Where Will Bitcoin Bottom Out?

&l;p&g;&l;img class=&q;dam-image shutterstock size-large wp-image-1119511475&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1119511475/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Shutterstock

The price of bitcoin is now in the $5,000s. Condolences if you bought at $20,000. The question now is how far will it fall and how to buy the bottom?

This is where we are as I write:

&l;img class=&q;size-full wp-image-57506&q; src=&q;http://blogs-images.forbes.com/investor/files/2018/06/btcusd8.jpg?width=960&q; alt=&q;The Bitcoin price in the last two years&q; data-height=&q;591&q; data-width=&q;900&q;&g; Bitcoin price in the last two years

I believe you should always look for and at the obvious in any chart. So this is the trend:

&l;img class=&q;size-full wp-image-57505&q; src=&q;http://blogs-images.forbes.com/investor/files/2018/06/btcusd9.jpg?width=960&q; alt=&q;The downward trend in the Bitcoin price&q; data-height=&q;589&q; data-width=&q;900&q;&g; The downward trend in the Bitcoin price

This doesn&a;rsquo;t mean it is going to zero, just that this is the road the bitcoin price is on. Until it materially leaves this trail, it is going down.

The next question you need to answer: does bitcoin have a future? Some say it doesn&a;rsquo;t, but I think it does and I should think you do too. So all we have to do is find the bottom and buy it.

Let&a;rsquo;s put in some suggestions:

&l;img class=&q;size-full wp-image-57504&q; src=&q;http://blogs-images.forbes.com/investor/files/2018/06/btcusd10.jpg?width=960&q; alt=&q;Looking for the right price to buy Bitcoin: some suggestions for the low&q; data-height=&q;591&q; data-width=&q;900&q;&g; Looking for the right price to buy Bitcoin: some suggestions for the low

Again, none of these levels are destiny, they are only areas where the market felt equilibrium in the past. As such, you would expect these levels to act as at least potential resting points or the bottom in a fall.

Bottoms are very rarely V-shaped; they tend to be W-shaped, so what we are looking for is this:

&l;img class=&q;size-full wp-image-57503&q; src=&q;http://blogs-images.forbes.com/investor/files/2018/06/btcusd11.jpg?width=960&q; alt=&q;Looking for the right price to buy Bitcoin&q; data-height=&q;586&q; data-width=&q;900&q;&g; Looking for the right price to buy Bitcoin: bottoms tend to be W-shaped

Where I&a;rsquo;ve placed this W is just an example, a kind of best guess, but it is to show what the bottom will likely look like.

You can play the bottom many ways. I might buy a chunk at every level down, or try to buy the last leg of the W.

Buying the last leg is much safer but needs a lot more self-control. The bottom will not happen overnight as the W will have to form. This can help an entry if you just want to buy into bitcoin a little lump at a time. I will most likely do this, averaging in.


Ultimately, as with all investments, you play the percentages. As the price falls, the percentages that you are nearing the bottom increase, so long as you think the asset has a future, which after all many assets do not, especially in equities. As the price falls you should have been buying so you can get a good spread across time to have a solid average. Better to buy late than early. As long as you buy near the base of the W you are in good shape.

As long as the current trend is in place, bitcoin is going down and when the trend breaks it may be too early to jump in too heavily. This is so reminiscent of the Nasdaq in the dotcom crash it is good to use it as a guide to what is unfolding:

&l;img class=&q;size-full wp-image-57502&q; src=&q;http://blogs-images.forbes.com/investor/files/2018/06/nasdaq-2.jpg?width=960&q; alt=&q;The NASDAQ during the Dotcom crash&q; data-height=&q;594&q; data-width=&q;900&q;&g; The Nasdaq during the dotcom crash

As Mark Twain said, history doesn&a;rsquo;t repeat, but it does rhyme.


&l;em&g;Clem Chambers is the CEO of private investors Web site&l;/em&g;&l;span&g;&l;em&g;&a;nbsp;&l;/em&g;&l;/span&g;&l;a href=&q;http://www.advfn.com/&q; target=&q;_blank&q;&g;&l;em&g;ADVFN.com&l;/em&g;&l;/a&g;&l;em&g; and author of &l;/em&g;&l;a href=&q;http://www.amazon.com/dp/B00R3ABO9G&q; target=&q;_blank&q;&g;Be Rich&l;/a&g;&l;em&g;, &l;/em&g;&l;a href=&q;http://www.amazon.com/dp/B00HCOUWS2&q; target=&q;_blank&q;&g;&l;em&g;The Game in Wall Street&l;/em&g;&l;/a&g;&l;em&g; and&l;/em&g; &l;a href=&q;https://www.amazon.com/dp/B079MJHCX2&q; target=&q;_blank&q;&g;&l;em&g;Trading Cryptocurrencies: A Beginner&a;rsquo;s Guide&l;/em&g;&l;/a&g;&l;em&g;.&l;/em&g;&l;/p&g;

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