Ten Reasons Why I'm Buying Bitcoin Right Now

Updated

This is a log-adjusted chart of the entire price history of Bitcoin (BTC) since data became available on Trading View. I applied a basic Fibonacci retracement overlay from the highest high to the lowest low. I also applied a trend line that connects the two lowest (reaction low) price points in Bitcoin's history to illustrate the level where price typically drops during peak fear (the line is based on a log-adjusted scale and is therefore a log-linear trend line).

With this said, here are 10 reasons why I'm buying Bitcoin right now.

(1) Price is approaching a very significant Fibonacci retracement level (around $17,381).
(2) Price is also approaching the log-linear trend line created by the price points at past bottoms.
(3) These lines have roughly converged in the same general range, which is rare. They also coincide with important trend-based Fibonacci retracement levels, as well as EMA exp ribbons that have previously supported Bitcoin's price.
(4) The Crypto Fear/Greed Index shows historic fear is occurring right now. Today we've reached the second-lowest rating on the index ever, indicating that fear is likely at or nearly at its peak. As experienced traders know: Sell when others are greedy, buy when others are fearful. Link: https://alternative.me/crypto/fear-and-greed-index/
(5) The Bitcoin hash ribbon indicates that capitulation has started. The moment a sudden, rapid move higher occurs, that indicator will switch from capitulation to buy.
(6) The Fibonacci Time Zone indicator suggests that Bitcoin's next major impulse wave may be underway in late 2023, at which point the price can easily push over $100,000 if Bitcoin's log growth curve continues as expected.
(7) Recently, Bitcoin has been inversely correlated to the U.S. dollar currency index (DXY) on the weekly chart (R= -0.733, P-Value: 0.0003, R-Squared: 0.3426). The DXY chart is showing signs of a topping candle near an important Fibonacci level. It is my belief that we are at peak inflation right now, and that the dollar index will soon top if it hasn't already. The corollary, therefore, would be that Bitcoin's drop may stop, assuming the negative correlation continues. Even if I'm wrong, there is a good risk-to-reward setup here.
(8) The price of Bitcoin has reached the 250-week moving average. This moving average successfully supported price at its previous reaction low in March 2020. Many traders are entering Bitcoin for this reason alone. Smart money has steadily been flowing in as weak hands sell to strong hands.
(9) The price of Bitcoin has been strongly positively correlated to the Nasdaq 100 ETF (QQQ) (R= 0.939, P-Value: 0, R-Squared: 0.6647). The charts show that QQQ is likely at a significant bottom. The NDTH is near the lowest it can go. The short derivate of QQQ (SQQQ) is already showing signs of fewer and fewer market participants opening up new short positions on tech, which is the first sign that a bottom is in for tech, and which can actually set the stage for a major short squeeze. All of this is extremely encouraging for Bitcoin which is highly correlated to QQQ.
(10) I can afford to take on the risk of Bitcoin falling all the way down to the next important level $8,000 - $11,000. This lower level is where the Visible Range Volume Profile suggests an absolute bottom may occur. Of course, the next Fibonacci level is also in play as an absolute bottom as well. That level is all the way down at $5,888. Reaching these levels on any sustained basis would be unlikely if the Bitcoin log curve is to continue. Perhaps a momentary blimp down to here is possible, or if a major Black Swan event further exacerbates unfavorable market conditions. It's always important to use stop losses unless you have a long-term plan to accumulate an asset and not sell in an emotional state, and of course, if you will not be subject to a margin call.

While only time will tell if this analysis proves true, there are too many reasons to buy Bitcoin right now for me to not buy. I will accumulate up to 10% of my portfolio and my average down amounts will increase at each important level until I reach 10% of my portfolio. Again, averaging down only works if you're a long-term trader (the time horizon is years) and you only bet a set percentage of your portfolio.

Blockchain technology is the future.

Not financial advice. As always anything can happen.

Note

Note

While this chart may look like a chart of Bitcoin, it is not. It is an inverted chart of Bitcoin's performance relative to the S&P 500 on an adjusted scale (adjusted both logarithmically, as well as order of magnitude). These types of adjustments better allow us to detect major bottoms in price action by enhancing our ability to visualize Bitcoin's price action relative to the broader index. This relative analysis allows us to surmise, to a fairly reliable degree of certainty, when a bottom reversal may occur. The presupposition, which does not always hold true, is that a bottom reversal occurs at levels of peak underperformance relative to the broader index, regardless of that index's price action. Even if the broader index is declining, the comparative asset will decline less if the underperformance trend has indeed ended. These adjustments, therefore, allow us to more accurately identify the asset's peak underperformance relative to the broader market. Of note, the yellow line is the 20-month EMA, which I have labeled as a major bottom indicator, though no statistical analysis has been done to prove that this line is not overfitted to past data. It nonetheless presents a good risk-to-reward setup.

Note

Please leave a like if you agree. Please leave a comment if you identified any errors in my analysis. Thank you, kindly.

Note

The 3-month and 6-month charts show that Bitcoin prices have reached important moving averages simultaneously on both time intervals. This rare time interval convergence further supports the conclusion that Bitcoin's price will find some sort of important support level here.

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