Bull Trap on the Bitcoin?
|Last week was pretty intense for the Cryptocurrencies. The market was hit by two fundamental events. First one was the information that China will ban Crypto exchanges. That was perceived as a very negative and triggered an impressive sell-off on this market. Second one was kind-off weird. Dimon from JPMorgan said that this market is a bubble and he would fire any trader trading bitcoins in his bank. Why it was weird? The information itself was normal. So banker is afraid of bitcoin as a tool which totally surpasses the banking system. We all get that those guys can be mad at that. What was weird here was the scale of the bearish reaction here, which actually can point here on the bubble scheme.
I do agree that we do have a bubble on Bitcoin. It does not mean that we will not reach 10000$ for one BTC soon but the fact is that more and more signs are pointing at the bubble scheme. Bitcoin is everywhere. People who do not know nothing about market in overall are all about bitcoins. It is the hottest topic in the gyms, playgrounds, pubs and other areas not connected with investing whatsoever. That was never good and for professional traders that was always a sign to stay away from those markets.
Second thing is the technical situation, the chart itself. It looks like a typical bubble chart that we saw in the history many times (some of them are hundreds years old!). With the Friday's reversal what we have here is a 'bull trap' stage. In theory, Bitcoin is currently being bought by the guys who missed the initial upswing, saw the 'attractive price' and decided to finally join in the party. After the bull trap, the next stage is 'back to normal' , which should be seen in the next few days and that actually should be the last bullish days in the current up trend.
We will see if this bubble pattern will repeat itself here as well. With all the surroundings I think that chances for that are very high.
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