- Bitcoin dropped to $40,200 overnight, echoing the losses on traditional markets
- The September curse has hit home once again
- If we take the long term view, things really aren’t that bad
Bitcoin crashed further overnight, hitting lows of $40,200, before an unconvincing bounce took it back to $42,000. Of course, no one knows where the current drop will end, but there are three reasons why, in all this red, we should still focus on the shoots of green that are still present in the cryptocurrency markets. Here are three reasons to be cheerful about Bitcoin’s position right now.
Reason 1 – Higher High, Higher Low
Nothing goes up forever, even Bitcoin, meaning there are always going to be pullbacks after a rally. After running from $29,000 in July, Bitcoin hit a clear pre-existing barrier of $52,000, after which a pullback was always on the cards. While it could be argued that it has pulled back further than was initially thought, on the weekly timeframe Bitcoin is on the verge of putting in a nice higher high and higher low:
Even if Bitcoin settled at $40,000 this would still mean that Bitcoin has turned prior resistance into support, as well as representing a 37% pump from the July lows. A great point to kick on the rest of the cycle. Only a weekly close below $38,000 would invalidate that, and even if it did this does not mean a bear market has started.
Reason 2 – Trendline Intact
In a bull market you need to see an upward trendline holding, which is what we have had since September last year:
As we can see, the July pullback confirmed this trendline, suggesting that even if $38,000 is lost, the overall upward trendline still remains intact at around $34,000. As long as this trendline remains in play then we can assume that upward momentum will continue.
Reason 3 – The Curse Lifts
September typically is a bloody month – there’s a reason why a ‘September curse’ exists in investment circles. But look what happens between October and December when Bitcoin has been in a bull market:
In all the three major Bitcoin cycles, September has been a red month and October-December have been magnificently green. Of course we can’t say for definite that things will play out the same this time round, but there is definitely a pattern, and, as the saying goes, history doesn’t repeat but it often rhymes.
Bitcoin Needs the Long Term View
As we can see, despite all the doom and gloom around the markets, and quite rightly, as usual we need to take the long term view. When we do that we can see that there are plenty of reasons to think that by the end of 2021 things will look much better, and this will just be another of Bitcoin’s famous dips where buying was the best option.