If you were buying bitcoin in August, then you should be selling it today.
Of course, most folks don’t want to hear that. They want to hear that bitcoin, after surging above $100,000 last week, is headed towards $500,000.
They want to hear that the bitcoin rally will spill over into all the meme coins, and that Dogecoin, Smoking Chicken Fish, and Hawk Tuah are headed “to the moon.”
They want to hear that when Cousin Eddie stopped playing Grand Theft Auto long enough during Thanksgiving dinner to recite the benefits of putting CUMMIES into our 401(k) that he was providing sound investment advice.
Everyone wants to hear that the raging fire in the cryptocurrency market will burn forever.
Go ahead and call me a wet blanket. But the reasons we turned bullish on Bitcoin back in August, are the reasons we’re turning bearish on it today.
Look at this chart of Bitcoin…
Back in August, Bitcoin was trading near $54,000. The price was down 30% from its March high. All of the crypto-cheerleaders had gone into hiding. The mood was quite bearish.
But, we noticed that as Bitcoin had dropped to a lower low, the momentum indicators at the bottom of the chart were making higher lows.
This sort of “positive divergence” is bullish.
It’s often an early warning sign of a potential reversal from a bearish trend to a bullish one. So, we suggested that Bitcoin was setting up for a rally.
Since then, Bitcoin has rallied nearly 100% – trading as high as $104,000 last Friday. The crypto-cheerleaders are all over financial television. The mood is wildly bullish.
This is the exact opposite of the setup we had in August.
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The price of Bitcoin has made a higher high on the chart. But, all of the momentum indicators are making lower highs. This sort of “negative divergence” is bearish. It’s an early warning sign of a potential reversal from a bullish trend to a bearish one.
To be clear…
I’m talking about the potential for a short-term decline in Bitcoin.
If you bought Bitcoin with the intent to hold onto it for decades, then you ought to be willing to ride out any short-term turbulence.
But, if you bought Bitcoin in August for a short-term trade based on the technical setup we showed you back then, then you should be selling Bitcoin based on the setup we’re sharing today.
Best regards and good trading,
Jeff Clark
Editor, Market Minute
P.S. This is a real-time application of my “Magic Pattern” in action. If you had bought Bitcoin when I suggested in August, you would be sitting on nearly double your money in just a few short months in an asset as big as Bitcoin.
I recommend setups like this all the time, for opportunities to double and triple your money. I’ll guide you through every step of the way right here.