CNBC’s Daryl Guppy Cautions Viewers For a Bitcoin Correction
Daryl Guppy, a technical analyst, recently cautioned his readers to “watch out for a correction in Bitcoin after a parabolic rise.” The statement was made after witnessing bitcoin increase at an astonishingly fast rate over the last several weeks, capturing the attention of traders and mainstream media alike.
The article goes on to talk about the trend, which can be defined using a segment of an ellipse. It further explains that once the trend has been set, it starts slow but picks up very quickly, with the charts almost going vertical.
As the saying goes, “what comes up must go down,” and the price will eventually come back, with CNBC saying at a “rapid retracement of 50 percent or more.”
It doesn’t take a technical analyst to realize this, but many first time buyers came in this wave, and the reminder to keep a cool head when the things get tough is a good reminder, as it is very easy to get caught up with the continuous green candles that is a cryptocurrency bull market.
Guppy argues cryptocurrencies are fiat currency in its truest sense, as it solely relies on investors confidence for its values. Since no sovereign state backs the currency, with some even questioning its legitimacy as a currency altogether, Guppy claims that these only make “cryptocurrencies suitable for short-term trading with exceptionally good risk management.”
Despite the recent Bitcoin contracts on the CME and CBOE, Guppy states that since the contracts can only be settled in USD, it shows how little confidence traders have in the currency itself. While Futures may legitimate and regulate trading activity, it does not regulate the underlying currency itself.
Guppy’s predictions seem to be true, with bitcoin below $17,000 and down 10.5 percent at time of writing. Many other cryptocurrencies are following suit, with a few outliers. Bitcoin cash is up 50 percent and broke $3,000 for the first time since the fork off the main network, as well as several other cryptocurrencies such as IOTA, EOS, and Bitcoin Gold.
Bitcoin typically has a history of picking itself up rather quickly, but after a bull run like this, price trends may fall into a slight recession, before picking steam backup. Either way, bitcoin still has had a spectacular year, with several other cryptocurrencies increasing in similar magnitude as well.