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Chart Of The Day: Why Bitcoin Will Keep Falling

By Pinchas Cohen/Investing.comCryptocurrencySep 12, 2022 09:19AM ET
www.investing.com/analysis/chart-of-the-day-why-bitcoin-will-keep-falling-200629684
Chart Of The Day: Why Bitcoin Will Keep Falling
By Pinchas Cohen/Investing.com   |  Sep 12, 2022 09:19AM ET
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Bitcoin is up for the sixth straight day in its longest winning streak since March 29, when it rose for eight consecutive days.

Crypto trader, il Capo Of Crypto tweeted last week that while the price of BTC was falling there was a pattern of buying interest that was picking apart supply pockets. Il Capo predicted that when this entity stopped accumulating, the cryptocurrency would bounce, and it certainly did, by 19%.

The author of Layered Money, Nik Bhatia and analyst at the Bitcoin Layer, Joe Consorti argue that "dormant supply peaks are springboards for upwards price action."

This is an argument favored by crypto traders that dormancy in the price of Bitcoin equates to a bottom. They cite the examples of 2016 and 2020 when Bitcoin was quiet and then the price exploded.

I disagree with them and here's why:

Bitcoin Daily 2016
Bitcoin Daily 2016

In 2016, Bitcoin's bottom set the stage for a large symmetrical triangle, followed by a continued uptrend.

Bitcoin Daily 2020
Bitcoin Daily 2020

In 2020, BTC bottomed, from where it catapulted to its Apr. 14, 2021, $64,374 all-time high.

Bitcoin Weekly
Bitcoin Weekly

In complete contrast to the previous two examples, which followed bottoms, today BTC is after a top, and not just any top, but the largest in its history—a $35,000 high.

Moreover, the price finds resistance below the rising channel, bowing to the more significant falling channel. Note, the price fell below the 200 weekly moving average (WMA) for the second time since March 2020. That was the first time on record since Sept. 11, 2017.

However, the weekly price closed slightly below the gauge and bounced back the following week. Currently, Bitcoin is below the 200 WMA for the fifth straight week. Also, the 50 WMA fell below the 100 WMA, even amid this rally.

When Bitcoin bottoms, I will be the first one to say so. According to the principles of technical analysis, the digital coin is on a trajectory much lower, a path it's been on since January. The price is retesting the broken rising channel, near the top of the falling channel, providing a potentially ideal entry, at least from a risk-reward perspective.

Remember, you should trade with a plan that incorporates your timing, budget, and temperament. If you don't know how to compose one, below is a generic example so that you practice learning about yourself. The principles of technical analysis are statistical-based presumptions. There is no way of knowing whether this market will follow statistics. Therefore, before you enter the trade, close your eyes and imagine it lost. If you can't handle that, don't enter the trade. The longer you trade consistently, the better your overall trading should become.

Trading Strategies

Conservative traders should wait for a fresh low below June 8 and short a corrective rally demonstrating resistance.

Moderate traders would short upon evidence of resistance at these levels.

Aggressive traders could short now.

Trade Sample

  • Entry: $22,300
  • Stop-Loss: $23,300
  • Risk: $1,000
  • Target: $19,300
  • Reward: $3,000
  • Risk: Reward Ratio: 1:3

Disclaimer: The author currently does not own any of the securities mentioned in this article.

Chart Of The Day: Why Bitcoin Will Keep Falling
 

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Chart Of The Day: Why Bitcoin Will Keep Falling

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Comments (12)
Cathenna Henry
Cathenna Sep 13, 2022 2:15AM ET
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why is bitcoin crashing?
Pinchas Cohen
Pinchas Cohen Sep 13, 2022 2:15AM ET
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hotter-than-expected inflation data fueled bets for a jumbo rate hike by the Federal Reserve next week
Stephen Fa
Stephen Fa Sep 12, 2022 1:32PM ET
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You have no clue
Stephen Fa
Stephen Fa Sep 12, 2022 1:32PM ET
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Apologies, wrong commented as was intended for a reply to another comment.
Berat Arda Dedekoca
Berat Arda Dedekoca Sep 12, 2022 11:58AM ET
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Be objective man … dont do manipulation acc. to your ‘short’ portfolio ..
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 11:58AM ET
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Spoken like an objective person. Yes, I'll be objective by saying what you want me to say
Aaron Dade
Aaron Dade Sep 12, 2022 11:56AM ET
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I want to credit your ability to remain unbiased and trade "the chart and not the story". until equities bottom (they haven't yet) I find it hard to believe crypto will bottom. They are both fundamental risk assets.
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 11:56AM ET
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I want to buy you a drink! So many voices insist equities bottomed, because - well, that wasn't clear to me. A bottom means a reversal in peaks and troughs
Johanes Joni Pasila
Johanes Joni Pasila Sep 12, 2022 11:41AM ET
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I agreed, today or tomorrow btc will be back to below 20K. Reason why, many exchanges are collapsing and many countries are fighting the inflation, also Ukraine vs Russian War
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 11:41AM ET
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I don't know any fundamentals other than the general economic downtrend.
Johanes Joni Pasila
Johanes Joni Pasila Sep 12, 2022 11:41AM ET
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BTC is pumped by the future whales, I think they will dump btc back below 19K to liquidate the long
Roy Nisani
Roy Nisani Sep 12, 2022 11:07AM ET
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bad bad trader
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 11:07AM ET
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I'm sowwy. I'll try better next time. Pwomis
Phil Kimmel
Phil Kimmel Sep 12, 2022 10:32AM ET
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“When bitcoin bottoms I’ll be the first to say so.” Crystal ball economcs Pinchas? What ansolute bs!
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 10:32AM ET
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"Bottoms" in technical analysis means that peaks and troughs will reverse from falling to rising. I didn't mean to boast that I'll be the first one on the planet with the foresight. It was within the context of my persistently remaining bearish despite all the bullish talk among the experts. I meant that if there will be a reversal I will not stubbornly remain bearish.
cogent equity
cogent equity Sep 12, 2022 10:20AM ET
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what do you mean “after a top of $35,000” ?
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 10:20AM ET
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In height, as marked on the chart above.
G D
G D Sep 12, 2022 10:09AM ET
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At the end of the day these new 2020 stimulus check gamblers will lose.
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 10:09AM ET
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They always do. It's what drives market cycles.
Tyler Simpson
Tyler Simpson Sep 12, 2022 10:06AM ET
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Lol. At least hire someone who understands the basics of market making and shifting of value to write these articles. Your hopium trend lines wont save you sir. I will be paid your liquidation premium. You obviously have zero understanding of anything other than a basic retail investor emotion based candlestick chart. Those charts are meaningless to institutional investors like I. I will be happy to take all of your liquidation premiums as you "take profits" at the local highs only to FOMO back in and post a BS article next week about how Bitcoin may change the world, right before I sell spot and dump my bag on your head.
G D
G D Sep 12, 2022 10:06AM ET
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Tell us what fund you're managing :)
Alex Malmstrom
Alex Malmstrom Sep 12, 2022 10:06AM ET
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An institutional investor ranting/ boasting on an https://investing.com forum?
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 10:06AM ET
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Alex Malmstrom  Hey, what's wrong with Investing.com :)?
Pinchas Cohen
Pinchas Cohen Sep 12, 2022 10:06AM ET
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So much verbiage, so little substance.
John Jameson
John Jameson Sep 12, 2022 10:06AM ET
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Alex Malmstrom  Most of these crypto maxis are institutional but not in the way you think.
 
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