Below is the interview with Pietro Paciello, CEO and Chief Analyst of Pro Markets Sagl, Asset Management Company, to whom we asked some questions about what is happening to Bitcoin.
To follow Pietro Paciello click here.
After the strong rally of the past weeks, Bitcoin in the last few hours is experiencing a vertical collapse. What is happening?
As anyone who knows me will know, my approach is always exclusively technical and in the past I have never conveyed Bitcoin as a promised land, indeed I have been quite critical about it.
What I see as a technical analyst is that Bitcoin in recent months continues to prove that it has become a graphically very mature tool.
Apart from the unpleasant marketing logic that accompanies it, from the point of view of technical analysis I like Bitcoin a lot.
It is a very precise tool that respects the fundamental rules of support and resistance touches and therefore for me it has become a technically beautiful tool to analyze and all in all I would say also easy to trade.
What is happening in these hours is that Bitcoin has made a classic figure of technical analysts.
This is a perfect double top in the 19,500 / 19,550 area and on this traditional figure of technical analysis, traders took advantage of it to give life to profit-taking.
In fact, there is no doubt that at these values, except for something not known to us, all Bitcoin holders are earning.
It was therefore logical to expect that sooner or later this irrational race would stop for a moment and in fact it is happening.
Nothing transcendental for the moment, but simply took advantage of a traditional technical analysis figure.
Do you expect this liquidation of long positions on Bitcoin to continue for the next few days?
Graphically speaking, the double maximum achieved by Bitcoin is a stopper that temporarily prevents forms of new acceleration.
From this point of view, the graph of this cryptocurrency is very similar to that of the stock markets, so we are talking about pure exaggerations which, as history has taught us, always fall.
I would not rule out that Bitcoin goes looking, as can be seen from the long chart, for a touch / support area in the $ 14,000 / $ 13,500 zone.
This becomes a very interesting threshold because a nice dynamic support in place since the beginning of the year and technically it is a new accumulation area.
If it is true that in the past I was very critical of Bitcoin, when at the first high it seemed to have become the philosopher’s stone of many investors, it is also towards that over time it has matured as a financial product.
Today I consider Bitcoin an asset class to be included in the portfolio in a limited way and apparently this interpretation also belongs to the large investment houses.
We must abandon those highly speculated pioneering visions of the past, bearing in mind that today Bitcoin is a tool like many others and that it respects the figures of analysis.
This is a double top that calls a touch of the support in the $ 14,000 / $ 13,500 zone and from there Bitcoin could and should start to rise again, because in my opinion it is now an asset that is clearly the subject of much attention.
Can Bitcoin be bought in the $ 13,500 / $ 14,000 area to build long-term positions? And possibly with what objectives?
In my opinion, Bitcoin is simply absorbing an excess phase right now.
Obviously it is a new concept asset class and moreover on historical highs until a few hours ago, so it is difficult as always to identify targets and in these cases we go higher than round and psychological figures.
If I were a Bitcoin trader, but I’m not, an approach of the support at $ 14,000 / $ 13,500 would look closely to hypothesize accumulation.
If it is true that this is a nice uptrend, perhaps exasperated at the moment, it is also true that in that area Bitcoin should reload the spring upwards and then return to attack the double high just drawn and sweep it away.
Later it will also be possible to hypothesize the achievement of round areas such as the threshold of 25,000 dollars.
What I notice is that today everyone is surprised by the drop, but I am not, simply because I had seen the hypothesis of the formation of the double top.
I am unable to say how long this Bitcoin weakness will last, but if technical analysis continues to do its job, I assume that the downside could lead to the dynamic support of $ 14,000 / $ 13,500, where many will attempt a re-accumulation.
As you mentioned earlier, your view on Bitcoin has changed. Is this different approach due to the fact that this tool is now more mature from a technical point of view or are there other reasons?
There was an underlying distortion in the beginning, when associating the rise of Bitcoin with blockchain technology, as if they were the same thing.
The truth is that the technology underlying Bitcoin is extraordinary and nowadays many use it, but this does not mean that a currency that has a technology inside it should make sparks as it was assumed.
I remember that there was almost a gold rush at the time, with even very “well-known” people who went out of balance with Bitcoin millionaire targets.
I was criticized when I asked to be careful after the first maximum of two years, warning of the risk that everything could come down like a stone.
This has earned me the fame of a person opposed to Bitcoin, but my evaluation is always and exclusively technical-graphic.
It must be said that in my opinion this cryptocurrency has matured and with many I notice that graphically it has become very mature.
Even the fluctuations of Bitcoin are no longer what they used to be, except for today’s extraordinary bearish session, with much more contained movements.
For me, Bitcoin is becoming a traditional asset and as such I analyze it: on the supports I buy it and on the resistances I sell it.
It must be said that this tool is pumped up by the fact that the new news really sees the big business houses positioning themselves on Bitcoin, so the demand is there.
Even in buying an asset that is likely to continue to rise, it will be necessary to do so judiciously, when the success rates are in our favor.
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