State of the Market - 2019.4.3


Bitcoin is up 25% in less than a week

What just happened?


If you’ve been reading my posts over the last few weeks you will remember how I predicted that some type of large scale movement would occur. The post on March 25th had two scenarios lined out, a break under $3,900 and a break over $4,200. Well, here’s what happened.

Within an hour of the last post, Bitcoin dropped about $100 to the $3,850 mark. Then, it held that price and started to creep up. I entered a long position at the bottom of that drop and rode it up to $4,000. After drifting up for a few days, something magical happened. Late in the evening on April 1st, Bitcoin broke $4,200 with a massive, massive, massive green candle. Some unidentified buyer placed a market buy order for $100,000,000 on a variety of exchanges and kicked the price over $4,200.

That $4,200 price was a huge barrier. Not only was there a history of the price action not breaking that point, but many people were short on Bitcoin (many with margin) and had placed their stop loss orders above $4,200. To the neophyte, this means that people were betting Bitcoin would go down in price, and if Bitcoin went above $4,200 their bets would lose so much money they had to be canceled. When a margin short is liquidated, the remaining money on that order is forced to buy at the market price.

So, that $100,000,000 buy kicked the price to $4,250. The orders with liquidation stops from $4,201 and $4,250 were all forced to buy at market. This, in turn, kicked the price up to $4,300, and liquidated another range of shorts. So and so until Bitcoin finally leveled off at $5,000. That $100,000,000 buy essentially added $10,000,000,000 to Bitcoin’s global market gap.

Now what?

Bitcoin seems to be stalling at $5,100. This is a really, really, really good place to book profits. As of this morning, I’m 100% out of all positions. The RSI for Bitcoin on the daily chart is at 90. That’s a 16 month high. This is not the time to buy! The time to buy was last week, but fear not, these markets are inherently volatile. Another opportunity will present itself. For the time being, I’m going to watch and see where the markets settle.

If Bitcoin settles at a low of $4,200 that would be truly incredible news. When a HUGE resistance price turns into a support line it is a sign of positive market growth. I’m crossing my fingers hoping for that.

What’s Up With Litecoin?

I wish I knew. I alternated between trading Litecoin and Bitcoin this last week. Every time Litecoin would break a local high I would buy in and watch it go up. Doing so I matched my entire Q1 gains in two days of trading in April. It’s been a . . . kind week, to put it mildly.

Litecoin is at a 10 month high right now. Daily RSI is astronomical and it’s up 50% in two days. I’ve been in this market long enough to know that’s not sustainable. I’m not saying Litecoin will go back down tomorrow. It could very well blow off for another $10 or $15 dollars. However, there needs to be a price retracement soon. Market indicators can’t be this high indefinitely.

Don’t Get Ready, Stay Ready

All indication is that the market is no-longer bearish. That could still mean a period of lateral movements. It does not necessarily mean that crypto will explode into growth similar to 2017. However, clearly there is still a lot of money to be made here. Stay ready, set your price alerts, and be ready to act. Most importantly, wait for the right set-up! Don’t force trades. The right situation will arise.

Alex Price