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01

Bitcoin Set for Record Second-Quarter Price Drop

No result found, try new keyword!Bitcoin prices were on track for a record second-quarter percentage decline, weighed down by China’s crackdown, concern the Federal Reserve would start tapering its stimulus program and persistent ...
02

Here’s What We Can Learn About Crypto From the Father of Technical Analysis

Some things never change… and smart investors use that to their advantage.

bitcoin© Source: Shutterstock bitcoin

I’m guessing you’ve never heard of Richard Wyckoff. After all, he was born 148 years ago and died 87 years ago.

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What the heck could someone who passed away more than 80 years before Bitcoin (CCC:BTC-USD) was even developed teach us about cryptocurrencies today?

Turns out… a lot.

Richard Wyckoff is one of the original fathers of technical analysis. He was a pioneer in this approach to studying the market, and even though his work goes back to the early 1900s, it provides a valuable framework for analyzing Bitcoin and altcoins.

Especially right now when the price action in Bitcoin has been pretty lousy the last couple of months.

Let’s take a look at what that volatility is telling us about the present and the future through the eyes of someone who lived a century ago. It’s fascinating, and it could help you make a lot of money…

Over the course of his career on Wall Street, Richard Wyckoff observed individual investors getting repeatedly fleeced by larger institutions. The big money almost always traded against the little guy, and it almost always won.

Told you some things never change.

I hear from investors all the time who think the game is rigged against them… and they’re not wrong in many cases.

I’m not happy about that, and neither was Wyckoff. He spent the greater part of his life hoping to level the playing field by instructing individuals about “the real rules of the game” as played by the big money. If that sounds like a modern-day newsletter service, you’re right. He was the founder of The Magazine of Wall Street and editor of Stock Market Technique.

The titles may be bland, but he was on to something.

Wyckoff focused on the factors that most affect price action, including supply and demand, volume, and emotion and psychology. He realized that individuals were almost always buying and selling at the worst times.

That should sound familiar, too.

To help understand the “game” and price movements, he came up with an imaginary person he called the Composite Man.

…[A]ll the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.

Spot on.

And that’s why we can learn a lot about Bitcoin’s price action from someone who died long before computers were even thought of, much less cryptocurrencies.

The same dynamics and patterns existed then, and they exist now in markets with institutional investors involved.

Below is a schematic of a Wyckoff accumulation event — a buying phase in which an asset’s price increases after selling off. The important takeaway is that the buying phase happens when individuals are selling out of fear and exhaustion, usually at a loss.

And guess who is happy to step in and buy at a discount? The institutions.

diagram, engineering drawing© Provided by InvestorPlace

Now, compare that image above to the chart below showing Bitcoin over the last five weeks. Pretty similar, wouldn’t you say?

chart© Provided by InvestorPlace

There’s a good chance Bitcoin is later in Phase B or possibly in Phase C right now. That would mean we are close to a breakout to the upside.

Bitcoin has bounced from just under $29,000 at the beginning of last week to current prices around $35,000. There is significant resistance just ahead at the $39,000-$41,000 level (the top horizontal yellow line), so price action around those levels will be important.

Whenever the breakout does happen, we could easily see a big move in Bitcoin… and even bigger bounces in smaller cryptocurrencies known as altcoins.

And there is virtually a 0% chance that the breakout won’t happen.

Blockchain and the software that runs on it — the cryptocurrencies — are transformative technologies. Such a massive transformation will take time, which is why we invest for the future more than the present.

Plus… Richard Wyckoff’s analysis describes exactly what is happening with Bitcoin right now. Data shows that short-term holders — mostly individuals who bought when Bitcoin was soaring earlier in the year — are getting shaken out of their investments and selling at a loss. Longer-term holders — more of the institutions — are hanging on and even buying more.

From June 18 through June 25 — when Bitcoin fell nearly 15% — long-term holders added 120,739 Bitcoins while short-term holders unloaded 97,333 Bitcoins, according to data from Glassnode.

That’s a shame. Just as Wyckoff observed more than a century ago, weak hands continue to sell into stronger hands.

And as a final nod to Wyckoff, I would also suggest that cryptocurrencies are the number one weapon regular folks have against Wall Street right now.

We want more transparency in things like investing, saving, loans, insurance, trading, betting and more. That’s what this new phase in the evolution of cryptocurrencies provides. Bitcoin pioneer Charlie Shrem and I call this “Blockchain 2.0.”

Bitcoin earned the bulk of the gains during the first phase. But this new era belongs to hypergrowth altcoins.

Thanks to altcoins, anyone with an internet connection can access crucial financial services all in one place — cheaper, easier and safer than if they went with a big institution. With just a single click of your finger, you’ll be able to take out a loan or mortgage… buy a new insurance policy… make money loaning out your money… and invest in stocks, bonds or any other asset class.

And the best part? You won’t have to deal with a middleman and their unnecessary fees.

This is a massive cryptocurrency catalyst that is about to fuel select altcoins to never-before-seen heights.

It’s a global movement toward an open financial system… and the biggest revolution to occur in finance in centuries.

The flood gates are just beginning to open.

On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now.  

03

What Role Does Technical Analysis Play in Bitcoin Trading?

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More awareness of cryptocurrencies is needed to become more popular and widespread and eventually achieve the potential that they have always been hailed for. This can only begin if we better understand the critical factors that contribute to our industry’s success.

One of them would certainly be Bitcoin Trading technical analysis, which entails understanding market mood and key patterns. Average traders can make better decisions, predict market fluctuations more accurately, and be more successful at their jobs in general if they have this knowledge at their disposal.

However, it would help if you approached it correctly to do this. Don’t worry; the information in this post will assist you in doing so. All you have to do now is read all the way through to find out just how crucial technical analysis is for Bitcoin trading.

Getting a Hang of Things

Technicians, or chartists as they are sometimes called, examine the big picture by using analytical tools to explore history. This allows them to gain a better understanding of the present market’s appearance and feel. In the technical analysis game, price movements are the most important factor to consider. The majority of information can be gleaned by simply studying Bitcoin’s and its price history, considering the numerous dramatic spikes, both positive and negative. The best chance you have of predicting the next possibly game-changing event is to identify the patterns or try to do so because it is tough.

The Basics

The fundamental concepts should be mentioned to understand everything better. First, you should compare the best stocks on the market and all present, past, and future information on the ongoing price of something; in this example, Bitcoin is already taken into account. As a result, the current price per coin is already a reflection of all previous demand, existing circumstances, and expected future supply and demand.The information, knowledge, and expectations of the market and those who engage in it already represent everything. Experts look at how all of this affects the market, what it says about it, and how it can be used to make the most accurate forecast possible. Overall, technical analysis is really important.

Following that, we’ll discuss price fluctuations. They rarely happen for no apparent cause. Instead of a random flow, they adhere to both short- and long-term trends that must account for various reasons. When a trend emerges, it is more difficult to ignore it than to follow it, and technical analysis exists to help us understand how we might profit from the trend. In technical analysis, the causes are less significant because experts are more concerned with the price history than with the same factors that led to the situation in the first place.The key here is to look at how supply and demand changed as a result of however many factors there were, rather than what those factors were.

Finally, in this section, we must recall the saying that history tends to repeat itself. This is true in the fields of finance, economics, trading, and investing. The general market’s psychology is predictable, and traders and investors react in the same way when similar circumstances arise as before. As a result, learning what happened in the past and how the best players in the game reacted can help you in the future when a similarly dire or promising event occurs.

*/ ]]> Things to Remember

It has already been stated that by leveraging the data obtained from all of the analysis, traders can take advantage and identify opportunities and smarter investment decisions. However, there are a few things to be aware of that are worth mentioning.

Despite the value of technical analysis, focusing on the price and volume of something can cause you to miss out on a huge opportunity or to purchase a Bitcoin amount when it is not so advantageous to do so. Buying Bitcoin when it is undervalued or overvalued is a bad idea, and in many cases other than sheer analysis, common sense should be used.

In other words, a combination of technical and fundamental analysis is required. A good example would be when a trader realizes that all of the indicators and patterns point to clear purchase of Bitcoin, but they are still uncertain. Then, they can help bolster their case by analyzing fundamental data about the factors themselves, as well as what and how they influenced the market.

Conclusion and Key Points

To answer the article’s title question, technical analysis is critical to the overall success of the digital currency industry. However, focusing entirely on it will eventually result in some missed opportunities and bad calls. As a result, you must consult the other, more fundamental type of analysis from time to time and harness the power of both to your advantage and benefit.

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