Much like salt preserves meat, it also preserves the core of the Bitcoin institution. It’s what weeds out the weak and it rains down on the crypto space just frequently enough to keep this ecosystem sterile and sad enough to devote time to actually learning the protocol. (And before you Austrians jump all over me about my headline implying that Bitcoin is a commodity, trust me I know. I just liked the alliteration.)

Why is Bitcoin dropping? Take a little peak at the technicals. They’re not good.

I could end the article here, but frankly I’ve been taking so much heat for being a bear lately that I’m happy to extend this little conversation we’re having for several more paragraphs before letting you get back to archiving Bitmex liquidation emails. As I’ve been saying for far too long, the bottom is not in. And anything less than a high-volume wick into the 3k’s or 4k’s will fail to convince me we’ve started a new cycle. Not enough coin has changed hands from the impatient to the patient and not enough glitzy lambo accounts have gone mysteriously silent. And they will. At this very moment, a large chunk of people you ‘look up to’ in some aspect of the cryptocurrency space are one more drop, two more drops from blinking. It’s because they built on a lousy foundation and worse, they bit off far more than they could chew.

I’ve removed most of the speculation from the chart below. I think it’s clear that we won’t escape the gravitation pull of a capitulation event. At this point, there are three support levels that I’m watching: 5800, 4500, and 3500. At the pace that Bitcoin is plunging, it appears we’ll see a re-test of 5800 support soon. If that holds, we may actually turn this train around. However, if it breaks, prepare for CRAZY lag on exchanges. Volume will be pouring in as people begin to panic. Bitmex will start jumping around 100 at a time as the price darts its way into the 4000’s. Whether the bleeding ends there or we hit the 3500 area is anyone’s guess.

However, since I’ve been calling the 3500 number for a few months, I’ll stick to my guns. The most likely scenario in my book is daily candles closing around 4500 with wicks into the 3000’s.

If you’re wondering about timing, I think we’ve got a bit longer, but Mondays have always been a tough day for the bulls. There is no rhyme or reason to why the market takes the path of most frustration. There is no ETF cancelation, “institutional money,” or mysterious wallet movement that gives a damn about you and your trading account. There is smart money and there is dumb money. Try to be the smart money.

And come what may, remember that when life gives you salt, make lemonade.

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