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In this video, we're going to take a look at the chart of Bitcoin and I'm going to ask you a very important question and I can guarantee you guys, many folks out there are giving the wrong answer to this important question and I want to make sure we clear things up in this video. Let me explain now, here's the chart of bitcoin and you can see that, as you will see from this chart, is becoming obvious that this key level that bitcoin keeps coming down to, you'll see that every time bitcoin has dropped, every time bitcoin has sold off and dropped, it keeps coming down to this important support level and that's a 6,000 level. So if I just draw a line at that level, it is without a doubt, clear that that's 6,000 to 5,700 level. We’ll let, let's just say 6,000 for the point of simplicity and clarity.

 

That's 6,000 support level is becoming very important for bitcoin. That's a key level of support for bitcoin and you can see so far it's maintained itself successfully above that level. Now I should say that in technical analysis and chart analysis, there is a theory that the more often price comes down to a key level of support, so the more often price tests a key level which indicates the 6,000 level, the theory says the more likely it is that eventually is going to break it. So let me just repeat that. One of the major theories and technical analysis is that the more often price comes down to test the key level, the more often price touches a key level, the more likely it is that eventually it's going to break it. So is there a likelihood that bitcoin could eventually break through this support level and drop below it?

Yes, there is. How likely is it? I would say about 55 to 60 percent, but there's no guarantee there is a probability, but there is no certainty. There's no guarantee. And also there's something else we need to remember that even if bitcoin where to drop below the 6,000 level, we don't really know when that's going to happen. We have no way of knowing with certainty or indeed any degree of high probability when that could happen. It might happen this year or it might happen potentially next year in 2019. One thing we do know with some historical accuracy is that the period from October to December is usually a strong period for bitcoin. I mentioned this in a previous video. You might remember again the period from October, the middle of October, I should say towards the December period is usually a very powerful and the strong period for bitcoin.


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So we're coming very close now. We're not too far away. We're about only about a month away from this strong period for Bitcoin, so maybe it won't happen this year, so maybe bitcoin won't fall below 6,000 this year. Okay. It might, but again, the seasonality seems to favour a strong period for bitcoin between the October to December period. The bottom line is this though. Here's the question I want to ask you. Let's say bitcoin, where to drop. Let's say it did drop below the 6,000 support level. Okay, so let me just do this for you one more time, so if I was to draw those lines, that particular support level for you here, so there is our 6,000 support level right there and let's say bitcoin did eventually break the support level. Okay. And let's say maybe this year or maybe next year, let's say the beginning of 2019, let's say bitcoin did finally drop below the support level and it went significantly lower.

In fact, I do think that if bitcoin drops below that support level, if it breaks it, the levels we're going to, we're going to be significantly lower. But here's the question I want to ask you. Would that be a disaster because many folks out there are saying that if bitcoin where to drop below the 6,000 level and if it worked, if it were to drop, let's say to 3000 or 2000, that would be a disaster for Bitcoin, but I want to ask you, do you agree with that and is that even correct? In my personal point of view, that is not correct. I actually think that if Bitcoin, if it were to drop down, let's say to 3000 or 2000, I think it would be a great thing for bitcoin. Let me explain. So it might not be clear immediately why, but let me just explain that point.

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Let's say let's say you were to buy bitcoin at near current levels. Let's say you were to buy bitcoin at 6,000. Okay? Now let's just keep it simple. So let's say you bought Bitcoin at 6,000. Let me ask you this question. How much would bitcoin have to go up by for you to double your money? Okay, let me just rephrase that. If you were to buy bitcoin at 6,000, let's say, how much with Bitcoin have to go up by to make 100 percent return on your money? The answer is very simple. You'd have to go up to 12,000. In other words, bitcoin would have to go up to 12,000. In other words, a $6,000 move just for you to make 100 percent return, not almost a double your money. Now imagine for example, bitcoin now fell down to 2000. Okay? As an example, let's say bitcoin were to drop to 2000 and let's say we bought Bitcoin at 2000.

Now let me ask the same question. If you bought bitcoin at 2000, how much would bitcoin have to move by for you to double your money? The answer is very simple. 2,000. So if bitcoin where to go from 2000 to 4,000, you'd have doubled your money. You don't make 100 percent return. In fact, if you were to buy bitcoin in 2000, by the time bitcoin has moved back up to its current near current levels, near 6,000, we'd have tripled your money. Okay? So one thing we can begin to see is something many folks out there do not begin to understand, which is that at lower levels. Okay? So at lower levels, in other words, at the 2000 to 3000 levels, the multiples are much better. The risk return is much better. Again, this is something very important to remember as I just explained, a person who buys at lower levels at 2000, they'd have a much better multiple because by the time bitcoin has gone back up to 4,000 to 6,000, they've already made a 100 to 300 percent return.

So again, multiples are better. The risk return is better and the odds of a potential bottom forming near to his current levels are also better in my point of view. Okay. Because I think that we might see more demand, more potential buying happening at those lower levels than at current levels. Now it is true that people who bought bitcoin perhaps at very high, so the very highs of near 17 to 15 or 19,000. For them it would not be a great thing if bitcoin where to drop back down to let's say 2000 or 3000. I understand that, but then again, if you're a long term holder, if you're a hurdler, for example, if you're holding for the very long term appeared of maybe five to 10 years, then maybe it wouldn't matter so much and in fact, maybe you might welcome the idea and I think one thing we have to understand actually appreciate is this, that we should welcome the idea.

We should embrace the idea of bitcoin dropping down to lower levels because I think the odds of a potential bottom forming are much better at lower levels. Again, the multiples, their risk return is so much better at lower levels than at near current levels. Now, the main thing to remember is that for the moment bitcoin is respecting this support level. So at present we're saying bitcoin maintaining itself above this 6,000 level of support. And again, there is absolutely no guarantee that bitcoin is going to drop and crumble behind below the support level. Uh, it could happen, but again, there's absolutely no guarantee is going to do that. So for the moment we just have to appreciate that this is going to be a key level of support for bitcoin and near 6,000 and if bitcoin where to drop below that level, let's say this year or next year, that actually is something should be welcomed, should be embraced and not something we should be afraid of. Our guys have this video's health and if it has, please get a thumbs up and also please subscribe for future videos.

Thanks a lot.

 

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