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It is nothing new in equities to watch an index rise towards a round number and fall back when it touches it, but for a new generation of crypto hodlers it’s a new experience.
There are always reasons given, ones that are plausible but not inclusive.
The Bitcoin price seems reluctant to go over $10,000
Classically the explanation is that there are sellers at, in this case, $10,000, who dump when the price gets close. Sounds likely. The more sophisticated version is that there are people who bought at $10,000 who then saw the price fall hard and that have been holding until the price gets back there, then sell. That is very stupid trading behavior, but I have heard real people say as such, so it is a factor.
However, mathematically, to break any level never to return on a skewed random walk, the chances of a clean break are about 1 in 5, more or less depending on the underlying trend buried in the random noise. That is to say, if there is a small directional trend inside a big wobbling market (hello bitcoin) the price will bash around any arbitrary level many times before it never revisits that level again. This doesn’t require the behavior of novice investors behaving strangely or any other theory or conspiracy to make a price appear to approach a level and then fall back. Obviously, we can roll human factors into that theory without them clashing. We can also spout on about support and resistance and again it might be a real factor or simply false pattern detection by our pattern seeking brains.
Charts are not generally good predictors of the future and work best in crazy times when the markets lose their normally overwhelmingly random fluctuations.
I use charts to help me see where an instrument has been and gauge its temperament. I draw few lines and keep it incredibly simple. Charts are prefect predictors of the past and that has some value because it gives context.
The only question remains, which way is the market going? So looking at the chart that’s what we should ask, which way is the market going?
Which way is the Bitcoin price going?
With the halvening behind the bitcoin (BTC) investor, the price should soon be through $10,000. The Federal Reserve have said it will do whatever it takes while encouraging the government to spend like a sailor.
That’s dole for the masses in floods of dollars. So what currency should you hold, when Europe is printing and Japan is printing and China is printing, and on and on. Couple that with what looks like international coordination to competitively devalue and its hard to think of a place to get out of the way of all this monetary easing.
Which is why I have as much bitcoin as sensible diversification allows.
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Clem Chambers is the CEO of private investors website ADVFN.com and author of 101 Ways to Pick Stock Market Winners and Trading Cryptocurrencies: A Beginner’s Guide.
Chambers won Journalist of…
Read more:The Fed Is Bitcoin’s Best Friend
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