Bitcoin buckles: Bears flex their muscles
After a longer abstinence, the bears are loose again and offer the recently rebellious Bitcoin bulls again. Market update. After the dizzying highs of the last few weeks, the Bitcoin rally is currently stalling. As of press time, the largest cryptocurrency is sliding to $18,119, down around $700 and down 4 percent on the day. This led to a big hype at bitcoin casinos like betchain.
Due to profit-taking, the market capitalization has shrunk by around 30 billion US dollars to 333 billion US dollars in the last 48 hours alone. After the rapid inflation of market capitalization in recent weeks, the total value of all bitcoin is thus back at the level of late November.
The exchange of blows between bears and bulls has currently unloaded at the 19,000-US-dollar mark. At US$19,832, Bitcoin just missed the jump to the next thousand mark on December 1 – a final show of strength by the BTC bulls. Since then, the bears have reported back from hibernation early and are gradually digging the ground again.
Bitcoin in the bull market?
Despite the consolidation, blockchain analysts at Glassnode still locate Bitcoin in the bull market based on the Reserve Risk metric:
Bitcoin’s Reserve Risk remains low, suggesting that the bull market has just begun. Reserve Risk is used to evaluate the confidence of long-term holders relative to the BTC price; when confidence is high and the price is low, Reserve Risk is low, and there is an attractive risk/reward ratio for investment.
Accordingly, investor confidence in the No. 1 cryptocurrency is unwavering. As the chart below shows, the Reserve Risk is only slightly above the green zone. That the ratio is so low, according to Glassnode, “indicates an attractive risk-reward ratio for investing in BTC at this price.” Thus, the current setbacks are just a snapshot before Bitcoin resumes its uptrend.
…or in a bear market after all?
On the other side, however, the bears are lurking and have so far prevented Bitcoin from breaking through to the 20,000-US-dollar hurdle. For example, according to Glassnode, the number of Coin Days Destroyed (CDD) has risen slightly. The CDD metric multiplies the number of bitcoin issued in a transaction by the number of days that have passed since that bitcoin was last issued.
Accordingly, the value indicates “that older coins are on the move, which means that longer-term holders are selling some of their BTC and realizing profits.”
Thus, long-term investors are exerting selling pressure, thereby currently keeping the Bitcoin price in check. As a result, Bitcoin could initially fall back into a sideways or downward movement and struggle to break out of the spiral, at least temporarily.
This is because historically, the CDD value has always risen during a bull cycle. Given the remarkable price performance in recent weeks, the fact that investors are flogging off parts of their BTC holdings is also not surprising.
But while Coin Days Destroyed is expected to rise, according to Glassnode, “historical trends suggest that buying pressure will more than offset this activity in the longer term.” Even though the bears are currently winning the wrestling match on the virtual trading floor, the bulls could soon take the reins again.
When will the 20,000 US dollars fall?
The Bitcoin is fighting! Not for survival, but for its own record. 20,089 US dollars is to be beaten – but in recent days, the bitcoin price gave up a little. A new opportunity for newcomers?
In 2017, the Bitcoin price cracked the 20,000-US-dollar mark for the first time. Since then, the value of the virtual currency fluctuated strongly, but has now been on the upswing again for months. At the end of November 2020, it looked for the first time again as if the cyber money could crack the former record value of 20,000 US dollars.
But shortly before that happened, the price collapsed. Within a few hours, the bitcoin price plummeted by almost 3,000 US dollars. On November 30, 2020, the second big opportunity loomed. Bitcoin climbed to 19,825 US dollars – before falling again to 19,100 US dollars within two hours. And with each new attempt, the rally stops just short of the record. What may annoy bitcoin owners pleases bitcoin enthusiasts. A lower price is the chance to enter.
After minor crashes, the bitcoin price recovered faster than experts had expected. Another attack on the record level is therefore possible at any time. Nevertheless, caution is advised! After explosive rises in prices, there have already been several subsequent slumps in the past. Even if Bitcoin reaches the legendary 20,000 US dollars, the big slump could come shortly afterwards, as many former buyers are just waiting to get out with some profit or at least without a loss.
In the long term, however, experts have been predicting a rich upward trend for Bitcoin and other cryptocurrencies for quite some time. Support from established payment services such as PayPal is growing. This promotes the spread of Bitcoin as a means of payment and also boosts the prices. However, the old problem remains: If the prices fluctuate too much, no one will use Bitcoin as a means of payment, but merely as an investment object. Will it ever become anything more?
5 Trading Wisdoms to Get You Through the Bitcoin Bull Market with Confidence
Bitcoin bulls are scuffing their hooves. Less than three months after halving, the No. 1 cryptocurrency is showing what strings it can pull. 5 tips on how to confidently navigate the bull market.
Dollar Cost Averaging
Timing the bitcoin market is considered the supreme discipline of day trading. In principle, it is actually quite simple: buy low sell high. In practice, however, many a Bitcoin self-made trader buys high and sells in panic as soon as the price drops. Those who plan to hodln BTC instead of trading anyway are well advised to use the so-called Dollar Cost Averaging. This is a strategy that averages the entry price. That is, traders invest fixed amounts in Bitcoin at regular intervals and thus save up their digital phenomenon peu à peu. This is referred to as “stacking sats.”
Don’t let your emotions do the trading for you
The bitcoin market can get wild. Those who have been around since 2017 will remember days when the price rose by double-digit percentage points in a matter of hours. For traders, this is a tempting breeding ground. Unfortunately, also for those who do not have a good hand for it. Our tip: Think about your investment strategy beforehand and then follow through with it.
- Hodl is not only a meme, but also a Bitcoin principle. Because if you believe in the success of the No. 1 cryptocurrency, you don’t even think about selling.
- The Hodl strategy seamlessly follows Dollar Cost Averaging and simply means holding BTC for the long term.
- Day Trading Forbidden. By the way, there is even a Hodler manifesto.
Don’t rely on charting
The web is full of trading ideas. From Moving Averages, MACD, MVRA to Mayer Multiple and Stock-to-Flow and Co. But they all have one thing in common: They cannot predict the future. Nobody knows how people will act in the future – or which macroeconomic phenomena will influence the Bitcoin price and how. Only the stock-to-flow model seems to be empirically reliable to a certain extent. However, it is not infallible.
Follow the news
Bitcoin price growth is cyclical. Triggered by halvings (roughly every four years, the inflation rate halves), the price of digital gold rises significantly – and subsequently plummets. In order to assess current price movements, hodlers should know which market phase Bitcoin is currently in. The stock-to-flow model also helps here. After all, it draws a conceivable path that the cryptocurrency can take. In addition, it is advisable to stay up to date with current developments around Bitcoin and Co.