BTC Leaves Accumulation Range In Spectacular Fashion
For much of late-2018 and early-2019, Bitcoin (BTC) looked dead. Price action was minimal, trading activity was at dismally low levels, and the levels of hype from the mainstream and crypto audience was lackluster. Yet, with this recent move to $8,000, which began with what some call “fireworks” on April 1st (move past $5,000), the cryptocurrency market has been revived. It’s been given CPR if you will.
With this move, however, Bitcoin moved decidedly out of a range of accumulation, defined by Adamant Capital as $3,000 to $6,500. For those unaware, the accumulation range/phase is when it is the most wise to purchase an asset, whether it be BTC, gold, or plummeting shares in ridesharing giant Uber.
Popular long-term analyst Dave The Wave recently confirmed this, noting that the Bitcoin is now trading outside of the “ideal buying zone”, as defined by his long-term logarithmic model, which has defined such ranges previously.
This suggests that the time to capture maximum economic profit is over. But does this mean that traders and investors should stop purchasing the cryptocurrency right here?
Why Buying Bitcoin May Still Be Logical
First off, it isn’t essential for traders to catch the “exact bottom” or the “perfect accumulation zone”. Alec “Rhythm Trader” Ziupsnys once claimed that it is unwise to actively seek the exact bottom. In a recent tweet, the cryptocurrency trader explained that trying to catch the exact bottom is “like trying to pick up a penny in front of a steamroller,” hinting at his thought process that there is a copious amount of risk for a little potential return.
Ask yourself: Would you step in front of an active steamroller in hopes of securing $0.01? I’m sure the answer will likely be no — and a hard no at that.
Ziupsnys went on to lay out his rationale behind this quip, specifically drawing attention to his belief that Bitcoin’s capped supply and deflationary characteristics will be a long-term bullish catalyst for BTC. He explained that there will only be 818,913 more BTC minted before 2020’s halving, slated to activate in May, which is a mere $3 billion in Bitcoin at current valuations. Ziupsnys subsequently concluded that this space should “let bears enjoy a few extra percentage points,” effectively stating that short-term nuances in the Bitcoin price shouldn’t irk long-term “HODLers.”
Second off, many have suggested that if Bitcoin rallies as its proponents expect, it won’t exactly matter whether your cost basis is $3,000 or $8,000. In a recent tweet, popular commentator Nick Cote made this assertion. The tweet in question can be seen below.
And as Josh Rager suggested, purchasing BTC at either $1,800 or $3,000 won’t really make a difference. Of course, the disparity between $3,000 and $8,000 is much different, but the point is that if the cryptocurrency market truly goes parabolic in a few years, investors who purchased the asset at either of the two levels will be happy with their gains.
This, of course, hasn’t been proven in a real-world scenario, so I guess we will just have to wait and see.
Photo by Austin Distel on Unsplash