The price of Bitcoin (BTC) fell off a cliff early Sunday morning — but don’t say we didn’t warn you. (Twice.) Now, is the best play to do nothing?
Daily Chart
Bitcoin tanked almost instantly from above $4100 to the 50-day exponential moving average (EMA), where it immediately found support. This has provoked some savvy traders to take out a long position, but such a bold gamble is not without risk.
Taking a long position in a bear market can certainly be profitable, but it is akin to swimming upstream. When the macro trend is down, buying or longing Bitcoin is to go against the overall trend of the market — which has been firmly down over the last 14 months.
Indeed, a convincing and profitable bounce off of the 50-day EMA is possible, but only traders willing to stomach a large amount of risk should take such a bet and stop losses should be set. In a market as volatile as this, Bitcoin could easily dump straight down to the 200-week moving average — if not take it out altogether.
Stochastic RSI
Bitcoin’s one-day Stochastic Relative Strength Index also clearly shows more room to fall in the immediate future. The popular indicator should reach oversold territory in the coming days, barring a sharp and sudden reversal in the market leader’s price tomorrow.
While it is never the sexiest opinion, doing nothing in the immediate term for Bitcoin may be the wisest play.
There is a significant risk when going long at this moment, but shorting inherently puts you in a dangerous position. If one does decide to play the market, he or she should make sure they have properly set their stop losses and is prepared to lose their entire investment.
What do you think about the price of Bitcoin (BTC)? Let us know your thoughts in the comments below!
The views and opinions of the writer should not be misconstrued as financial advice. For disclosure, the writer holds Bitcoin at the time of writing.
Images courtesy of TradingView.
The post Bitcoin (BTC) Price Analysis: Sometimes, It’s Best to Do Nothing appeared first on Bitcoinist.com.
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