Bitcoin Just Broke Down… (Our July 2024 Bitcoin Forecast)

Summary

The 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.