The fascinating thing about cryptocurrencies is that it is also a "game" of human psychology
When you look at the chart for Bitcoin over the past month, there's only one story to tell - and that is prices are heading lower. It's an ugly one if you tried to catch the falling knife, but here is where things start to get interesting.
A lot of people I've talk to are telling me that this kind of volatility is normal and that such retracements are bound to happen. But at one point yesterday, Bitcoin fell by 50% from its peak posted back in December. I'm not sure how normal that is, but I do know that human psychology is something that drives markets as well.
The $10,000 is a big psychological barrier. Dips below here begs the question, "is it cheap enough to buy now?". And that can get a lot of people invested in the idea that Bitcoin has fallen enough and the retracement is over and done with. As Adam pointed out yesterday, a bounce here can easily turn fear into greed.
If you look at it from a technical standpoint, the rebound late in overnight trading yesterday saw prices rebound above the 50.0 retracement level and the 100-day MA. That is an important view if you're trading it as it means the bears have not won out just yet. There's still work to be done for sellers.
Even from the hourly chart, you can see that buyers will do anything to cling onto support levels. But I figure the $10,000 level is the bigger one to look at here.
There's also reason to believe that the fall this month is attributed to the moon! And by that, most people are talking about a common theme that cryptos do poorly prior to the Chinese Lunar New Year.
Well, they're not wrong to some degree. Here's what the seasonals (there's seasonals for Bitcoin?!?!) say about January Bitcoin trading (source: Coinbase):
February meanwhile has been a good month over the last three years. So, is the worst over yet for Bitcoin?
Let us know what you think here or share your thoughts on our Telegram group.
