Bitcoin is making some eruption-like spurts in price as I write this. They appear volcanic with green candles jumping up suddenly as lava would when spewed from the mouth of a volcano. It appears out of the norm, which is usually quite staid and sedate. But every now and then price action becomes volatile and starts blowing a steam whistle.
It’s often a storm in a teacup, and a retracement follows, it has a life of its own, despite the occasional whale, because it is made up of so many minds that it becomes a collective symptom of thousands of buyers and thousands of sellers all trading simultaneously. It truly looks like a writhing dragon in red and green, and we traders are like little humans trying to harness this giant animated and unpredictable creature, as they did in the movie Dune, when riding the desert worms.
Well one way of learning to read the signs of the dragon to track its movements is by looking at past patterns and decisive events, like the Halving. This is a set time on the bitcoin blockchain designed into the code by Satoshi Nakamoto, where at a certain point in the chain, the reward to the miners is halved, like an inflation decelerator actually. The miners paying for the computer hardware and electricity to mine the bitcoin and blockchain, receive half the payout. It sounds like a lot and it is but it is factored into the equation. It is balanced out by the fact that bitcoin is much more expensive with time so even if you are getting less, the price grows much more than double.
These halving are every few years, the last was 5 September 2016 and the one before that was 26 November 2012. There have only ever been two. And the third one is due in May 2020, about 13 months from time of writing. Now the dragon was noted in the charts, as it writhed its way over time and price, to make a distinct climb in price around one year before both halvings. Price began to climb and kept climbing through the halving and on for 100 weeks in total the first time and 120 weeks the second. Those were the two last major bull runs. The halving occurred right near the middle of both of them.
So with the next halving coming in May next year, the implication is that the current bull run should start around May – in a month. We are in the last 6 weeks of the bear market. Price needs to break through $6000 resistance to really push any higher. That resistance will be huge. And that is why price did not push through this past week when it made around $5300, depending on which exchange you check. The dragon is rearing its head as it awakens but it is still sluggish and will actually likely do that long-awaited retracement as its head drops lower back to previous lows one more time before lifting it up and this time pushing right through $6 000 and upward on the next bull climb.
This is just my opinion and I have been wrong before. I thought the dip was going to come sooner. I never saw this recent pump in price coming at all. It’s all a matter of interpretation of the chart facts from which we all work and analyse and observe the path of the dragon. And the older traders, who have crossed the desert of a bear market more times than others, tend to pick up lessons along the way and they work from that. Maps emerge from the journeys of previous traders as they all followed the trail of the dragon across the sands of time, while we tried to mount her and ride her for a few miles or days or months so that she took us up to the moon, the place we all look to fondly and longingly as one would to a distant home.
So the odds of a short term correction are good, and thereafter a big push into the bull market, so have some fiat ready to tether that dragon and ride her as long as you can before she shrugs you off, and make sure you don’t get crushed along the way or rekt. Always be ready to climb back up and try once more because with time and practice it becomes easier and you start finding your way, you find the way that suits your nature and you trade according to that strategy.
But always have a strategy clearly plotted out beforehand because when you harness that dragon, the adrenalin and hormones and instincts all push in and become really difficult to discern objectively. Emotions get in the way of intricate trading. So you come prepared with a plan or strategy so that once you’ve entered the exchange, you know when you want to buy, how much at a time, when you want to sell, and you keep to that as much as possible. It becomes Zen and the art of trading as you learn to harness the dragon until she takes you to her cave of treasure.
