Today was a momentous day for Bitcoin as King Corn surged higher again, rallying over $4,000 and breaching the $40,000 level for the first time to print a significant new ATH. After reaching $40K, Bitcoin quickly pulled back in the face of resistance, short-term traders taking profits, and some smaller short positions, but Bitcoin quickly recovered, finishing the day near the highs exhibiting the strength of its buying pressure. Bitcoin's getting a little overheated, so I wouldn't be surprised to see a correction soon, but trying to time a short-term short against crypto is a recipe for disaster for most.
(January 7, 2020 7:30PM EST)
Bitcoin surged nearly 10% Thursday, briefly reaching above the $40K level as the bullish parabola continues. Sentiment is extremely high right now and technical indicators are off the charts (see Daily RSI above). Now, that doesn't indicate a top is in or imminent, but it does indicate that it may be near in the not so distant future. Nothing can go up forever; anyone who didn't know that learned the hard way in 2017 when Bitcoin (and most of crypto) printed a similar-looking chart by the start of 2018. That's not to say Bitcoin has topped and the bull run is over; quite the contrary, I think we're closing in on the end of the first wave of the bull market's Elliot Wave path. I'll do an Elliot Wave schemata for Bitcoin and Ethereum's long-term price targets once we have a confirmed or suspected confirmed local top in, as that will provide us some clarity in determining impulsive waves and corrections.
From here, I'm looking for a local top, which I surmise will likely be somewhere in the $40K - $50K range, which will be our first "major" target in this bull run and a significant "checkpoint" on the way to a six-figure Bitcoin price. The path of least resistance is up; don't try to fight it unless you're a degenerate gambler willing to get burned. At this point, I'd put support around $30K with stronger support around $25K down to $20K. There will be a retracement at some point, though possibly not until Bitcoin hits $50K at which point a rejection there at resistance may inspire some profit-taking enough to stimulate a short-term correction. If you've been in crypto for a while, you know that moves tend to be exaggerated in both directions due to the volatility and heightened market psychology stages.
I think the best strategy going forward is to buy on dips, dollar-cost average on a regular basis, and even earn Bitcoin if you can. You simply can't short or even sell this market when all it does is go up over time. Sure, there are short-term fluctuations, but long-term there's no sense in missing out on this ride. This is truly the trade of the decade: if you're not in Bitcoin, chances are you'll be getting much worse returns elsewhere.
Support: It's surreal to say but my first point of support is $30K, which is a large, round psychological number and further supported by the 38.2% Fibonacci retracement level just below around $28,500. Below that, I think there will be massive support around $25K which is supported by the 50% retracement level and is a large round psychological number as well. Below that, I think more and more buyers will step in the closer Bitcoin gets to $20K as they know it will not last long, not when Bitcoin can slingshot higher in a couple of months and triple their money like it's done so many times before over the past 11 years. Why would this time be any different?
Resistance: Keep an eye on price action around 40K; if BTC experiences some trouble and gets rejected there multiple times and it seems like the dips are bought less and rallies are faded, then I think we'll see a bearish sentiment shift and a correction will ensue. If Bitcoin breaks above $40K, look for $45K, and then $50K. After that, we'll probably move in $10K increments.
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