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Bitcoin Plummet Was Expected – Why? for KRAKEN:XBTUSD by TraderNeoh

Hi Traders, today we’ll be discussing my Technical Analysis on Bitcoin and why did i called a reversal earlier on 25th October around the 68k area.

Bitcoin has been in a strong rally ever since Covid-19 outbreak, definitely a hot instrument to trade. Whichever trading platform or community you go, everyone’s talking about Bitcoin heading to 100k mark. Do not get me wrong, I do agree Bitcoin could possibly head towards the 100k price level, but in the short-term, it needs to pullback to balance out the supply & demand factor.

Think about the market psychology, when everyone’s chasing the buys, Bitcoin’s is set at an overbought condition. When a market is extremely overpriced, it will eventually return its short-term true value. It has nothing related to market manipulation, it’s just how supply & demand works. When one side is pressing so hard, market finds insufficient buyers due to its overpriced condition which causes a slow down in uptrend, then sellers find opportunity to take advantage of the short-term selling opportunity. Naturally, it will create a Price Action where price halts around the previous high, grinding lower indicating multiple failures, then have that sharp drop when supply has completely overcome demand.

So, when Bitcoin returns to a reasonable price, big buyers will naturally step back in.

It all goes back to one thing, which is the failure to understand the difference between short-term trading and long-term investing. If you’re a long-term investor, most likely you’re not so concerned about the short-term price fluctuation, either you have a smaller size to protect the downside, or you’re buying at a very reasonable price where noises doesn’t cause any impact on your portfolio. But if you’re a short-term trader, it is your job to develop a strategic trading plan and strategies, to enter and exit at the best price possible. If you’re a short-term trader chasing highs, a big swing downwards will shake you off because of your risk exposure due to the leverage.

Let me know your thoughts on Bitcoin on the Technical side.

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