In the past 2 weeks, the price of Bitcoin made a surprising run up, breaking past the famed $600 level to a $630 high. The market was awakened after a prolonged dull sideways trend, and drew out traders now calling for a run up to $700. All was going well until September 12, when a sharp sell off down to $594 caught the market off its guard. Lots of traders were caught offside on over leveraged long positions.
“Sorry man….can’t guard against a drop like that too well. There’s just no way to protect yourself against that kind of volatility at 20x.”
There was better news on the fundamental front as mainstream financial institutions warmed up to bitcoin.
On the last analysis, I expected a low probable break upwards, but had given up on the long awaited break to $620. Sideways trends that drag out tend to exhaust traders and fuel uncertainty. $575 in hindsight was the last low, before the bull momentum to $638 which upset my high probability bear break. The 2 hour chart below highlights the sell off that followed.