Trading Bitcoin: Price Tops at the 0.618 Fibonacci

Price Tops at the 0.618 Fibonacci

Price tops: At the time of writing, Bitcoin is experiencing a cascading waterfall as price declines by 12%. In yesterday’s article, we noted,

“$13.5k has confluence with the 0.618 golden fibonacci level which typically acts as resistance. If a rejection should occur, it would most likely occur at the $13.5k price region.”

As of now, Bitcoin has been rejected at $13.7k and is now going through a hard correction. Additionally, we looked at sentiment in yesterday’s analysis. Yesterday, the crypto fear and greed index was at 95/100, its highest level ever. Today, greed has begun to decrease to 92 for the first time throughout this massive run up. Greed is a noteworthy indication because if it cannot be sustained, there is no reason for the price of Bitcoin to be this high. Nothing has changed in the fundamentals of Bitcoin. While Bitcoin’s technology is improving, it’s not improving at a rate which would increase price 80% in one month. Naturally, pullbacks occur when markets rally irrationally. In many cases, price will crash much faster than price increased to begin with.

Conclusion

Price tops: Eventually, Bitcoin will find support and consolidate. Currently, it appears we are in the midst of a possible 30-40% correction to the $8k – $9k price region. However, this does not mean the bull market is over. A correction of this magnitude would be very healthy for Bitcoin’s macro trend because it would give the market the opportunity to create a true higher low. When markets bottom, they don’t increase forever, a second higher low needs to be formed. While many people believe Bitcoin transcends traditional markets and technical analysis, humans are still the ones buying the asset. As we know, people are irrational and their psychological patterns are mathematically predictable.

On the other hand, if price rebounds and breaks through the fibonacci resistance at $13.5k, the next level of psychological resistance is $20k. While this scenario is possible, as of now, it appears price has topped after an extraordinary run.