Last month, I published an article called, The BTC Bubble is Playing Out Exactly as I Said It Would.
In it, I explained the five stages of the BTC bubble…
And with the recent plunge throughout the digital currency markets, BTC is now firmly in the panic stage.
If you thought that Monday’s selloff was bad for stocks, just take a look at what happened to BTC in the chart above.
While the S&P 500 dropped 3.9%, BTC fell a punishing 15.6% in just one day.
The crash took the world’s most popular digital currency back to the $20,000 level for the first time since 2020.
But does the discounted price mean it’s a good buy here? Absolutely not. Here’s why…
Fundamentals in the digital currency markets are much different than the fundamentals in the stock market.
While there are no earnings or revenue figures to report, we can look at BTC’s usefulness as well as its adoption in the marketplace.
Unfortunately for the BTC bulls, there’s really no use case for BTC, and adoption is just not happening.
As I’ve said before, talk to 100 people who own BTC. Ask how many of them have actually purchased something with it.
The answer will likely be zero.
That’s why I continue to say that BTC is not a currency. And it is certainly not a hedge against inflation, as some claim.
Inflation readings continue to set records this year, as you know. So, you might expect that the price of BTC is booming, right?
Well, it’s not. As you can see from the chart, it’s plummeting.
BTC is simply another speculative asset that is trying to wrap up its latest bubble cycle.
Now, I emphasized “trying” in the previous sentence because I still think BTC has a ways to go before the panic stage is over.
When the price was around $32,600, I wrote that “I wouldn’t be shocked to see BTC fall another 80% from today’s prices.”
An 80% decline from that level would put BTC somewhere between $6,000 and $7,000. I still stand by that call, and let me explain why…
In the daily chart above, I’ve noted a few key technical events that have transpired this year in BTC.
As I pointed out in my original article, the BTC price was rallying at the start of the year, but it was soundly rejected at its 200-day moving average (blue line).
This was the first big technical clue that a crash was coming. When a stock trades below its 200-day moving average, it represents a clear signal that the trend is lower.
Next, BTC fell below its 50-day moving average (red line), which was another bad sign.
Price then dropped to the dashed short-term uptrend line drawn on the chart above. But a few sessions later, that level broke down.
The next move was a push toward the prior lows and horizontal resistance around $33,000, and that level was also quickly broken.
That led to an initial crash to the $25,000 level, although price bounced back and tested the underside of that horizontal resistance level, as you can see toward the right side of the chart.
While to some this looked like a potentially bullish consolidation that might end the selloff, I saw that the 50-day moving average was just overhead and pointing sharply lower.
So, I wasn’t surprised at all when the breakdown in the broader market spilled over into BTC and the price crashed at the start of this week.
Of course, BTC could find support at the 2017 highs around $20,000, but all of the technicals and fundamentals are telling me that lower prices are still in store.
Now, if you are looking to trade BTC rather than own it, that’s a different story entirely…
The World’s Most Profitable Side Job
No one I know is better at using technical analysis to find investment opportunities that can deliver potentially huge gains in the digital currency market than my colleague and expert trader Josh Martinez …
So, before I sign off, I want to tell you about what he describes as possibly “the world’s most profitable side job”…
Josh is absolutely meticulous in his approach to the markets, and he has years of experience teaching his students how to manage risk.
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Embrace the surge,
Editor, Stock Surge Daily