It is hard to see any downside when you're making a lot of money, which is why people can't resist a bubble. From the Tulip Mania, to DotCom Fever, to the Real Estate Crisis, for many people the appeal of easy and fast money cannot be resisted. Now we have Bitcoin, and the process is repeating - backed, as usual, by impeccable rationale of how everything makes perfect sense. The chart shows a parabolic advance, which we know is very likely to collapse. We just don't know when.
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On the weekly chart, the recent advance looks even more extreme. The aftermath of a similar arcs in 2017 and 2019 show us precisely what can go wrong. Parabolic moves on securities that are backed by tangible assets can easily decline by -50% or more. For "Seinfeld" securities (backed by nothing), the price can go to zero. And these folks won't even have tulip bulbs to show for their trouble.
Conclusion: Bitcoin is experiencing a strong parabolic advance. We know parabolic moves end swiftly and painfully. The weekly PMO on the above chart presents a negative divergence, but we could still see the vertical advance continue. Nevertheless, a trailing stop is essential.
Technical Analysis is a windsock, not a crystal ball.
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