Bitcoin next week: FOMO or a Blow-Off Top?

Last Friday, Bitcoin was within an inch of reaching a price of $100,000. Because many traders had set automatic sell orders at that mythological price limit, there is a bounce back once that level is almost reached. Back in April and May of this year, Bitcoin tried to break through the $70,000 level several times, after hitting $74,000 in March. Once again we see the effect of short-term profit taking by day traders.

Next week we can go in either of two directions: FOMO (which stands for fear of missing out) and a further jump to, for example $120,000, because new investors will enter when $100,000 is exceeded, or a so-called ‘blow-off top’ where everyone simultaneously takes profits and we drop back to a level of $80,000 or even lower.

FOMO

The argument for FOMO mainly comes from the fact that the date indicates the end of November, and during previous bull runs (in 2017 and 2021), December always meant a very strong end to the year.

Because Bitcoin appears in the weekend newspapers and there are more and more articles about it, new investors are willingly found to take the step and purchase Bitcoin at a new ATH instead of waiting for a ‘dip’ to form. 

Some on social media are even claiming that the Bitcoin price will be a major discussion point during the Thanksgiving family celebrations that will take place in the United States late next week and that we could move higher again.

As politics and religion are too precarious as a point of contention, profits in crypto (and stocks) can be an alternative discussion between family members at that time. I personally think it’s far-fetched, but the possibility does indeed exist.

Blow-Off Top

The argument for a so-called ‘blow-off top’ or a strong and rapid decline (after which a ‘buy the dip’ moment can follow), is because so-called ‘whales‘ (persons or entities that own more than 10,000 bitcoins) are selling (slowly) ever since Bitcoin broke through the $90,000 barrier about a week ago. Most purchases meanwhile are made by smaller crypto wallets, while the larger wallets are more likely to sell at this time.

The last time we observed this type of behavior was after Bitcoin set a new All Time High during the 2017 and 2021 bull runs.

Reminder that MicroStrategy, just about the largest Bitcoin Hodler among companies at the moment, saw a 16% drop in price in just one day this week, while Bitcoin continued to rise. That was also a clear blow-off top after MicroStrategy’s share price already rose more than 500% this year.

In any case, I expect volatility.