Bitcoin saw a sell-off Tuesday and this morning after it managed to touch resistance. Have we seen the top for now, or is bitcoin gathering itself for another launch upwards? Traders beware.
From its high at around $25,250 on Tuesday, bitcoin fell up to 5.5% down to about $23,860. Since then it has regathered itself and is looking to get back above $24,300 which has now become resistance. This is also the bottom of an upwards channel the price has been following since mid-February.
Bitcoin bulls would like to see the price regain both the resistance and enter the channel again before returning to attack the major $25,000 resistance once more.
The perversity of the market
Those who have been trading markets for many years know just how perverse they can be. Yes, every good trader has their set of indicators they use, and personal rules that they know they must abide by.
But even the most competent trader knows that there will be plenty of times when the market just seems to take the most unexpected path, as if for the fun of getting as many traders wrecked as possible.
Many traders are unsuccessful
According to Investopedia, only 5% to 20% of day traders consistently make money, and these are probably more likely to be those who do it for a living.
The crypto market is far more accessible to those wishing to trade given that it is truly global and that it operates 24/7 throughout the year. This means that a lot more amateurs will trade cryptocurrencies.
Perhaps it could be stated that less than 10% of those trading crypto will be successful in it, and that is especially the case for those who are day trading and for those who use leverage.
Those with poor trading knowledge will be flushed out
There is no doubt that there is potential value in some of the current crypto projects, but just as in the case of the dotcom bubble, probably the vast majority of crypto projects will not make it.
Investors will do as they will do. Perhaps it takes getting really burned on a few occasions before sense and proper risk management is used. However all of the weak hands would probably eventually be flushed out of this market.
A successful strategy?
Bitcoin is perhaps seen as one of the most boring of the cryptocurrencies because it doesn’t have the volatility of the others. However, its downside is arguably much less than its potential upside, and it is probably a lot less risky than the altcoins. Those who regularly average in with small amounts might do well (not financial advice).
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
