Bitcoin is really living to its nature of being the most volatile investment out there.
When the cryptocurrency entered a new bull market on July 26, it rallied by 28% in 23 days.
I saw the breakout as a confirmation that the bull market is real, and was glad to see my investment turn profitable so fast.
Of course, I wasn’t the only talking about it.
The news has taken the internet by storm, and the die-hard enthusiasts were already calling for $20,000 Bitcoin by the end of September.
Their prediction, however, was short-lived.
After briefly moving above $12,000, the largest cryptocurrency started declining, resulting in a mini-crash that brought Bitcoin back below $10,000. A decline of 21% since the most-recent peak.
This has made many believers of this new bull market question their thesis.
Let’s see if they, along with yours truly, were wrong about it.
Bitcoin Fundamental And Technical Analysis
The primary reason why I started noticing cryptocurrencies again was improving fundamentals.
The public always viewed Bitcoin as an alternative to our existing monetary system.
It’s decentralized, has limited capacity, and thus cannot be tampered with. Kind of like gold, except that making day-to-day transactions with Bitcoin is much easier.
So, when the COVID crisis came along, and central banks turned their money-printing machines on max, our need for a new store of wealth emerged once more.
To top it all off, Bitcoin has just entered a new halving cycle. Moreover, the number of HODLers, those owning Bitcoin for over a year, reached its highs.
Both of these indicators have signaled the start of a new bull market in the past.
However, while the fundamentals were pointing in the right direction, the price was yet to confirm them. Based on the technical analysis, Bitcoin hasn’t broken into the bull market territory.
But it did so on July 26, which I saw as an ideal moment to enter the market.
The HODL Philosophy
Now, the question is whether my original thesis has changed for the worse?
Fundamentally, it hasn’t. The central banks are printing with no end in sight. The Fed is saying we should prepare for higher inflation. And the overall confidence in the fiat currency is deteriorating.
Furthermore, technically, this bull market remains intact. The price would have to drop another 20% from here for that to change.
You should also understand that no market goes up in a straight line. There are always correcting periods in between.
In fact, it’s healthy for the price to consolidate and shake out the speculators and weak hands before continuing higher. It’s to prevent a blow-off top—a chart pattern with a steep and rapid increase, followed by a steep and rapid fall. The 2017 cryptocurrency bubble is a perfect example of that.
Furthermore, for a cryptocurrency to go through a 30% correction, let alone a mere 20% one, in a bull market is expected.
This is a volatile asset class.
No one was complaining after Bitcoin increased by 223% from March 13 to Aug 17. So why should you panic if it declined by only 20%?
There is a reason why the term HODL (Hold On For Dear Life) exists. It’s because of the cryptocurrencies’ violent up and down moves. Adopt this philosophy if you want to make money in this space.
Verdict – Buy Cryptocurrencies
So, there you have it. I’m sticking with my original thesis.
I see no reason that this bull market is fake.
My advice is that if you haven’t bought any Bitcoin or other cryptocurrency yet, then this is the ideal moment.
You get a chance to buy it on sale.
I think this investment has one of the highest risk:reward ratios on the market right now.
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