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Why this might be the worst time to buy Bitcoin

27 Feb 2019   #Bitcoin

For over a year, investors were forced to watch their Bitcoin investment melt as the coin's price continued to drop. Thousands of people around the world were waiting for a bull run, hoping that HODLing is the right thing to do, although to no avail, as the prices kept sinking. After two market crashes, BTC ended the year at a low point of $3,200. However, the new year promised a new start, and possibly a rally that failed to arrive, as 2018 drove to a close.

The bull run seemingly finally arrived nearly ten days ago, when Bitcoin price started growing and climbing towards its $4,000 resistance. While it breached it several times, it was unable to remain above this price. However, as the roadblock kept the coin just below the $4,000 mark, the bullish trend was suddenly replaced by a bearish one.

All hopes that Bitcoin will breach the barrier and go for one of the next major resistances were dispersed, and a correction occurred, affecting the entire market. The continuation of the rally is still not completely dismissed, although it is more likely that Bitcoin might continue its drop.

Why might Bitcoin drop further?

At the time of the drop, both the daily RSI and the Stochastic RSI were topped out, showing that there is not much room left for Bitcoin to continue its growth. As mentioned, its price continued to experience rejections whenever it approached the $4,000 mark, as well as during the periods of the breach, which were all short-term, and were nullified within minutes.

Also, while the possibility of the return of a bullish trend exists, it is more likely that the market trend might remain bearish. In fact, the only scenario in which the rally is possible is if the golden cross is made on the daily time frame, which seems unlikely.

As a result, the bearish scenario is a realistic alternative. There are two such scenarios that might come to pass, with the first one being the bearish pennant. This is what happens when the price is falling aggressively but then enters a pennant because it could not complete a correction at once. The pennant comes as a short period of stability of growth which allows the market to take a brief break before the decline continues.

The other possibility is a temporary bullish trend which will take a turn as the bear flag is being formed. This possibility is less likely to arrive, although chances for it are higher than chances for a legitimate rally. Whichever scenario eventually plays out, it is likely that the Bitcoin price will continue to drop, which is why a decision to buy Bitcoin at this point might be a bad one.

As for the intensity of a drop, this is a bit more difficult to predict, as Bitcoin has some strong supports below its current position. It is likely that the coin might end up sinking to $3,000, although there is also a possibility that it will go even further down. Earlier, there were some predictions that the coin might drop to $2,500, or even $2,200 as a result of the final effort of the bear market before it can truly start climbing back up.

The arrival of the bulls caused a lot of traders and investors to dismiss such predictions, but as we can see now, it might still come to pass.

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