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Bitcoin is the world's largest digital coin based on market capitalization, but at the beginning of 2018, it suffered maybe the worst sell-off. Nevertheless, for the time being, it seems to have briefly climbed above the $8.000 and marked a comeback.
The concerns related to governments’ regulations and hacking on investors’ accounts, created volatility in the crypto market. Moreover, the economist and Nobel Prize Laureate, Robert Shiller, stated that he regards the Bitcoin as a sort of bubble which has been created based on the psychological ground rather than serious investment.
Shiller added that the Bitcoin bubble is expected to burst, but it doesn’t mean that it will burst forever or disappear. Furthermore, Shiller is a professor of economics at Yale University and co-founder of the Case-Shiller index. Precisely, he believes that Cryptos could be around for many years. Additionally, he stated that the Bitcoin price moves are probably influenced by emotions and excitement, which can’t be explained by the computer science department.
The example of Bitcoin may show that despite the fact that the popular digital coin fell to its doom, it seems that is always coming back, which could be a result of the collective mind feelings and emotions over the market. This may represent traders’ hopes and fears which are formed based on what they have heard and/or read about the coin. Some of them fall into the trap that Bitcoin will climb forever whereas some others are selling off as they believe that this is the end. In any case, those actions are emotionally driven which means that this is a non-professional approach comparing to the normal currency pairs.
Bitcoin may fall and rise, but I believe that it will probably come to a balance, meaning that investors and traders will realize that this is the only way to make this work in a professional way free of emotions.
Furthermore, Shiller pointed out that many people don’t trust the government anymore and they like the idea that this didn’t originate from a government but by some “real smart computer scientists”. Some people believe that governments have nothing to do with this technology. Maybe, this is true but what if governments had something to do with it? It is really hard to believe that governments let this grow so much without having a plan for this technology that in its core gives freedom to people from government money monitoring.
BTCUSD - Technical View
On the technical side, it could be noticed that the price appears below the Kumo and the lines Tekan Sen, Kijun Sen and Chikou Span. The lines Tekan Sen and Kijun Sen seem to be in a bear formation. If the price comes below the Tekan Sen and Kijun Sen, then traders could consider looking for bear signals.
About the Author:
Marios Athinodorou is TeleTrade’s market analyst and commentator. Apart from being an experienced trader, Marios is an advanced technical analyst and is interested in trading psychology. He has 7 years of trading expertise in Forex and CFDs, providing insights to share with all kinds of traders, from beginners to experts. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars, here.
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