Bitcoin, as you already know, is the biggest part of my wealth.
Yesterday, Sunday April 26, 2020, however, it happened something since a very long time, specifically since October 2017, just a few weeks before it hit the 20,000$ high.
What exactly was that?
Bitcoin had its biggest daily drop in seven years on March 12 this year. On that day, price fell to 3,800$ from nearly 8,000$ per coin the previous day, a 50% drop.
On the same day, the Dow Jones lost about 10% in capitalization.
Since then, the price of bitcoin has begun to stabilize and steadily rise.
So what happened yesterday is that the price closed for 6 consecutive weeks in profits.
Closing the price for 6 consecutive weeks with a profit is not easy and simple, not only for bitcoin but also for the stock market in general.
In the recent history of bitcoin, this was the last time you will see from the chart below in October 2017.
But what does that mean?
2 traders can look at the same information and the same technical indicators and at the end come to two different conclusions.
What happened yesterday is rare but does not necessarily mean that it is positive or negative for the development of the price.
I personally take it as a positive development though based on 2 main reasons.
What happened 1.5 months ago with the price of bitcoin I consider it to be a major overreaction.
To some extent, the psychology of traders as well as algorithms that perform actions in fractions of a second overreacted.
In those days, the stock market collapsed and this greatly affected cryptocurrencies.
This pushed the price of bitcoin to a very high free fall, higher than it should be.
So it makes sense that after things calmed down a bit, the price would go up again.
Bitcoin Halving Event
On May 12, 2020, we will witness another important event for bitcoin, an event that happens about every 4 years.
And this is the Halving Event. The production of the new daily currencies will be reduced by 50%.
So while today it is possible to create pressure by selling 1,800 newly mined coins every day, from May 12 onwards, production will fall by half, resulting in the production of only 900 new coins every day.
Those who have been in this field for a long time know that this creates a problem in the supply of available coins, as a result of which investors and traders buy as much as possible before Halving.
But some are taking advantage of this kind of event to move into the well known strategy: Buy the rumor Sell the news
So what is possible is that when the halving is completed we have a drop in price for a period of 1 to 3 months.
How does this affect my strategy?
The truth is that it does not affect it.
At the moment I have open positions with over 100% profit and I am not going to close them soon.
I didn’t do it when bitcoin went from 3,150$ to 13,800$ last summer, so I won’t do it even now.
I’m here for the long run, which means that as long as the price stays at the levels I want, I only buy and hold or better say HODL.
If you ignore the small and large price flactuations in the short run then the returns you can have in the future are much higher. And these returns are my goal.
So I’m waiting with interest to see what will happen after the halving event and how the price and the community around the cryptocurrencies and especially my favorite Bitcoin will react !!