The big move everyone is waiting for...
Market Cap: $272,533,689,181
24h Vol: $67,681,507,380
BTC Dominance: 67.3%
BTC Price: $10,220.82
Almost every trader in the crypto space is eyeing this obvious compression pattern. I’ve written about compression patterns before, but in short summary they act like springs being pushed to the maximum point of tension and then when you ‘let go’ they break out violently to a direction.
Kinda like this…(ignore “spring at Rest)
Normally, the market will move about the same distance between when the pattern starts (illustrated below)…
The BIG question is… which direction will it break out?
Crypto twitter has been debating this for a few weeks now, many people suggesting it is a bullish flag, others a bearish. The objective reality is it is a bilateral pattern, in a very uncertain market. Meaning the true direction of this breakout is VERY unclear, and VERY unpredictable. I know this isn’t the most helpful insight, but it’s the truth.
My thoughts are that the breakout will be to the downside, purely because there are far too many crypto ‘investors’ who are far overconfident in the short term performance on the market without any tangible reason as to why. When the majority is expecting a bullish outbreak a) the market has likely already priced the “outbreak” into the price b) the herd is often wrong, especially in the long run c) institutional investors will use the extra liquidity to manipulate the market.
I’ve spent the past few days studying similar patterns in the crypto market, and the results are around 50/50. We have seen times like this, when volume is decreasing, and compression patterns arise and we’ve seen both very aggressive moves to the downside, and equal spikes upwards. It really is too hard to tell with any degree of confidence.
With that said, this is what I am doing…
50% of my portfolio is in Bitcoin.
50% of my portfolio is in fiat (usd).
If the market spikes up, great, Bitcoin will likely gain the most in percentage and I will make money in it (albeit less than a 100% allocation), then I will average in the other 50% over time.
If the market falls, my Bitcoin will lose, perhaps 10-20%, however I will average in my fiat and look to gain on the rebound upwards from a sharp decline.
The lower end anticipated target for this move is around 7,000 and the higher end target is around 13,000 USD. I do expect either direction to stimulate a snowball effect. What I mean by this is the dominant emotions (fear and greed) will cause people to panic and sell if the price reaches 7K, or panic and buy if the price rallies.
I believe my structure of 50/50 mitigates risk well in this environment.
To conclude, just be careful when big trades are near, there are no certainties and balancing risk is key.
Hope this helps and wish you all the best,
Devin