Cryptocurrencies

Bitcoin – implications of the rise

This post builds on what I said yesterday in “Bitcoin – What’s Happening?“. Today I will once again use a pseudo-point form style to look at the most important aspects of the Bitcoin / Crypto market and its most recent happenings.

ETFs

Last discussed in my post “A(nother) word on Bitcoin ETFs” two months ago, I have said over and over again how unnecessary ETFs are for Bitcoin or cryptocurrency success. The latest price movements prove me correct and will prove me increasingly correct as time goes on. More on this later in this post.

Bull Trap

Yes this is a bull trap.

No you should not panic and sell.

BTC rose fast, too fast. Nothing can maintain growth this far outside of the Bollinger bands:

BTC will have to drop in price to get back into the bands, but that should only take a day or two or three. After that, BTC is free to continue its climb. I would not attempt to trade this bull trap, the uncertainty factor it too high. Hodl through it and you should be just fine. I don’t know the exact “When?”, “How much?” or “How long” of the bull trap, but it will happen soon. In the long-run it does not make any difference to BTC price performance.

It can, and should, be ignored.

If you would like a little more detail on this subject, then I suggest that you check out fellow TImmian Workin2005’s perspective on it. See that here: “Bitcoin Technical Analysis: BREAKOUT…BE CAREFUL”.

200 MA

Whether you prefer the 200 MA or the EMA does not matter. It was shattered yesterday by a rapidly rising BTC.

As I said on 22 March in BTC 200 MA – revisited:

The 200 MA is still mirroring that of the 2014/2015 market. The imminent crossover will firmly mark the current consolidation period – giving further validity to the arguments of those of us who have been saying this for some months now. It will be a significant technical indicator that even hardened bearish analysts can’t ignore, and should in itself create a little more buoyancy in the market. The bear will not only be dead, but buried as well.

I stand by that. 

#burythebear

Volume

As this was already discussed yesterday, I don’t have to go into much detail on the topic of Volume. Suffice to say that it has continued to rise since that post, with BTC volume pushing well past $21 Bn per day – several orders of magnitude above what it was at the beginning of this year. This is an indicator of even higher prices to come. Volume has now reached the same peak levels that it did when BTC was trading at $20 000!

Short Squeeze

Also discussed yesterday, this is an area of great interest, both to myself and the crypto community in general.  Since BTC’s price spike, the BTC shorting crowd have been in turmoil. Shorts have already:

  • Plummeted in price
  • Consolidated at a lower level
  • Shot back up in price
  • Consolidated again

Not bad for less than a day and a half!

There is not doubt that positions have been squeezed and that continued squeezing leads to higher prices which leads to more continued squeezing. 

Since I am not one of those altruist people who believes in serenity and peace for everybody – even the wicked, I can safely say “Ha ha ha! Poetic Justice!“. I’ve been waiting a long time to see the BTC shorters get burnt. I hope this teaches them a lesson – a lesson in shorting a naturally buoyant asset class – which is a stupid and risky thing to do. 

Shorting BTC has a negative effect on BTC price and is one of the factors that contributed to BTC becoming so oversold and suppressed. By helping to put so much tension on the BTC “spring”, the shorters are now reaping what they sowed.

The shoe is shifting to the other foot

How many times have I said: “BTC does not need institutional money; institutional money needs BTC!“?

I don’t know how many people believed me, but that’s not my problem. I took the horse to water, my conscience is clear.

BTC can and will rise regardless of the actions of institutional investors. I think it is hilarious that, for instance, Goldman Sachs never opened their planned “Crypto Trading Desk” due to lack of interest and the headache that this would have caused from a regulatory perspective. Perhaps if major banks like Goldman Sachs had been less critical of cryptocurrencies (we won’t even mention JP Morgan!) then there would have been a lot more interest in crypto last year. Imagine if big banks had pushed FOR crypto – investors would have been queueing up at their “Trading Desk”. Regulations would naturally have followed because (in case you don’t know how the world works) money buys regulations.

What will happen now is that institutional money will realise its mistake and will desperately struggle to catch up. Financial institutions will suddenly start offering a flurry of crypto products as the man on the street shows that he is keen to put his money into crypto. February’s talk of permanent Quantitative Easing in the States will certainly help the cryptoverse in this regard! Thanks Fed, we owe you!

I don’t think people realise just how quickly and profoundly this change in attitude by financial institutions is going to happen: watch this space!

Having said that, I strongly advise against getting into any crypto products offered by banks and old school financial institutions. You do not need anyone else to manage your crypto for you! They will only charge you fees to do that – don’t let the rich steal a cut of your crypto profits!

And remember: “not your private keys – not your crypto”.

More on Fib Levels

Yesterday I published my updated Fib levels. I’m pleased to say that they appear to be working. BTC turned just before hitting a level predicted on the chart I showed yesterday. I have now tweaked the chart to take the $50 discrepancy into account. My latest chart looks like this:

With the BTC and crypto markets now rising again, the diagonal Fib levels seem to bring something to the table that horizontal ones don’t. I am also using standard horizontal Fib levels, it remains to be seen which will have more predictive value in the bull market, diagonal or horizontal. I foresee myself using a combination of the two. Perhaps places where the two sets of Fib levels coincide at particular points on the chart will be very useful for predicting future BTC prices and times. This is an area of TA that I will continue to study and develop in 2019. I look forward to seeing what I can learn and what I may be able to predict using this method. A combined diagonal/horizontal TA chart looks like this:

Just out of interest: a long-term diagonal Fib chart, something I have also just started working on, looks something like this:

Final word:

If you are an investor then please do not follow the advice of traders – especially traders who do not specialise in crypto markets. The philosophy of trading is very different to that of investing. The philosophy of crypto is very different to that of other markets – a fact which most financial professionals deny. I can see that I will have to write another post about that topic soon.

All charts made by Bit Brain with TradingView

Yours in crypto

Bit Brain

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

~ Mark Twain

“By this means (fractional reserve banking) government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”

~ John Maynard Keynes

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