Bitcoin: Mid Range Prices No Advantage.

2 maj 2021

Bitcoin stuck while Ethereum continues to flirt with highs? Maybe ETH is taking the lead but all the coin drama aside, the only thing that really matters is RISK, no matter what coin, time frame or strategy. If you can't evaluate and respect risk, you can't win in the long run. This space is still enjoying a frothy and complacent cycle which at some point will change.

As far as Bitcoin goes, in my previous article I highlighted the potential buy signal at the 51,300 area. You can see the result of that now. Miss the move? It's understandable, because price was about 5K points higher within hours, and not worth chasing.

Bitcoin is now within what I like to call the 50/50 zone. It is gyrating around the mid point between 48K and 62K. This is after establishing a minor higher low off of the 52K area which was one of the potential continuation patterns I was anticipating over the previous week. Again tough to catch if you are not watching constantly.

I know everyone wants an absolute forecast, but this isn't the weather. As much as the "authorities" try to convince you that they KNOW where the market is going, the reality is NO ONE on this side of the equation knows. If anyone knows anything, (most likely an insider) it is not in their best interest to share it, ESPECIALLY on a public forum.

As a retail trader or investor, best we can do is evaluate price structures and come up with potential scenarios based on their relevance to the bigger picture trend. From this we can at least get a sense of where probability is more favorable, get an idea of how smart money is positioning AND most importantly measure our risk.

So what is reasonable to expect this week and what is the risk?

The current price position offers NO clear advantage, it is like flipping a coin (50/50). For those looking for new trades, there is nothing to do but WAIT.

One scenario that would prompt me to share a new swing trade idea is a retrace to the 51,500 area (small blue box) AND produce another bullish reversal confirmation (a pin bar would be nice). In such a scenario, risk can be defined around 2 to 3K points, and reward potential is still relatively reasonable since price can test the low 60Ks over the next two weeks.

IF the 50K area is tested again, that would be another potential buying opportunity (upon a setup and confirmation). If 48K is cleared, I would avoid Bitcoin until price stabilizes in the area at least (good to step in small for longer term).

And IF you are chasing Ethereum instead, 2550 is your first support, 2K is your second. That is the risk you face if you buy it at 3K and expect it to go to some unrealistic level in a very short time. Logic does not drives markets so using it in your decision making process will lead to random and inconsistent results.

One IMPORTANT event this week: The CME is going to begin their Bitcoin micro futures contract. Why is this important? It will change the behavior of Bitcoin because it opens a new area of liquidity and arbitrage opportunities for market making firms. Basically Bitcoin is more likely to behave like the S&P 500. Is this good? Sure, if you're a market maker.

Thank you for considering my analysis and perspective and I hope you find it helpful.