- Bitcoin plunged during the early hours on Tuesday as we continue to see massive amounts of profit taking.
- That should not be a surprise because we are up about 90% from the beginning of the year to the recent high.
Very few people are going to sit on that type of gain without at least collecting some profit. This is human nature, just as a lot of retail traders will hang onto a move like this for far too long. This is where we are at the moment, but it doesn’t mean that Bitcoin should be shorted.
ETF Inflows Have Been the Momentum
I understand that the ETF inflows have been a major factor in what has been going on, and that of course is part of what has made the BTC/USD market so explosive. That being said, sooner or later people take profit, or they just simply stop throwing money into the market. Why would you buy something that has doubled in price that quickly when we know it's only a matter of time before we pull back and offer more value?
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With that being the case, I like the idea of taking advantage of cheap bitcoin, but I don't think we are at the floor yet. Furthermore, it's worth noting that Wednesday is Federal Reserve interest rate decision, and while most crypto traders don't think along the lines of what the Federal Reserve monetary policy dictates, the reality is that we now have an institutional market.
If that's going to be the case, it's going to act like an institutional market. I'm looking for signs of stability and perhaps maybe even a long wick underneath the candle to show that buyers have come back in. One candidate right now is the $60,000 level. It's an area that I think a lot of people will be paying attention to. Underneath there, we then have the $50,000 level and the 50 day EMA. In general, this is a market that I think you do buy the dip, but I don't think we're done pulling back yet.
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