Bitcoin Analysis May: Indodax Market (Indonesia)
Hello everyone!
This is my second post about cryptocurrency market. I am trying to answer several questions and also do a little bit of technical analysis. Before we continue, please read my disclaimer
DISCLAIMER
This post is not an investment or any financial advice. I only try to post as a mean of exercising my technical and fundamental analysis skills, which are far from perfect. If you decide to follow what I do, you hold full responsibility and accountability of your action</>
So let's continue. I will use price actions and market from indodax.com , Indonesia's biggest crypto exchange. And note that the number may look funny (100 millions or more). Don't worry, it's just that I use Indonesian Rupiah (IDR) as the unit (1 USD = approximately 14000 IDR, data per 29th May 2018).
First, I want to address 2 things.
One is that everyone being so salty and angry about the consensus almost 2 weeks ago. Why?
They were expecting the price to skyrocket soon after the consensus, while in reality the price dropped quite sharply. For those people, I can only say that they need to look back in history. According to instagram and twitter account that is very expert in cryptocurrency, historically the so called bull run happened quite a long time after consensus, not immediately.
So, instead of panicking, being salty or pessimistic, in my opinion now is one of the best times to buy cryptocurrency (if you want to invest) this year.
Secondly, most of the people in crypto space have been at least seen this Wall Street Cheat Sheet
Many people think that we are in Disbelief or Depression phase, so that the price will go up soon...and those who bought at near ATH can finally take (a little bit of) profit, especially after seeing the bitcoin price action like this:
If we combine 2 last pictures above, one can easily assume that the rally will begin soon.
But it seems that it won't happen anytime soon. Price just dropped and dropped and dropped. People are starting to desperate now. Well, I used to too! After all I bought a little at the top, even though not much.
(Note: I only use BITCOIN chart because it is still the dominant cryptocurrency and that altcoins are still "following" bitcoin trends)
Here's the problem: people are actually forgetting several important things:
- There is no time frame in Wall Street Cheat Sheet. It could be 1 month, 1 year, or even 10 years...or even a week cycle.
- Cryptocurrency, especially bitcoin, is one of the most manipulated market nowadays.
Alright, for the first point, I cannot say anything except "be patient", that's all.
The second part is what is really important. The biggest difference between 2018 and the previous years is that this year, institutional investors are going into crypto space. In 2013-2017 the markets were mostly filled with retail investors and traders(you know, individuals like you and me, who barely have 1000 USD to start playing cryptocurrency). But now, the "BIG" players are coming to play:
George Soros:
http://fortune.com/2018/04/06/george-soros-cryptocurrency-hedge-fund-bitcoin/
even WALL STREETS:
https://www.nytimes.com/2018/05/07/technology/bitcoin-new-york-stock-exchange.html
You know what will happen when big kids enter the playground? That's right, they will try to chase small kids away. This is most likely what they do...
Well, not exactly by kicking our asses out, but by making us, retail and amateur investors, getting desperate or bored and then leave this market. How? by manipulating the price to go down lower and lower. Also, this actually gives them opportunity to buy this asset class at the absolute lowest support to ensure that they gain maximum profits. Well, it's not actually wrong, it's just a strategy and there is nothing we can really do, except perhaps, HODLing.
Let us move on to the technical analysis. After all, the chart also represents the market behavior and human psychology...
Again I would like to remind you that this is not an investment advice and I am not a financial advisor.
Before we really get into a state of panic, saying crypto is dead an stuffs, actually do yourself a favor and look at the bigger time frame.
As you can see, in bigger time frame (weekly), We are in a giant bull run. Just look at the trend line (green). It is not possible that bitcoin can reach 150 million IDR (10000 USD-ish) minimum by the end of 2018.
Then, if we zoom in to the daily time frame for the last 3 months, we get this picture:
Using levels I have been fine-tuning now, we are actually testing the 104 million IDR level (red line). It is very likely that we will go down further to around 96 million IDR (black line further below, and even to the red area (around 71 - 82 million IDR). I would happily buy and spend most of my money if bitcoin reach the 82 million level. But I would start to get panic if bitcoin still go down below 71 million IDR.
This is the explanation of my statement above: If we look at the chart with Relative Strength Index below:
You can see that we are actually in a mid-term BEAR MARKET (not to be confused for my long term bull run on several previous pictures above). You can see that this year alone, 3 counter trend lines have been formed, with synchronous Relative Strength Index. Most probably, people who are angry, start to get bored or depressed are those who invested in the end of first or second counter trend line. They speculated that when price broke the trend line, bull run starts. But this is also what I find intriguing about cryptocurrency: there are many false breakouts. I don't know who does these but it actually works to sucker-punch amateur investors. You can see on the middle counter trend-line (second red line on the chart) that false breakout happened, and if we zoom in to 4 hours or hourly chart, you can see so many similar patterns...and you'd hear many sad story about traders and investors losing their money.
Now, if we look at the picture below, you can see why I am quite sure that bitcoin price will reach 71-82 million IDR
We are near the giant-bull-run-trend-line support (the one I showed you above in weekly chart). Ideally, when the price hit that level, it would bounce up. But this is exactly what I mean by manipulation. The manipulators will likely spike the price down a little to the red region, making amateurs and somewhat young investors panic, feeling that the era of cryptocurrency is over, and panic sell their holding. Who will buy the crypto they are selling? Of course the winner of this game: the big players, the patients, and the seasoned trader/investors.
So, here's what I will do:
NOTE: ONCE AGAIN, THIS IS JUST ME SHOWING WHAT I DO. NOT A FINANCIAL OR INVESTMENT ADVICE! If you wish to follow what I do, follow at your own risk.
The scenario I mentioned is just a possible scenario. The price could actually go upside super quickly and skyrocket tomorrow. Or the price could drop to almost zero. Since I am an investor and swing trader, I play safe.
I save my fiat and buy ferociously when the price reaches 71-82 million IDR area. Because that area is a very strong support, the price could bounce quite high. That's where I take some profits.
But what will happen if price goes down lower?
This is why exactly we need to do fundamental analysis. Cryptocurrency market is still pretty young. Even though bitcoin price go even lower at let's say 1-2 million IDR, I would still HODL (Ah, for you who are new to cryptospace, HODL is basically holding and not letting go of your crypto bag and sell it later when price goes higher). There are only 1-2% people in this world who are exposed to cryptocurrency, let alone those who are active at the market. So there are still so many influx of people that will increase the demand in cryptocurrency and make the price go higher again.
And what will happen if the price doesn't hit the red area and skyrocket immediately?
I won't FOMO. I would just do averaging. I will just put my money to buy crypto weekly or daily and let them accumulate.
After all, what differentiate the successful investors and not are their plan in investing and capital preserving. I don't want to just throw away my money without doing some research and calculation. And I am sure as sure as I can to not invest more than I am willing to lose in this crypto-space.
Hope it gives you a little bit of an explanation and insight...Feel free to discuss with me if you want to