Trying to prove my point to a friend

By LordTitoso | Is the Crypto Market a bet? | 30 Jan 2025

Today (January 25) I was talking with a friend. He is starting to invest and I asked him if he considers to invest in cryptocurrenceis, and he said: “It’s to hard to invest! Investing in cryptocurrency is like a bet, you never know what will happen, you buy betting that it will go up!”

So I said: Sure, if you put your money into projects without any basis or out of pure guesswork, you would be making a bet. But, even so, you may not lose all the capital you invested, which happens if you lose a bet.

I showed him this chart in TradingView, of Optimism. It's a solid project even if has almost just 3 years, it have more than 2 billion dollars in market cap and the price is 1,66 dollars. I must alson consider that we are in the bullmark.

Image 1: Optimism chart on Coinbase, seen on TradingView. 1 day period

So I asked: would buy this cryptocurrency? And he said that not a option since the price is to low and looks like it’s falling. And he is right, but, let’s go into a little deeper analysis. I put some indicators and made some markings, and here is the chart.

Image 2: Optimism chart on Coinbase, seen on TradingView. 1 week period

First, place the chart on a weekly base to have past references more easily visualized;
Place the BB (Bollinger Bands) indicator to measure the volatility of this asset and identify overbought or oversold conditions;
Place the RSI (Relative Strength Index) indicator that measures the speed and change of price movements, helping to identify overbought or oversold conditions;
Draw support and resistance bands

What we have here?

The chart shows us a downward trend in the last six weeks. As we can see, the candle breaks the upper BB (red line) in addition to breaking the resistance, indicated by the red band, showing a possible trend reversal. This corroborates with the downward break of the 20-period average (blue line) and the downward movement of the RSI (purple line).

Image 3: Close-up view of the last few weeks on the chart

But here’s the beauty of investing. There is a strong support, indicated by the green band, and, as we can see in Image 3, the lower BB (green line) has just entered this support band. So, if the candle touches the green BB line within the support, we have a great chance of reversing the downward trend in the coming weeks. What we can do here, while this downtrend persists, is a DCA.

That’s what I told him, but it still doesn’t mean anything to him and it remains like a bet.