People who got in Bitcoin for the first time in the last 1-2 due to FOMO got burned again (just like in late 2018) when price collapsed on Weds.
Bitcoin soared as much as 39% this week to $13,852, the highest since January 2018. But it hit a brick wall around 4:30 p.m. New York time Wednesday, plunging more than $1,800 within about 10 minutes. Moments later, prominent cryptocurrency exchange Coinbase Inc. reported an outage on its consumer site, which was resolved in under an hour. Swings continued Thursday, with the coin anywhere from down 15% to up 4.8%.
It was down 15% to $11,111 as of 12:23 p.m. in New York. Volatility in Bitcoin is near the highest levels since early 2018, when the bubble was bursting. Analysts said this was likely a sign of things to come.
“A 20%-30% pullback would not be surprising and very consistent with Bitcoin’s recent bull-market pullbacks,” Robert Sluymer, technical strategist at Fundstrat Global Advisors, wrote in a research note.
This is one of the reasons why you need to know what you are investing in and that FOMO will kill you. Equally important before getting into a trade, you must know the level you were wrong so you can get out of the trade and the level where you want to take some profits. This is the model we all should take, regardless if one is a day trader or long term investor. So lets take a step back and put some things in perspective.
From the recent low in June, price has retraced only 50%, which is rather normal and gives investors/traders who didn’t chase FOMO an opportunity to get on board. Levels to be mindful of is the psychological level at $10,000, the long term previous resistance/supply at $8000, but the get out of the trade and regroup is the demand at $7900.
NOTE: I didn’t mark it on the chart, but there are also buyers between $9000 and $9250.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.