I would like to start by saying that cryptocurrencies or trading are right now not important. However, if I had to look at the Bitcoin chart, I have to say that it is doing incredibly well. The very first reaction of Bitcoin after the news of invasion was sharp decrease in price, while gold and silver rose. Stocks for instance fell as well.
Bitcoin has thus confirmed that as of now, it cannot be fully thought of as a safe haven asset. Nevertheless, I still believe that in the future it will become a safe haven asset, but it needs to prove itself mostly from the historical point, which is really difficult with such a young age and so much volatility. However, later in the day Bitcoin rose and precious metals fell.
With the current situation I would not try to enter any positions. Noone knows what the situation will look like in the coming days and the next steps are really hard to predict. As of now the reality is that cryptocurrencies are still thought of as a risk-on asset with a significant amount of volatility. Looking at the overall situation very simply, we can divide the buyers of Bitcoin into two categories – retail and institutions.
Institutions definitely see Bitcoin as a risk-on asset. Even if they bought the dip, I hardly believe that they have done so in tremendous numbers. Most of them perceive Bitcoin as a pure speculation and that is not a type of an asset that they would comfortably invest in with significant amount of money.
However, looking at retail we can mostly see that they invest when the situation is positive and the markets are rising. Vast majority of people is usually jumping on board when the markets are moving up. The past shows us that there are not so many brave people that would be buying the dips. It is something that almost everyone knows, but very few follow.
As I mentioned, I am not currently looking to enter the market, because I believe that the traders will seek every upside movement as a potential to take profits. I do not believe that this price increase will lead to any significant trend continuation.
1D Bitcoin chart, Source: Author´s analysis, tradingview.com
I definitely do not believe that Bitcoin is dead or that its coming to its end. I would however be prepared for any scenario in the short term. I am not entering any trades now and I will be looking at two possibilities. I will either buy Bitcoin much lower or I will jump back into the market when it stabilizes and there will be a much higher probability of any upside potential. Currently I can not see this happening, which means that I will be waiting on the sidelines.