Not long ago, I blogged about Bitcoin’s recovery and how retail investors could invest/profit during such a scenario. As of 30th September 2021, Bitcoin’s (BTC) attempt to break the USD50k resistance came with a very strong buy volume. As always, anything can happen in the cryptocurrency market and investors shouldn’t be surprised if there’s a sudden dip in BTC’s price action the next day — our strategy here is to play the long-term game while we buy/sell BTC during a bull rally.
Bitcoin looking good (for now)
It has been proven from time to time that unlike the stock market or forex, Bitcoin will not react to major news half of the time — there were instances where BTC continued to be bullish despite the release of severely negative press, and vice versa. Given this characteristic of BTC’s, I shall only focus on the technical analysis of its charts because that’s the closest we can get into studying BTC’s price action. Hence, we shall take a look at its latest chart (8th October 2021) on the daily timeframe:
Item A: On 23rd July 2021, BTC started a convincing bull rally that broke above its EMA20, EMA50, and then EMA200 resistances before a minor breather.
Item B: BTC carried on to break above its USD40k resistance without any effort, and this run continued to reach just above its USD50k resistance before meeting heavy rejection at USD52k (probably investors taking profit after the bull rally from USD30k).
Item C: It’s natural that after such a strong rally upward, its price action would go into some sort of a correction. BTC did just that and found support at USD40k and its EMA200 line, which gives us a clear higher-low from USD30k, and is forming what seems to be the initial stages of an uptrend pattern.
Item D: This time around on 5th October 2021, BTC managed to break above its USD50k major resistance without much of an effort, and with majority strong green candles. If it’s able to turn this resistance into a support, then that would be a good sign of things to come. The next major resistance would be at USD60k where we can expect to see BTC get rejected more than once. And if it successfully converts USD60k into a new support, that’s when we may see a rally to a new all-time-high.
How should I invest from here?
As always with Bitcoin, I suggest that the simplest form of investing into this market would be to plan for long-term gains. Trading over the short to mid-term can be very challenging especially with its volatility and unpredictability of pumps and dumps happening every now and then.
At current prices, you can invest with a small portion of your capital that you won’t be touching over the long-term. Keep doing this whenever BTC conquers a major resistance level and turns it into a support, while its chart shows a clear uptrend with higher-lows and higher-highs, especially on the weekly timeframe chart. Again, it’s better to invest while the chart is on a bull rally so that you have the choice of withdrawing profits and/or your initial investment capital.
The same goes with those who have been invested in BTC at much lower prices. It’s advisable to at least withdraw your initial capital and let your profits continue to do the investing, while you allocate that initial capital into other forms of investment.
If BTC happens to dip all of a sudden and your portfolio is in the red because of this, just remind yourself that you’re invested for the long run. After all, BTC has proven to have strongly risen in value over the past many years despite its very volatile nature.