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"Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." - Warren Buffett, in his 1986 Berkshire Hathaway shareholder letter |
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| This 1986 Warren Buffett Quote Is the Key Advice You Need Today (Inc): While the media tries to figure out why bitcoin has dropped in price (spoiler alert: no one knows), smart investors are figuring out what to do about it.
Investor takeaway: Let's reword Buffett's famous quote to
"When everyone's manic, don't panic. When everyone's sad, buy like mad."
In other words, consider starting your steady-drip investing today, when markets are slow and the prices are low. (Instructions + flowchart here.) |
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| Here's why steady-drip investing is a better solution for most investors: it protects you against the roller-coaster swings of the crypto market.
Investor takeaway: If you don't already have a steady-drip plan set up, the new year is a great time to get started ... especially this new year, with its bargain-basement crypto prices. |
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| Hi Everyone,
Once again, the crypto market finds itself in the depths of despair.
This morning, the price of bitcoin briefly dipped below $40,000, reaching its lowest point in five months.
If the gloom were limited to pricing, a lot of this bad fortune could have easily been shrugged off. Alas, there are a plethora of other metrics confirming the apparent negativity of this market.
The most ominous sign, of course, is the technical setup known as the Death Cross, which seems likely to materialize at some point this week.
In this graph, we can see the red line, representing bitcoin's short-term average price, about to collide with the blue line, which shows the long-term average. |
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| For more information about the Death Cross and what it means, please see this explainer from analyst Imran Yusof. For additional Death Cross fun, check out this video.
Another ominous metric we saw yesterday is that the number of wallet addresses that were used to send bitcoin, as reported by BitInfoCharts.com, came in at the lowest level since July 2018, the heart of crypto winter.
Although that data is not corroborated by other platforms like Glassnode or CryptoQuant, it's still pretty scary, even for a Sunday. |
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Fear & Greed
The Crypto Fear & Greed Index, which measures a wide range of data to arrive at a number between 1 and 100, flashed an extreme fear reading of just 10 yesterday, which is about as low as this index has ever been. |
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| Obviously, we all know the old investor adage most famously encapsulated in a quote from Warren Buffett that "you want to be greedy when others are fearful and fearful when others are greedy."
In the market, we always want to buy low and sell high, so when the prices are approximately 42% below the all-time high, it's certainly a better opportunity than we've seen in a long time. |
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| The range
As we've stated many times throughout the last few months, bitcoin is currently in a very wide range from $30,000 to $60,000. Any and all movement within this range should be taken in context.
Here, we can see a long-term graph of bitcoin, where each candlestick represents one week. The range is quite clear. Especially if we see a bottom anywhere above $30,000, the long-term upward trend will be reinforced.
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| Thus we can confirm another old market adage that is particularly relevant to bitcoin. When in doubt, just zoom out.
For myself, anything in the lower half of the above range is considered the accumulation zone.
We don't necessarily have to go lower from here, but we should at least be prepared for this possibility.
Wishing you a lovely evening. |
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| Mati Greenspan Analysis, Advisory, Money Management |
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This is a perfectly valid point! |
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| Bitcoin Market Journal is a daily newsletter focusing on blockchain and crypto investing. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Steve Walters.
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