Bitcoin Just Broke Down… (Our July 2024 Bitcoin Forecast)
Summary
TLDRThe video discusses Bitcoin's recent 20% corrections, a significant shift from its 2023 performance. Despite a promising setup in May, Bitcoin failed to break resistance and diverged from the S&P 500's all-time highs. The presenter closed their Bitcoin position, citing a broken technical posture and potential downside. They highlight the importance of risk management and compare current Bitcoin trends with past market behavior. The video also mentions a successful Salina trade, suggesting a potential for a similar bullish run as in 2021, while emphasizing strict risk management in crypto trades.
Takeaways
- 📉 Bitcoin has experienced two consecutive 20% corrections, indicating a significant shift in behavior compared to its performance in 2023 and early 2024.
- 📊 There is a potential for Bitcoin's price to move lower, with the recent price action possibly signaling a topping pattern.
- 🔄 The expectation in May was for Bitcoin to return to its price channel and resume its bull market, but it failed to break above resistance and diverged from the S&P 500's performance.
- 🚫 A trade initiated in May on Bitcoin was closed at the same level it was initiated due to a breakdown in technical posture and a stop loss triggered by the price channel.
- 🔎 Historical data shows that Bitcoin and the S&P 500 have been closely correlated, but there have been divergences in the past with varying outcomes.
- 💡 The possibility of a false breakdown or bear trap exists, as the S&P 500 is at all-time highs and Bitcoin could potentially catch up.
- 📈 Large Bitcoin holders have been selling, which is the opposite behavior observed towards the end of 2022, indicating a change in market sentiment.
- 📚 Capital.com's analysis of large Bitcoin holders' activities provides further insight into the current market dynamics.
- 💼 Risk management is crucial for successful trading, with principles such as initiating trades with a good risk-reward ratio and booking profits early.
- 🔄 Bitcoin is currently in a sideways trading range with no clear direction, and a bear trap scenario could occur if it tests the bottom of the price channel.
- 🌐 The active trade on Solana (SOL) is based on a key trend line and has shown a 10% increase since testing support, with a technical setup similar to a successful pattern from July 2021.
- 📉 Despite high volatility, strict risk management has resulted in small losses and large wins in crypto trades since the start of 2024.
Q & A
What significant change in Bitcoin's behavior has been observed since March of this year?
-Bitcoin has experienced two consecutive 20% corrections, indicating a shift in behavior compared to its performance throughout 2023 and the beginning of 2024.
What was the expectation for Bitcoin's price movement following its peak in March?
-The expectation was that Bitcoin would return to its price channel and potentially resume its bull market after its peak in March.
What was the trading strategy initiated in May based on the key moving averages and S&P 500 performance?
-A trade on Bitcoin was initiated when key moving averages pointed upwards, suggesting a strong trend, and the S&P 500 was surging to new all-time highs, offering the possibility for Bitcoin to catch up.
Why was half of the Bitcoin position closed, and what was the outcome of the remaining position?
-Half of the position was closed for a 10% profit when Bitcoin broke below a trend line. The rest of the position was closed at the initiation level after Bitcoin hit and closed below the price channel, resulting in no profit or loss.
What concerns arose from the breakdown of Bitcoin's technical posture?
-The breakdown raised concerns about the possibility of additional downside on Bitcoin in the short term, which the traders wanted to avoid risking to their clients.
What is a 'whipsaw' or 'false breakdown' in the context of trading?
-A 'whipsaw' or 'false breakdown' refers to a situation where the market moves in the opposite direction after a significant price movement, often misleading traders into making incorrect decisions.
What historical correlation exists between Bitcoin and the S&P 500, and how does it relate to the current situation?
-Bitcoin and the S&P 500 have been closely correlated, with strong divergences in January 2024 and 2023 eventually correcting as Bitcoin caught up to the S&P 500. The current situation could be similar, but there's also a risk of a bear trap.
What evidence suggests that large Bitcoin holders have been selling recently?
-Evidence from the last few months indicates that large Bitcoin holders have been selling, which contrasts with their behavior towards the end of 2022 when they were accumulating.
What are the key principles of risk management mentioned in the script, and how were they applied to the Bitcoin trade?
-The principles include initiating trades with a great risk-reward, booking profits early, not closing winning positions too early, and not letting winners turn into losers. These were applied by initiating the Bitcoin trade when risk was smaller than potential reward, booking profits early, and cutting exposure before heavy losses.
What is the current state of Bitcoin's price action, and what scenarios are being considered for future trading opportunities?
-Bitcoin is in a sideways trading range with no clear direction. One scenario is for it to test the bottom of the price channel before potentially catching up to the S&P 500, which could be a bear trap type of move.
What is the current active trade in the crypto space mentioned in the script, and what is its performance so far?
-The active trade is on Solana (SOL), initiated as it tested a key trend line defined by lows in 2023. Solana is already up 10% since testing this support and has a technical setup similar to a successful run in July 2021.
What has been the success rate of the crypto trades initiated since the start of 2024, and what strategy has contributed to this success?
-The success rate has been high, with all losses being small despite high volatility, and some winners being very large. A strict risk management strategy and being very picky with trades have contributed to this success.
Outlines
📉 Bitcoin's Topping Pattern and Divergence from S&P 500
The script discusses Bitcoin's recent performance, highlighting two significant 20% corrections since March of the current year, contrasting with its behavior in 2023 and early 2024. It suggests that Bitcoin's current price action might indicate the start of a downward trend, possibly forming a topping pattern. The video also revisits a previous analysis predicting a return to a bullish market after a peak in March. The script details a trade initiated in May, based on key moving averages and the S&P 500's surge, which unfortunately did not materialize as Bitcoin diverged from the stock market's performance. The trade was closed with a 10% profit when Bitcoin broke below a trend line, and the rest was closed at the initial trade level after hitting a stop loss. The script raises concerns about Bitcoin's technical posture and the potential for further downside, considering the divergence from the S&P 500, which has been at all-time highs. It also mentions historical correlations and divergences between Bitcoin and the stock market, as well as evidence of large Bitcoin holders selling in recent months, which is a shift from their behavior at the end of 2022.
📈 Solana's Bullish Trend and Risk Management in Crypto Trades
The second paragraph focuses on Solana's (SOL) current bullish trend, comparing its recent price action to a similar pattern from July 2021, which led to a significant price increase. The script describes an active trade initiated when Solana tested a key trend line, which has already resulted in a 10% gain. It emphasizes the importance of strict risk management in crypto trades, which has been a successful strategy for the clients involved, as evidenced by the trades closed since the beginning of 2024. These trades show small losses despite the high volatility in the crypto space, and some significant wins. The script also speculates on Solana's potential to reach $560 if it continues on its current path, mirroring its performance in 2021. It concludes by reiterating the importance of being selective and disciplined with crypto trades to ensure continued success.
Mindmap
Keywords
💡Bitcoin
💡Corrections
💡Momentum
💡Price Channel
💡Moving Averages
💡S&P 500
💡Divergence
💡Risk Management
💡Stop Loss
💡Bear Trap
💡Salana
Highlights
Bitcoin has experienced two consecutive 20% corrections since March, marking a significant shift in behavior.
A bearish price action on Bitcoin suggests a potential topping pattern and possible downward movement.
In May, a great setup for buying Bitcoin was observed with key moving averages pointing upwards and S&P 500 reaching new highs.
A trade on Bitcoin was initiated in May based on a strong trend and support level, but it failed to break resistance.
Half of the Bitcoin position was closed for a 10% profit when the price broke below a trend line.
The remaining Bitcoin position was closed at the initiation level after hitting a stop loss due to further price decline.
The technical posture for Bitcoin is concerning, with a broken trend line indicating potential for additional downside.
The possibility of a whipsaw or false breakdown in Bitcoin is considered, given its correlation with the S&P 500.
Large Bitcoin holders have been selling, contrasting with their behavior towards the end of 2022.
Risk management is emphasized as crucial for successful trading, including booking profits and avoiding heavy losses.
A sideways trading range for Bitcoin with no clear direction is observed, with a potential test of the price channel bottom.
Salana has an active trade with a 10% increase after testing a key trend line, showing a strong technical setup.
Salana's current price action resembles its successful run in July 2021, suggesting a potential for a similar bullish trend.
A strict risk management strategy is applied to trades, ensuring small losses and large wins for clients.
Cryptocurrency trades since the start of 2024 have shown small losses and large wins, demonstrating effective risk management.
Transcripts
since March of this year Bitcoin has
experienced two consecutive 20%
Corrections it's a big shift in Behavior
compared to what we saw throughout 2023
and the beginning of 2024 when Bitcoin
begins to lose momentum things can take
a turn for the worst so is the price
action that we're seeing on Bitcoin
today signaling that this has just been
a huge topping pattern with Bitcoin
ready to move lower if you watched our
last video on bitcoin you'll know that
we were looking at this price Channel
following its peak in March our
expectation was that Bitcoin was going
to make its way back to the channel and
then possibly resume its bull market
there was definitely a great setup in
May of this year to buy Bitcoin all of
the key moving averages on bitcoin were
pointing upwards suggesting the trend
was very strong and price was right
above a very key level of support you
also had the S&P 500 that was surging to
new all-time highs in May and the
possibility for Bitcoin to actually
catch up to the rest of the market now
with this setup back in may we initiated
a trade on bitcoin on our website
initially it did play out for a nice
move but Bitcoin failed to break above
resistance and started to turn around
completely diverging from what the S&P
500 has been doing now we closed half of
our position on bitcoin when have broke
below this trend line that you see right
here for around a 10% profit then you
can see Bitcoin continued to move lower
hitting our stop loss which was this
price channel right here and even
closing below it so unfortunately we had
to close the rest of our position on
bitcoin coin we closed this trade right
at the same level where we actually
initiated it in May today with this
breakdown on bitcoin the technical
posture is broken which concerns us
which brings in the possibility of
additional downside on Bitcoin in the
short term which of course we want to
make sure we're avoiding risking that to
our clients now could this be a whipsaw
or what's called a false breakdown or a
bear trap absolutely as I mentioned
earlier the S&P 500 is at all-time highs
and typically they coin and the S&P 500
have been incredibly closely correlated
the last two times that we had such a
strong Divergence between Bitcoin and
the stock market was actually in January
of 2024 Bitcoin eventually caught back
up to the S&P 500 and in January of 2023
where the S&P 500 was moving higher but
Bitcoin was still making new lows at
$116,000 eventually Bitcoin caught back
up to the S&P 500 it could be that we're
in exactly the same situation but if we
zoom out a little bit further we look at
what was happening in November of 2021
you can see Bitcoin was moving lower
while the S&P 500 was moving higher and
this time it wasn't Bitcoin that caught
up to the S&P 500 but just the opposite
the S&P 500 caught down to bitcoin we
also have evidence that large Bitcoin
holders have actually been selling over
the last few months which is the very
opposite to what they were doing towards
the end of 2022 if you want to have more
information on what large Bitcoin
holders are doing you can check this
video out from capital.com
they did a great dive into that Dynamic
so there's always two ways to look at
any asset there's a bullish case and
there's a bearish case to be made
ultimately what really determines
whether you're going to be able to make
money is how good your risk management
is only initiate trades that have a
great risk reward always book profits
when things are going well don't close
winning positions too early and don't
let your winners turn into losers those
are just four of the many principles
that we teach to our clients we apply
apped to our Bitcoin trade we initiated
the trade when the risk was much smaller
than the potential reward we booked
profits quite early when things were
going well and we completely cut our
exposure to the position before it could
turn into a more heavy loss today
Bitcoin is clearly in a sideways trading
range with no clear Direction one
possible scenario is for Bitcoin to test
the bottom of this price channel before
potentially catching up to the S&P 500
this would be a classic bear trap type
of move there will be close watching
Bitcoin for other trading opportunities
we do still have an active trade on
crypto right now and that's with salana
we initiated the trade right as salana
was testing this key trend line that was
defined by these two lows in 2023 now I
know some people are going to argue that
this is not enough to define a trend
line and that I know nothing about
technical analysis but the reality is
that we've had many successful trades on
these types of setups and salana is
already up 10% since it tested this key
trend line support this is one of the
cryptocurrencies with the strongest
looking charts with a technical setup
that looks very similar to July of 2021
where salana experienced a huge runup
followed by a multi-month consolidation
successfully tested its 200 day moving
average and then resumed its run higher
today we've seen a huge run up on salana
multi-month consolidation and so far
what looks like a successful test of the
200 day moving average in fact if we
copy the price action that salana saw in
2021 and paste it to what we've seen in
2023 and 2024 it seems salana is
following the same path but a little bit
more stretched out if it continues to
follow the same path salana could get as
high as
$560 again just because we think the
reward could be great doesn't mean that
we won't be applying the same strict
risk management strategy in the event
that salana begins to break down below
this bullish structure being very picky
and strict with our trades on crypto has
brought a lot of success to our clients
participating in these this year these
are all of the trades that we've closed
on crypto since the start of 2024 you
can see all of the losses that we've
endured on crypto are very small despite
the high volatility in the space while
some of the winners are indeed very
large now there's no guarantee we'll be
able to keep this up but we are working
day in day out to make sure that's going
to be the case
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