{"id":19164,"date":"2021-11-19T07:30:24","date_gmt":"2021-11-19T12:30:24","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19164"},"modified":"2021-11-19T07:30:24","modified_gmt":"2021-11-19T12:30:24","slug":"bitcoin-is-raising-a-big-red-flag","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/bitcoin-is-raising-a-big-red-flag\/","title":{"rendered":"Bitcoin Is Raising a Big Red Flag"},"content":{"rendered":"

You may have noticed crypto bulls<\/a> attaching “laser eyes” images to their social media profiles as a sort of virtual fashion statement…<\/p>\n

It’s a way of letting everyone know they think bitcoin (BTC) will rise another 66% from current levels to hit $100K.<\/p>\n

Over the long term, I wouldn’t bet against it…<\/p>\n

Because adoption keeps growing, the Fed’s money printing machine continues to be in overdrive, and inflation makes anything other than cash seem attractive.<\/p>\n

And according to recent headlines, blogs, and commentary, sentiment has been on the up lately…<\/p>\n

The first reason for that is due to two highly anticipated bitcoin ETFs going live – the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF).<\/p>\n

I’m not sure why this particular bit of news stokes positive sentiment towards bitcoin… These ETFs are structurally flawed and are of little use to long-term BTC investors.<\/p>\n

They don’t hold actual bitcoin, but instead hold futures…<\/p>\n

And due to constantly replacing expiring futures contracts with new ones – even if bitcoin stays where it is now for the next 12 months – holders of these ETFs will still lose money.<\/p>\n

The positive sentiment may also be due to a more fundamental reason, like the anticipation of a bitcoin network upgrade, known as Taproot (the last time the network had a major upgrade was in July 2017, sending prices up almost 50%).<\/p>\n

But, I’m not sure if any of this holds water…<\/p>\n

That’s why our latest essay on bitcoin questioned all the enthusiasm when bitcoin made new highs right in the headline: Bitcoin Is Back… But Is It Back with a Vengeance?<\/a><\/p>\n

It’s already fallen around 10% since then and is poised for more downside.<\/p>\n

The way the price action is shaping up, it’s a lot more likely to first drop another 20% to around $50K, rather than have those laser eyes hit their $100K target.<\/p>\n

Let me explain…<\/p>\n

This Similarity Shows Where Bitcoin Is Heading Next<\/h2>\n

When bitcoin was trading at $65K<\/a> earlier this year – fresh off of 200% gains from its December breakout – we introduced Market Minute<\/em> readers to the volume profile and used it to show how bitcoin was about to start heading down.<\/p>\n

From there, it dropped all the way down to $30K (where we started pounding the table for investors to buy).<\/p>\n

That’s because the volume profile shows traders the price levels where most people got in.<\/p>\n

It does this by showing how much volume was traded at each price… And the price level that shows the biggest volume buildup becomes the most critical area.<\/p>\n

Failure to continue trading above this area means that there are no more new buyers left. Once others begin the process of taking profits, everyone rushes towards the exit.<\/p>\n

At the time, that price level was $58K and bitcoin’s failure to trade above it was a big red flag.<\/p>\n

Now, I’m seeing something similar happen.<\/p>\n

Just take a look at this chart…<\/p>\n

\"Chart\"<\/div>\n

The volume profile in green to the left of the chart shows that this recent run-up had most people buying around $61K.<\/p>\n

And, since August, that price level had by far the most volume traded… making it even more important for bitcoin to hold.<\/p>\n

But there’s also something else…<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Very few investors were buying bitcoin on October 20, when it broke its old all-time high and on November 10, when it made a run at $70K.<\/p>\n

Now that critical price level has been breached… and along with that, bitcoin also rejected its short-term 8- and 21-day moving averages<\/a> (MA).<\/p>\n

Short-term momentum is important for bitcoin, as we laid out back in February<\/a> when we showed how most of bitcoin’s returns occur above<\/em> these technical points.<\/p>\n

So, right now, my price target is around the $50K level… and maybe a tad lower.<\/p>\n

You can also see from the chart that the $48K-$50K area also had a sizeable volume buildup and prices used it as a springboard to recapture all-time highs.<\/p>\n

For me, that would be the level where I would reassess going long on bitcoin and perhaps attach some “laser eyes” to my<\/em> profile as well.<\/p>\n

Regards,<\/p>\n

Eric Shamilov
Analyst, Market Minute <\/em><\/p>\n

<\/p>\n

Reader Mailbag<\/h2>\n

How do you feel about bitcoin now that it\u2019s failed to keep above its highs? Were you an early investor, or are you still doubtful about its future potential?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

When everyone rushes towards the exit…<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[13],"newsletter-type":[],"ticker":[],"class_list":["post-19164","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-eric-shamilov"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19164","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19164"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19164\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19164"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19164"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19164"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19164"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19164"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}