Bullish Case For Bitcoin: Profit Taking Turns Into Buying The Blood
Bitcoin price recently saw a $2,000 correction after months straight of surging. At the start of the selloff, signs pointed to profit-taking as the primary reason for the pullback. However, after greed turned to fear, big-money investors have begun buying the blood right out from under investors who are panic-selling the cryptocurrency at a loss.
Here’s why this is incredibly bullish for Bitcoin and what this could mean for a new uptrend taking hold.
Bitcoin Whales Buy The Blood As Small Time Investors Panic Sell At a Loss
The crypto market has been on fire in 2020, and although other crypto assets have outperformed Bitcoin, it too has done well for itself.
Bitcoin remains the most profitable mainstream investment of the year next to gold, stocks, and anything else. But a recent over $2,000 crash turned the ultra greedy market into a fearful one.
Related Reading | This Accumulation Pattern Suggests Bulls Are On The Right Side Of Bitcoin
Contrarian investing strategies recommend selling when markets are at peak greed and then buying when most fearful. That strategy would have proven well over the last few weeks when the crypto market Fear and Greed Index reached record highs.
Smart money investors taking profit caused the selloff initially, as depicted by the green moving profit average below. But smart money may now be buying the “blood in the streets” as contrarian Baron Rothschild suggested.
Bitcoin Moving Profits and Losses | Source: Twitter
Profit-taking has turned into buying the fear and panic of those who cannot control their emotions, and are selling their Bitcoin at a loss – represented by the red line just recently crossing above the green.
Note how during each major crash, more investors are selling at a loss than in profit. Meanwhile, during each top, investors are taking profit instead of panic-dumping below entry.
But after such an enormous fall on Black Thursday and an ongoing bear market that hasn’t yet been concluded with a new higher high, why are investors buying up the blood with prices still so high?
BTCUSD Weekly S/R Flip | Source: TradingView
What’s Given Crypto Bulls So Much Confidence To Buy The Dip?
If technical analysis patterns are accurate, then bulls are right to be buying the dip, rather than selling at a loss. Those who have sold on the way down may sorely regret it and be forced to buy back at higher prices.
What has suddenly given smart money confidence to buy the dip after recently taking profit, is that downtrend resistance turned support, along with $10,000, recently held up strong on daily and weekly timeframes.
Related Reading | Has Bitcoin Confirmed A Bullish Retest Of “Meme” Downtrend Line?
If the key level can also hold on the September monthly, chances are that a new bull market has fully developed, and a retest of all-time high is only a matter of months away.
Featured image from DepositPhotos, Charts from TradingView
OhNoCrypto
via https://www.ohnocrypto.com
Tony Spilotro, Khareem Sudlow
