Bitcoin rallied all the way to $459,200 on the charts of BTC-E and even broke the $500 barrier on Bitstamp this week after the last weekly candle from October closed nicely above $304,300 resistance level indicating more bullish movement. It didn’t take long for a panic buying frenzy of massive proportions to take place shortly after that. Everyone wanted to get in early in fear of missing out.
Bitcointalk was teeming with investors and traders speculating on the price of Bitcoin and the vast majority of people agreed that this is going to be a serious breakout. Even bigger than the last one (in 2013) and that we would see prices higher than a thousand dollars very soon.
What people didn’t realize was the resistance from 2014 at around $454 USD (remember, I’m almost always using BTC-E charts to do my analysis) that made the price bounce back down shortly after it reached there. On the hourly chart you can see BTC trying to break the resistance seven times in a row until finally giving in to the pressure of the bears and falling down further.
This along with a number of people from Bitcointalk screaming that this is the end of the bubble, fueled the bears even more and the price declined a total of -20,5% in just two days. Heck, even the Chinese quit pumping money into the cryptocurrency which of course meant that a lot of people just gave up altogether. In OKCoin many traders who went literally “all in” received margin calls all around from the sudden decline as they were hoping we’d be flying to the moon on the next rocket.
The bigger picture
It’s always fun to watch people buying in panic and then starting to sell as soon as someone claims it’s the end of the world. These people just can’t see the bigger picture which, at this point, clearly indicates we’re going to see another jump in value very soon. Maybe not next week, maybe not even next month, but soon enough. Remember, the halving is right around the corner and we are safely above the support of $304.300 so unless this gets broken, the long bulls are good.
It’s true that on a shorter time scale, we are currently inside a downward moving tunnel, but when you look at the daily, weekly and monthly charts, you will see there is no reason to panic just yet.
Here’s a cute chart: