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A legendary short seller who shorted the 2017 Bitcoin bubble top just before the bubble began to deflate, has some sound advice for crypto investors looking for an opportunity to buy: Wait for a base to form, much like what happened in early 2019 when Bitcoin bottomed.

Mark Dow, Legendary Bitcoin Shorter, Dissuades FOMO-Buying BTC

Mark Dow is a global macro trader and author of the blog Behavioral Macro. The former US Treasury economist focuses his analysis on technicals based on market behaviors and has a knack for calling tops and bottoms.

Dow famously shorted Bitcoin at its 2017 peak and then tweeted about how he had closed the short back in December 2018, just as Bitcoin bottomed. Although he at that point said he had “absolutely zero interest in going long,” he eventually began to notice signs Bitcoin was forming a solid base and flipped bullish in March just ahead of Bitcoin’s 2019 parabolic rally.

Related Reading | Crypto Market Fear Index Suggests Bitcoin Price Has Further To Fall 

That base, Dow says, is an important signal to watch for before buying Bitcoin given the current downtrend it is in. Until that base begins to form, Dow says its best to use a wait and see strategy.

In his latest blog post on Behavior Macro, Dow explains that although he understands that “FOMO here is irresistible” for those “fundamentally bullish” on Bitcoin, it doesn’t mean that buying here is a smart idea.

 

Dow claims that after a massive selloff, “a lot of technical damage” has been done that “needs to be repaired” before a safe entry in a long-term position is possible. The two most important things Dow says traders and investors need to be aware of is building a base – much like what happened at Bitcoin’s $3,000 bottom – and overhead resistance.

He suggests that Bitcoin is nowhere close to building a solid base, and overhead resistance was clearly too strong that the entire historical rally has since been erased completely, leaving nothing but massive wicks into that resistance behind on Bitcoin price charts.

Related Reading | Uncommon Bitcoin Metric Suggests Massive Profit Taking Is Underway

For fundamental Bitcoin bulls that can’t resist taking a position at current prices – down nearly 50% from the year’s highs – then it is recommended being “ultraconservative.” Dow even specifies that taking a short position here also isn’t advised and could be just as risky.

Those that do take a position are advised to set tight stops due to the chance volatility picks up or be stuck babysitting the position, ready to flip the other direction depending on price action. Otherwise, watch for a base to form before buying more BTC or opening a long position, no matter how appealing current low prices may seem.


Tony Spilotro , 2019-11-21 18:00:54

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.


While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock


Nick Chong , 2019-11-10 12:00:38

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