analysis near US$32,900. Still, it wouldn’t surprise us if Bitcoin temporarily breaks through its directional support (white directional line). And again, this is the very short-term daily picture. Let us have a look at a more suitable time frame for wealth preservation. A time frame that is immune to Bitcoins volatility.

BTC-USD, Monthly Chart, Time on your side:

Bitcoin in US-Dollar, monthly chart as of July 6th, 2021.

Large time frame guidance is, in principle, the most important one. Time perspective analysis gets greatly overlooked. Looking at the monthly chart above, you will find that upthrusts in Bitcoin are quite cyclical. Stars seem to align with a healthy retracement, the time cycle having matured and Bitcoin overall being ready for its second leg. Typically, this leg is the largest in size from a technical analysis perspective. As such, we find large time frame plays to be in favor both in risk/reward-ratio and in timing. In our humble opinion, six-figure targets are certainly within reach over the next 6-9 month period.

Bitcoin prices are deceiving:

Anti-cyclical purchases can provide for a massive edge. When you buy a motorcycle in winter, you can get up to thirty percent discounts. Purchasing Bitcoin on one of its typical declines is no different. Like watching for seasonal patterns, it pays to be a contrarian. Professional traders get accustomed to the emotional discomfort. It provides the edge needed to consistently come out ahead in one’s placed trades. To gain the required confidence stepping into the market at times when it is hard to press the button is planning and practice. Write down the reason why you want to own something. Start with paper trading and small position size to accept the risk and try to execute while your intuition would tell you otherwise. Over time, you will find these efforts to be handsomely rewarded, and it substantially changes your overall performance.

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All published information represents the opinion and analysis of Mr Korbinian Koller & his partners, based on data available to him, at the time of writing. Mr. Koller’s opinions are his own and are not a recommendation or an offer to buy or sell securities. Mr. Koller is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations. As trading and investing in any financial markets may involve serious risk of loss, Mr. Koller recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Although a qualified and experienced stock market analyst, Korbinian Koller is not a Registered Securities Advisor. Therefore Mr. Koller’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction. Past results are not necessarily indicative of future results. The passing on and reproduction of this report, analysis or information within the membership area is only legal with a written permission of the author.

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