In this video, we're gonna take a look at the recent drop in the price of Bitcoin and what this potentially could mean going forward.
Could it be all bad news or is there some hope around the corner for Bitcoin?
We're going to take a look at this chart as well and what this chart also means as well as this one as well. So it's a lot of things. And take a look at here in this video before we take a look at those charts, let me just first of all read you some of the headlines today because actually, believe it or not, they can be quite interesting. So here's what CNBC saying, over 26 billion wiped off cryptocurrency market in 24 hours after a massive oil plunge. What's like a look at that? We'll also take a look at this one over here. This is CoinDesk. They're saying Bitcoin falls to one month low below eightK amid the global market routes. And here's one from Forbes, four per saying, the cause of the sudden sell-off, uh, wasn't immediately clear. Though some have pointed to wider stock market and commodity turmoil in the face of the spreading virus. And by the way, at the end of this article, there's an interesting paragraph here at the bottom of the article and it says over here the latest fall and the Bitcoin price will all but destroy any remaining expectation that Bitcoin has begun acting as a so-called safe Haven assets, um, so which are expected to move higher in times of greater risk and uncertainty.
All right guys, let's get back to the chart that Bitcoin, as far as the charter Bitcoin is concerned, as I'm sure you probably know by now that this was my main primary expectation on Bitcoin. This was not my primary expectation. So my main expectation, even until a week ago was that Bitcoin very likely is going to hold this trendline that you see here, that trendline supports. So we drew this trend line and you can see even until last week, we held this trend line. We bounced off this level very nicely. It looked like it was going to get through some resistance, but it couldn't get through the resistance, which is why I mentioned in my previous video, we have to get through resistance first. We just couldn't get through it, so the fact that it actually Bitcoin just couldn't get through that resistance level that you see there on that 21 daily moving average and then started to roll over. That was not a good sign by the way, and you can see what happened, broke that trend line and then went below my stop loss. So we make it very clear, guys. Again, this was not my primary expectation. My primary expectation was we're going to hold this trendline support that we had here and that we could see a bullish continuation continuing the uptrend. That was my main expectation. However, guys, as good traders and analysts, we always have a stop loss. We always drew a line in the sand and say, well, look, if Bitcoin does not do what we want it to do, then we have to limit risks. I said, if Bitcoin breaks support, I'm out due to increased downside risk. So I drew the line in the sand. As you can see there. That was my line in the sand right there, 8,300 and the trend line, so the trend line and the 8,300 support. Essentially it was my stop loss. And in that video I said, look, if Bitcoin bricks that level, that said, I don't care, I'm out. Why? Because the risk to the downside increases. It's all about risk limitation. In my video about a, I think it was last week, I mentioned this too, I said, look, there is currently a high correlation between the S and P and Bitcoin between the stock market and Bitcoin.
The smart way you should try to start Bitcoin trading with small amount of money
So if the stock market's drop in the next few weeks, this could put downward pressure on BTC. And in case you're wondering why would the stock market put downward pressure on BTC? We'll take a look at this chart. There's been a high correlation guys. This is on trading view on a four hour charts. As you can see, I'm comparing Bitcoin to the stock market. The stock market is the blue line. All right? The orange line is obviously Bitcoin. All right guys, notice there is a high correlation at the moment here. Not an exact correlation. It's not a hundred percent correlation, but there is nonetheless a correlation. So notice that Bitcoin and the stock market peak at about the same time as you can see there, uh, they peak there and then they both start dropping here. Now I do agree with you if you say to me that, you know, Bitcoin's drop has not been as severe as a stock market. That is true. I agree with you on that. But nonetheless, there is this correlation has been happening so far with Bitcoin and the stock market. Yes. And and even if you go back on a daily timeframe chart, uh, you know, again, the correlation is not exact, but you can see there has been this sort of, uh, let me just go back here a little bit. As you can see, even back as far as 2018, 20, 19, notice that when the market dropped sort of Bitcoin. All right, so notice that in fact, Bitcoin and the stock market made a low almost simultaneously. And you can see there was the bottom almost near the same levels back in 2018, 20, 19. Uh, now as you can see here, certainly the markets, the market did not go parabolic the same way to Bitcoin did. But nonetheless, guys, there is this sort of correlation has been happening every now and then. Sometimes there's a high correlation, sometimes there's a decoupling. So at the moment guys, this correlation between the stock market and Bitcoin seems likely to continue. And by the way, guys, this actually goes to my previous point as well. I mentioned this to you about over a year ago that I think a recession would be a terrible thing for Bitcoin. You should recall my video from almost over a year ago. I pointed this out. But again, guys, the evidence is there right in front of us that a market crash and a potential recession could potentially spell bad news for Bitcoin and cryptocurrencies. And again, you can see that today, the S and P, look at the S and P today. Guys, this is the S and P futures. Massive, massive drop. By the way.
Today, oil prices also have dropped significantly by the way, oil prices today hits capitulation on our indicator. Take a look here by the way guys. There's the LT acceleration extreme indicator here on the daily timeframe chart. We've hit the red and purple acceleration extremes, which when markets are dropping, when you get a signal like that, that often signals a capitulation. Again, extreme oversold acceleration. All right guys, let's get back to the chart of the Bitcoin. So again guys, as I mentioned to you in my Bitcoin update and my video on the 20th of February, again, just to repeat this point, if Bitcoin brick support is what I said, if Bitcoin brick support and the trend line, I'm out due to increased downside risk, as you can see here, as you can see here, guys on the price of Bitcoin, we broke that trendline yesterday on Sunday and essentially, and it hit my stop loss. As you can see here, it actually hit my stop loss right there. 8,300 so the fact that it broke the trend line and the fact that it my stop loss there at 8,300 and essentially means I'm out. Why are you suddenly saying you're out? We'll have you pulled yourself out of the market. Well guys, as I'm sure you probably know from my previous videos, and I explained this many times in the past as professional traders and professional analysts, we respect two important rules. The first rule is this, as explained by Mark Douglas in his book, trading in the zone, a book I highly recommend you read, Mark Douglas says, you must have an unshakeable belief in uncertainty, number one, and number two, be rigid with your rules, but be flexible with your expectations. Okay? Be flexible upon your expectations. Why? Because anything can happen. The markets are ruled with uncertainty, which is why all professionals follow what's called Bayesian probability. We fall a Bayesian probability, so we let the market tell us what it wants to do. We don't tell the market what it wants to do. All right guys. The problem is that most people, they're trying to tell the market what it has to do. So you see this with a lot of amateurs, a lot of amateur traders and analysts. They're trying to tell Bitcoin or the market, Hey, you got to have to do this. You have to go up, or you have to go down. Professionals don't tell the market what to do. They don't follow their ego. Professional analysts and traders, we have to respect the market. We have to respect what is telling us, not the other way around. When the market is speaking to us, when it's saying to us, Hey, you know what? I've changed my mind and I'm going the other way. We have to respect that. So remember guys, when the facts change, we have to change our minds with the facts. Unfortunately, again, a lot of new traders, a lot of the amateurs out there, don't get this, but I know you, you as my subscribers and my viewers of this channel, I know you're sophisticate and intelligent individuals and I know you understand this, but unfortunately some people just don't get it.
Now, let me just mention this point here, even though I say I'm out of all my long positions, there is some slight hope here. Let's go on this chart over here on the weekly chart timeframe. Notice on the weekly charts, we are below the 21 weekly. That is not good news guys. So we're below the 21 weekly average and as you guys know, whenever price falls below the 21 weekly moving average, as you can see there, that's the blue line, the 21 weekly. And actually guys, we're below the 50 as well. We are below at at 21 and the 50 moving averages on the weekly timeframe charts. So that at the moment happens to be the line in the sand and that means this guys, as long as Bitcoin remains below the 21 weekly average selling pressure could continue. So that's the line in the sand for the moment here on Bitcoin, which means this, if Bitcoin can somehow gather momentum and go back above that 21 weekly average here, if it can go back above that blue line, the 21 week is about 8,600 then fine, I'll get back in. But for the moment the risk remains to the downside. Let me also show you this chart here. This is the chart of Bitcoin from 2016 to 2017 in the massive bull market that we had in Bitcoin. As you may recall in that period. Now you'll notice something interesting here and that bull market in 2016 2017 it wasn't all straight. It wasn't all perfect. In fact, noticed several times, Bitcoin fell below its 21 weekly. There it is in 2016 it fell below 21 weekly and then after some weeks had managed to recover and go back above is 21 weekly and then started the bull market higher. As you can see there. Notice that exact same thing over here. Let me just bring this into focus here. So as you'll see here guys, I'm just a make this a bit more clear. Yeah, there it is. So here you'll see that Bitcoin fell below his 21 weekly and then about a few weeks afterwards it went back above it again. As you can see and then continue to blow market higher. Did the exact same thing. As you can see here, it fell below is 21 weekly, then recovered when deck Obama's 21 weekly. And then as you can see here, once price goes back up by the 21 weekly price manages to recover and go back higher again. Did exact same thing here. Guys, look at the exact same thing. In the summer of 2017 and the summer of 2017 fell below 21 weekly, dad recovered and continued to bull market higher.
So guys, going back to the chart of Bitcoin right now. Yes, I know it looks terrible right now and our main focus should now be on risk limitation. All right? That's all we care about right now. Reducing risk, reducing downside risk. And that's why guys, my stop loss as I mentioned to you, my video, that's what we had to have a stop loss. All right guys, having no stop loss, having no risk parameters, having no risk control when are trading or whatever you're doing in the markets means you're not an investor. It means you're a gambler if you have no risk control, if you have no hedge in place, if you have no stop loss, that does not make you an investor. It does not make you a trader. It makes you a gambler. So let's understand the difference. So at the moment guys, we're below the level I mentioned. So on the daily time frame chart, we were below the trend line. So the fact that we'd below the trend line that I mentioned to you already has increased downside risk. And so rubella, the 21 week as you can see here, and that means as long as we remain below the 21 weekly average, the sellers or bears have control. And could they push this market lower? Yes they can. And in case you're wondering, well what happens if Bitcoin can not recover? And go back about the 21 week average. If Bitcoin cannot recover in the next few weeks, or at least very soon, if it cannot recover in the next couple of weeks and go back about the 21 weekly. If it cannot do that, then yes, guys, the risk has open for further downside and in another video, in a separate video, we'll talk about potential downside targets, but for the moment, guys, that's all we have. We have to remain cautious and let's see what Bitcoin decides to do.