My usual write up for Bitcoin (BTC-USD) contains a somewhat elaborate argument for its existence. Today, the goal is to discuss actual levels and trading strategies for BTC-USD. However, I will state that for as long as we have fans of it, Bitcoin will retain its value. Meanwhile, it will tend to fluctuate wildly over time. This concept is very similar to the bullish thesis behind gold.
Bitcoin discussions are almost always passionate. The crypto king has haters and extreme fans, but very few people in between. Today, I will try to present myself as a moderate to help you get some clarity about the opportunities brewing. My conclusion is that I definitely want to own it at a small amount now and add to the position later.
The Bitcoin Correction Was Imminent
Back in November, I did a study on the potential correction that would take Bitcoin down to $20,000. That has since unfolded almost exactly how the technicals suggested it could. It all started by losing an important neckline around $45,000. They tried and failed to recover it in early April when it hit $48,000. Then the bearish pattern was afoot with ominous targets. That technical pivotal level process repeated itself at $33,000 and again at $25,000. Remember those levels, because they will be resistance on the way back up.
My original November plan was to reengage long with Bitcoin at my target, which we have already achieved. However, I have since read other technicians that suggest that there could be further to go. Their scenarios could take it another 50% lower this year. While I don’t see it that way, I respect them enough to leave reasonable doubt in my execution plan.
Therefore, I have partially engaged a plan at the lows and I am already very green. My main coin this time is Solana (SOL-USD), as it recently did a bit better than other cryptocurrencies. And I left plenty of dry powder to double down at or below $10,000.
What Investors Should Do With Bitcoin
Meanwhile, shorter term, there are levels to note for Bitcoin investors. But none are more important than the recent lows it just made. If for whatever reason the bears breach it, BTC will take another leg lower. My assumption is that it holds, so I am also looking up more than down.
Trading cryptocurrency is a daunting task for most new investors. A major hurdle is usually finding a trustworthy broker. A lot of them are overseas and quite frankly, feel like casinos. At least with stocks, the major brokers have been here for decades. For those who cannot get over this, ProShares Bitcoin Strategy ETF (NYSEARCA:BITO) is a good substitute to trading actual Bitcoin.
This is a ticker that trades like a stock on your regular broker accounts. It came to life at the top end of the Bitcoin rally, so its chart looks like an abyss. Eventually, it too will bottom with Bitcoin as they trade tick-for-tick. So, the easiest way to participate in Bitcoin rallies is to buy a little BITO stock at $12.44 per share. Then, if the $9,000 Bitcoin scenario unfolds, I would add a little bit more at $6 per share.
Note that the rally back may not be as quick this time around. Wall Street created new derivatives, like the Bitcoin futures, for example. Now, market makers and liquidity providers have interest in managing the price action. They have the power to control the game, so they will try to tame the wild Bitcoin price action.
On the date of publication, Nicolas Chahine did held ETH, USDC, SOL, MANA, CRO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.