Digital Currency Past Present Future - Is Bitcoin Ripe for a Major Correction?
Bitcoin's price chart is currently forming a very steep head and shoulder pattern which offers huge short-term profit potential as well enormous risks. It also suggests two things could occur. First, the next drop will be very deep which could be within $5k to $5.5k range. Secondly, the drop could be abrupt.
During major price correction, bitcoin typically losses 1/3 of its price which is clearly evident in the last 3 corrections from February 2017 to September 2017. It also took about 15 to 30 days for the price to consolidate from its recent low before attempting another ascent to its new high.
This time around however, both price correction and the following ascent will be different in many ways due to the introduction of bitcoin Futures and ETF later in the year. How much of an impact these factors will play in bitcoin's price graph is hard to quantify.
Many institutional investors who want to join the bitcoin mania will also look for a good entry point. Now armed with futures and ETF, their estimated $10 billion new investment will be turbo-charged and could significantly influence bitcoin's ecosystem. It's a good thing that bitcoin surpassed the $100 billion capitalization before the entry of these institutional investors. Otherwise, it could turn ugly for bitcoin and its non-institutional investors.
Another thing to keep in mind is this - with the entry of institutional investors, bitcoin's price will be even more volatile with sudden and steep price swings. While this provides more profit opportunities for sophisticated day and swing traders, small individual investors could be in for more surprises. For long-haul investors, they may have to re-examine their strategy and investment goals.
Be warned - bitcoin is entering a new ecosystem it has never experienced before. Inside this ecosystem, there are new rules, new players and new traps. The small fish living in the pond all its life was swept into the sea full of sharks, whales and other predators it has never seen before. This will be the next big obstacle that bitcoin needs to conquer to survive.
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Disclosure: I do not intend to provide investment advice through this article and do not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the article in the process of making a fully informed investment decision.
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It would not surprise me.
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I feel like no matter what you may feel about TA itself, no one can possibly understate the impact this new market will have. Institutional money will be moving in and out of a decentralized system for the first time. If bitcoin does happen to prove itself and survive the first wave, it would only mean more and more smart money will continue moving into bitcoin. If it can accomodate this market it could rise in price dramatically, but it has to survive the volatility.
agreed. a very dangerous test for bitcoin.