20.12.22
Today’s trading spotlight deals with the cryptocurrency Bitcoin. If you have heard of cryptocurrencies you will know Bitcoin, so I do not have to talk about Bitcoin in general. Bitcoin is still the uncontested king of coins.
Even though we have seen a drop of ~75% in BTC from its all time high (ATH), I think we still have a leg down to come with the world economy still having a hard time. Inflation numbers are still high and fears of recessions in many countries are still strong.
Even though my long term (5+ years) expectation is still bullish, the short term timeframe is not looking good in my eyes with “weak” world economies. Every time I take a look at Bitcoin (and overall crypto markets), I compare the price movement to that of the US economy or more specifically the $SPY, which pictures the biggest 500 US public companies. I make this comparison as the crypto market still feels attached to the equity markets in some way.
Below is the daily chart of Bitcoin pictured with a short term resistance line in red, where the BTC price reversed its mini pump at ~$18k and went down further.
For a trade with a more conservative play I would consider this $18k level the risk level. For a little more aggressive play the risk level lies lower, either around $17k where BTC had trouble breaking above earlier and where it wicked too in the last hours. You can see the last few hours of BTC in the below chart, with the lower red line marking the $17k area.
For the trade I would consider a Short trade for BTC, risking a break above the $17k area for a stop loss. Entries somewhere below, ideally in the $16.8k - $17k price area. The exit/target area for this plan is around the $16k - $16.2k where the recent low in the above image is. The risk/reward is around 1:2 - 1:3 or potentially more if BTC has a big flush.
At the time of writing BTC is having troubles at the $16.8k level, where it can not break above.
As the volatility is not really high in other coins, you can possibly trade altcoins following the BTC price movement, which potentially can provide bigger gains.
I hope this helps you. For any questions feel free to send me a DM or write below in the comments. Have a great day!
Niklas
This is not financial advice, it is for educational purposes only!
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