I'm Fired Up for a Trade When Bitcoin Price Dips Below $86,000
Those interested in buying the bitcoin price dip should be aware of the U.S. dollar index and president Trump's likely changes.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The Idea of buying this bitcoin price dip is tempting for those of us who never really got too carried away with the crypto space.
I had traded some of the trusts and ETFs and made some money both in Bitcoin and Ethereum. Honestly, though, I really have not truly participated and that train has, for the most part, left the station without me. I am sure that there are at least one or two of you out there who also either have never ventured into that space or were underexposed as it exploded higher in late 2024. Such is life. It's not what you did or didn't do. It's what you do or don't do next.
Bitcoin, along with most of the higher-quality cryptocurrencies, are well off of their December highs, but still up sharply from where they had been. On Monday morning, at just below $91,000 per coin, Bitcoin is both down 16% from the December 17, 2024 high and up 83% from the August 5, 2024 low. One must remember that it takes two to tango, and in this case, Bitcoin's dance partner, at least for me and for many of you, is the U.S. dollar.
The U.S. dollar index, also known as "The Dixie," is up a cool 9.7% since late September as the relationship between the euro to the dollar has sharply deteriorated since that September turning point. What I am saying is that one must work in concert with the other in order to effectively trade Bitcoin in U.S. dollar terms.
This is how trading any alternative investment, such as gold or silver, works. Gold and Bitcoin are both potential alternative currencies that have largely been relegated to commodity status due to the fact that nobody uses gold as a medium of exchange anymore and nobody uses Bitcoin in that way, at least not yet. Both are easily divisible. Gold certainly serves as a store of value. Bitcoin arguably does so, while better serving as a tool of speculation as well.
Similar, but different. There's a generational gap too. Folks my age trust gold. Younger folks more easily open themselves up to the potential positives of cryptocurrency, while accepting the obvious risk.
Spot Bitcoin at Pivot
Readers will see that, from November into the present, Bitcoin had developed a head-and-shoulders pattern. This is a pattern of bearish reversal, and this one has a neckline/pivot of $91,300. Bitcoin is trading in a state of danger on Monday morning as the world's most famous cryptocurrency stands a chance of losing that pivot. That would put the downside target in the $77,000 to $78,000 area.
Coincidentally, readers will see that a 38.2% Fibonacci retracement of Bitcoin's run from early August to the December high would be a rough $85,900. Should that spot not show up and catch Bitcoin on this weakness, the "half-way back" point or 50% retracement level stands at $78,900, which is close to my hastily put together downside target.
Additionally, for spot Bitcoin, the 200-day SMA currently stands at $73,600 and is rising steadily. This line could reach that 50% retracement level that also happens to be near my target by late February or early March. Give or take. We're using hand grenades here, not sniper rifles.
Whistling Dixie
Readers will note that the U.S. dollar index has been stuck in a fairly powerful rising wedge pattern. This is also a pattern of bearish reversal, but this wedge does not look like its about to narrow and close. That said, should President Elect Trump choose a weaker U.S. dollar as a policy goal, while that could inflame consumer level inflation, it would also be a turning point... for Bitcoin.
What Am I Saying?
For those looking to initiate or add to existing long positions in Bitcoin, I think it pays to both know your technicals in the spot commodity and where those key levels are, but also to be aware of where the U.S. dollar is relative to its reserve currency peers and be fully cognizant of the new administration's attitude toward the greenback.
This incoming administration has a more positive view of cryptocurrency than the outgoing crew. That could be huge. I think I really get fired up once Bitcoin trades below $86,000.
Walk slow. Make no noise. Socks filled with grass and worn outside of your boots. Head on a swivel. At the ready.
At the time of publication, Guilfoyle had no positions in any securities mentioned.
