Bitcoin Analysis

Some quick price analysis of the current environment for those who enjoy it:



So since the beginning of this year BTC price has been forming a chart pattern known as a descending triangle. Its one of the most accurate indicators in technical analysis in predicting price movement. As you can see from the chart, while BTC price has maintained a stable base at around $6k, it has continued making lower and lower highs, hence the formation of the descending triangle pattern. What the pattern predicts is that once that triangle is cleanly broken(a full candle below the triangle), price will capitulate to the downside. From what I understand, the probability of a descending triangle breaking down is roughly 3/4.

But wait, theres more! Say it breaks down, whats the price target? Well, the breakdown will be roughly equivalent to the percentage change from the top to the bottom of the triangle, in this case its about a 50% price move. So if we cleanly breakdown from $6k support, we can see ourselves at $3k very quickly. The odds of a descending triangle meeting its price target is roughly 3/5.

Theres also a lot of other reasons as to why its very probable price will capitulate quickly once we break the $6k support line. If you look at the charts, there was significant buy volume around this price range. Many of these people will panic sell once price is reasonably below $6k, and thats when the capitulation will set in, because huge sell volume will set in once that occurs. This is generally how the end of a bear market turns out. The bear market of 2018 in BTC so far has been an absolutely text book bear market in terms of price action, thats why its surprising with people constantly calling for bull runs every time the price goes up like a thousand dollars. BTC has been making lower highs since February, its nowhere near a bull market.

Having said all this, theres one major reason why I'm still very cautious and why I haven't shorted my BTC yet. Its because of the unreasonable amount of shorts:



Historically, when shorts have been this high there has always been large spikes up in price action as you can see from the chart. In fact, the last time the long/short ratio(not shown in the chart) was at this level, we made the historic bull run from $7500 to $20k. The market isnt gonna make it easy for people to make money shorting bitcoin, thats just not how trading works. So given this, I'm still remaining cautious, but I'm definitely leaning more towards the descending triangle breaking down in a violent fashion.