Bitcoin: What If 45K Support Breaks?

Jan 2, 2022

There is no momentum in Bitcoin. Over the previous 3 weeks, three buy signals have appeared off of the 45K support area, and none of them have followed through. IF price cannot clear the 48,500 level soon, the selling pressure as a result of the new population of longs will likely lead price to a break of the 45K support and a second test of the 42K swing low.

I recently shared some details on a potential trade idea upon the bullish break of the 48K level. The candle established a bearish outside bar and since I usually suggest a 3500 to 4K stop loss, that idea is still in play. There has been another bullish attempt since, but price is not making progress. This CLEAR lack of follow through can be interpreted as a sign of inherent weakness and requires managing risk in the form of tightening stops, taking small losses, etc. Hope is not a strategy, and will rob you of any coincidental profits you may have made in this space.

While the probability of the general location still favors bullish reversals (higher low formation within broader bullish trend), it only offers a potential inflection point to assume a reasonable risk from. It does not guarantee momentum which requires some form of positive catalyst.

I keep seeing predictions and projections of Bitcoin going to 200k, or there's X% chance that Bitcoin rallies this month because of some "seasonal" patterns observed over the previous 10 years, etc. While this makes for great "infotainment" and empowers many to feel "informed", it offers no more actionable value than a financial gossip column. Producers of this type of content are incentivized by the monetization of attention, NOT by the accuracy of their ideas. Since hope runs very high in this space, most people are very happy to be lied to in this way.

As I remind my followers, LISTEN TO PRICE. NOONE knows anything in this space unless you are an insider and insiders DO NOT share anything of value publicly because it is usually not in their best interest to do so.

Charts can help us manage risk and anticipate potential price movements in the near future, but you need to able to tell what information on a chart offers any actionable value.

For me its about location, levels and price behavior. If 45K breaks, we are looking at 42K. If that breaks, we are looking at 38K. If 45K holds, we are looking at 50K, if 50K breaks, we are looking at 56K. Its NOT about WHEN, it is ALL ABOUT "IF".

Thank you for considering my analysis and perspective, I hope you find it helpful.