Bitcoin dropped nearly 5% this week, surged up to 85,000 and then fell back down, currently breaking below 83,000.
Is this a correction or a trend reversal? Just look at these three points.
1. See if there are many buyers.
This week, very few people bought.
Adding up the money from exchanges and funds, it's only about 6.8 billion USD per day, data that can be checked, the quietest level in over a year.
On the day it surged to 85,000 (October 4th, Sunday), the trading volume was only half of a usual Sunday. No one was supporting the rally, so it couldn't hold.
2. See if sellers are making profits or losses.
In the past few days, out of every ten coins entering exchanges, eight and a half were sold at a profit. People who have held coins for only a few months are busy cashing out, the highest in a year, usually less than 40%. This is not fear-driven selling, but taking profits and exiting.
3. See where the threshold is.
Currently, 90% of short-term players are still making profits, not much trapped. But those who entered in the last one or two months are different: they bought around 81,900 on average, just a bit above the current price. Plus, new money coming in is not much (4.9 billion in 30 days), while the market cap is inflating rapidly (12.8 billion), which is unsustainable.
So now focus on two numbers: 85,000 and 81,900.
If it climbs back above 85,000, we need to see if real money is coming in to support it—that would be a true breakout. If it falls below 81,900, recent entrants will start losing and likely exit together.
Next, watch two things: whether more buyers come in, and whether 81,900 is broken. The rest doesn't matter.
Is this a correction or a trend reversal? Just look at these three points.
1. See if there are many buyers.
This week, very few people bought.
Adding up the money from exchanges and funds, it's only about 6.8 billion USD per day, data that can be checked, the quietest level in over a year.
On the day it surged to 85,000 (October 4th, Sunday), the trading volume was only half of a usual Sunday. No one was supporting the rally, so it couldn't hold.
2. See if sellers are making profits or losses.
In the past few days, out of every ten coins entering exchanges, eight and a half were sold at a profit. People who have held coins for only a few months are busy cashing out, the highest in a year, usually less than 40%. This is not fear-driven selling, but taking profits and exiting.
3. See where the threshold is.
Currently, 90% of short-term players are still making profits, not much trapped. But those who entered in the last one or two months are different: they bought around 81,900 on average, just a bit above the current price. Plus, new money coming in is not much (4.9 billion in 30 days), while the market cap is inflating rapidly (12.8 billion), which is unsustainable.
So now focus on two numbers: 85,000 and 81,900.
If it climbs back above 85,000, we need to see if real money is coming in to support it—that would be a true breakout. If it falls below 81,900, recent entrants will start losing and likely exit together.
Next, watch two things: whether more buyers come in, and whether 81,900 is broken. The rest doesn't matter.