Why Now May be the Best Time to Invest in Bitcoin
The fear is palpable with Bitcoin.
Since testing a June 2019 high of $13,835, the coin slipped to less than $8,000 must four months later. All thanks to a lack of any news from the U.S. SEC, Bakkt’s lackluster launch, Libra’s uncertain future and rounds of bearish sentiment send many investors to the exit doors.
Even one of the top Bitcoin investors, Michael Novogratz is warning it could fall to $6,500, near-term. That’s a far throw from his predictions of $20,000 by the second quarter of 2019.
“There’s going to be a case of institutional FOMO [fear of missing out], just like there was in retail,” he said at the time, as quoted by Barron’s. Around the same time, he also said, “Ten percent of my net worth is in this space. It’s the ‘best investment of my life,’” he says, as quoted by Coin Telegraph. “The Nasdaq got to $5.4 trillion in 1999, why couldn’t it be as big?”
However, while there is plenty of uncertainty, and pessimism, a good deal of fear has been priced into the price of Bitcoin, in our opinion. In fact, it’s become oversold, and our technical indicators are all aligning deep in oversold territory.
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For one, Bitcoin now trades at its lower Bollinger Band (2,20), oversold and consolidating. Two, Full Stochastics is well under its 20-line. Each time it gets this low, we begin to see a pivot higher in the price of Bitcoin. Three, relative strength (RSI) is quickly nearing oversold levels, where we also begin to see a pivot higher in Bitcoin, as well.
All of these indicators paint a clear picture that fear is out of control in this coin.
Fear is a Trader’s Best Friend
Remember, when all seems lost, and others run away, that’s a queue to buy.
Even some of the top investors will tell you that, including Baron Rothschild, Sir John Templeton, and Warren Buffett. All of them suggested buying excessive bouts of fear.
Look at Sir John Templeton for example. In 1939, Europe was an absolute mess. Investors ran scared, as markets and stocks plunged. Instead of running with the herd, he bought every European stock trading at less than $1 and made a fortune.
To this day, Warren Buffett still advises that a “climate of fear is your friend when investing; a euphoric world is your enemy.” He’s also said, “be fearful when others are greedy and greedy when others are fearful.”
Baron Rothschild would tell investors to buy the blood in the streets.
While it may not sound like a good idea to buy when fear is raging out of control, many times it can produce the best results.
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