I’ve been waiting for a crypto correction. Indeed, today it’s difficult to hide the fact we are in the middle of a doozy.
To be sure, when an asset price corrects, emotions run high. That’s for sure. Equally important, is not to fall prey to Financial TV. For example, take this CTV news headline: Bitcoin’s crash is very bad news for other cryptos. That headline would freeze any investing noob.
On the contrary, Bitcoin’s price has not crashed. Take a look at the chart below and you’ll notice price is back to where it was in February. At this point, Bitcoin is merely in a short-term correction within its bull market.
As a matter of fact, the crypto correction catalyst was Elon Musk’s odd tweet last week. Apparently, Elon is taking a step back and suspending the ability to purchase Tesla EVs with Bitcoin. In my humble opinion, Elon is using this correction to add to his Bitcoin position at much cheaper prices. He single handedly put cryptos on sale in a single Tweet.
Simply put, Elon is not an idiot. And he knows crypto currencies are the future of money.
Bitcoin Price Correction
Bitcoin Technical Analysis Highlights:
- Key support at $43,000, will buyers support this level?
- Only 8% downside to the 200 day moving average
Ethereum Price Correction
Ethereum Technical Analysis Highlights:
- 16% downside to 50 day moving average
- Important intraday low at $3117
- RSI at neutral reading
Conclusion
The first thing to remember is corrections are a necessary part of any bull market. Prices don’t go straight up forever. In fact, professional hedge fund managers wait patiently for the opportunity to buy assets on the cheap. And so should you.
As shown above, crypto currencies like Bitcoin and Ethereum are in a correction. This is good news for investors looking to make their first purchase or add to existing positions.
Moving forward, if Bitcoin fails to hold ~$43k and falls to the 200 day moving average, it’s highly likely Ethereum will test its 50 day moving average. For sure, pay attention to the charts.
Another key point is to never buy any position all at once. That is to say, break your order up into pieces. For example, if you plan to buy $10k of Ethereum, break your order into 4 trades of $2,500 each and spread the order out over time, depending on your goals and risk tolerance.
Surely, this is the best trading and investing advice I ever received.
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