Bitcoin Price Prediction for May 23, 2016
May 23, 2016 --- (ARCHIVED) Free Reports
The frustration amongst active bitcoin traders is palpable on both the bullish and bearish sides of the ball due primarily to this seemingly never-ending sideways consolidation. Considering sentiment has shifted from hyper-bullish to firmly bearish, we think this will continue.
As we have said before, the market's job is to bamboozle as many participants as possible at any given time. When bulls get too confident in a breakout and start piling in on the long side, then we can be fairly certain that a move to the downside will try to take them out. Conversely, when too many bears pile on it is rather easy to see a short-squeeze spike to the upside materialize to wash them out as well. When we have split sentiment in which half of the players are very bullish and the other half are downright bearish, we get the perfect conditions for a prolonged and agonizing period of relative inactivity (we are here).
While many traders might view this as a negative for the longer term health of the market, from a technical point of view this type of action is actually good in terms of sustainability. There is an old Wall Street adage that says that “the longer the base, the higher in space”, indicating that the longer we chop around these rather depressed levels prior to a significant upside breakout, the higher the market has the potential to rally once it does resolve.
Despite the fact that some traders may become impatient or jaded prior to the breakout move and will thus leave the marketplace altogether, this period of stagnation also allows other players to continue to strengthen their core positions buy adding at favorable support levels. This additional accumulation allowed by the sideways marking of time also allows for much more accumulation by strong hands. While it may seem less than optimal to wait through another 6 weeks of chop for a real move, do not fret because this could turn out to be a great thing going forward.