Cryptocurrencies

Bitcoin – an update

TLDR

Things haven’t changed since my previous BTC post, now almost three months old. (“Bitcoin: 12.5% of the Way to Nowhere – The Tale of Right Now”.)

Explanation:

BTC is running along a medium-term channel. The current price dips represent the bottom of that channel, this now being BTC’s third visit to that level.

Overall BTC remains rather stable for the time being, though a breakout from this channel – positive or negative – would obviously alter that state of affairs.

For now there are no signals of an impending breakout and trading volume remains smooth, perhaps with a slight positive gradient to it. Being crypto, this fact does not really mean much, as huge volatility based on next to nothing could always await us around the next corner.

Macroeconomics

One should remember to consider everything – and I do mean everything – in the context of the greater global economic system.

Covid ramifications continue to be felt. Were it not so incredibly disturbing, I would find it hilarious that the de facto view is now that the Covid-induced recession lies behind us. This is a demonstrably false and delusional narrative – a topic which perhaps warrants an entire post of its own. Information which indicates the exact opposite is freely available: money printing took place on an ENORMOUS scale, the effects of which are now inevitably being felt as inflation. That inflation is causing some market panic and interest rates have already begun to climb rapidly.

Supply shortages continue to remain a problem, and have in fact been exacerbated by events such as the Mexican trucker blockade, the previous trucker protests – most notably in Canada, the Russia-Ukraine War, and any further events such as the current fire at Taylor Farms are only going to further compound that problem.

It’s worth noting that when I say “Covid-induced recession”, what I mean is “Recession caused by the actions of oppressive authoritarian governments during the Covid pandemic” – but that’s a real mouthful, so I’ll stick to the short version, trusting that you know what I mean.

While unemployment in the US has normalised, this is not necessarily true for the rest of the world – you know – countries who can’t print dollars to fix their problems. The greatest indicator of a continued recession must surely be the velocity of money – a quantitative measure of actual economic activity – which remains EXTREMELY low. The chart from FRED, seen below, is self-explanatory.

Attribution: Federal Reserve Bank of St. Louis, Velocity of M1 Money Stock [M1V], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/M1V, April 14, 2022.

Ironically (I promise I didn’t plan this), the FRED chart shows the recessions as shaded areas, including the recession I’m currently speaking about. Note how the official FRED chart indicates that the recession ended in Q2 of 2020! Come ON guys! You can’t make this stuff up…

Projection

As stated in the “TLDR” section, nothing has changed. Had you read my BTC post of 22 January, you would have seen this chart:

From https://mentormarket.io/cryptocurrencies/bit-brain/bitcoin-12-5-of-the-way-to-nowhere-the-tale-of-right-now/

This is the same chart – unedited – seen with the updated information of today:

So what message should we take away from this?

The message is that Bitcoin remains stable and somewhat predictable. The longer the term you look at, the more predictable it becomes.

From a more holistic viewpoint, one could say that Bitcoin is behaving just as it should. We could also say that this is a reminder to BTC investors to zoom out and not to sweat the small stuff. You can follow short-term charts and their analysts until you’re blue in the face, but you’re seldom going to derive any value from them – if ever. You can watch the beautiful zig-zag patterns of Elliott Wave theory fail over and over again, because they are – and will always remain – simply Fib levels combined with thumb-sucked times and forced into patterns which possess no basis of existence.

I suggest zooming out and taking the long approach, which is why I’m a Bitcoin investor and not a Bitcoin trader. I do trade the odd bit of crypto – but would never depend on that as part of my long-term game.

Relax, enjoy your Bitcoin and don’t panic when events cause prices to drop momentarily. With interest rates going berserk, we can expect lending to become a lot more expensive, leading to a visible slow down of the the economy and even more visible proof that this depression is not only still with us, but quite possibly also on the path to become a depression.

BTC remains on track and things are going well. Even in a bad scenario, I find it extremely unlikely that BTC will end 2022 at a price of less than $50 000.

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView unless stated otherwise

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

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