An economist ran a poll to check the pulse of the bitcoin market. An ultra bullish atmosphere may signal that a trend reversal is incoming.
Over the last couple of weeks, bitcoin has been slaying bears and disbelievers. On Tuesday, bitcoin printed a fresh 2020 high of $8,903.20. The crypto token’s renewed bullish vigor is driving many retail investors into euphoria.
The ecstatic atmosphere probably drove Alex Kruger to measure community sentiment. The trader and economist ran a poll asking Crypto Twitter (CT) what they think would be BTC’s 2020 high.
Results reveal that CT is feeling ultra bullish. That’s bad news for bitcoin.
Kruger recently ran a poll that involved the responses of over 4,000 participants. Results show that 47.1% believe that bitcoin would trade above $20,000 this year. Close to 30% think the coin would settle between $14,000 and $19,999. The remaining 25% said the cryptocurrency will trade at $13,999 or lower.
The survey reveals that nearly 75% of participants believe that bitcoin will print gains of over 100% this year. Almost half see the cryptocurrency skyrocketing by over 180%. These are ultra bullish predictions even by bitcoin’s standards. The results tell me that it is wise to take a contrarian stance.
When it comes to investing, the wisdom of the herd is often wrong. This is especially true of bitcoin. The digital asset has a tendency to mislead the crowd and burn retail investors.
We saw this happen in the 2017 bull market. Many retail investors hopped on the bandwagon just as bitcoin was peaking around $20,000. Countless got wiped out as the cryptocurrency entered a vicious bear market.
This happened again in December 2018. At the time, bitcoin was trading at $3,000. Many capitulated as calls for a massive drop to $1,800 reverberated on social media. What did the cryptocurrency do? It left disbelievers with their jaws on the floor as it soared to a 2019 high of $14,000.
These examples show that it’s prudent to look at the other side of the coin. Getting pulled by the herd is a bad trading strategy.
The top cryptocurrency has managed to gather significant bullish momentum this year. The bulls must step up their assault. Otherwise, the bears can quickly take over.
That’s according to Wyckoff whiz Todd Butterfield. The owner of the Wyckoff Stock Market Institute thinks that bitcoin is “at an important juncture.” Mr. Butterfield said,
If we can add on to yesterday’s gains and then extend them, I think we have a bull market starting. But if we start to give up the gains, then all bets are off. So next few days are crucial.
On the other hand, liquidity game-theorist Majin believes that bitcoin is primed for a massive capitulation. The trader told CCN,
I suspect this rally collapses back to $7,000 soon. Then, capitulation to $4,000 to $5,000 begins.
CT’s biggest bull is painting a nightmarish picture. Considering the ultra bullish sentiment, it wouldn’t be surprising if bitcoin pulls the rug. I guess we’ll see in the next few days.
Disclaimer: The above should not be considered trading advice from CCN. The writer owns bitcoin and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
This article was edited by Sam Bourgi.
Last modified: January 22, 2020 11:38 PM UTC