Cryptocurrencies

Bitcoin update – reaching $10k (again)

Bitcoin has hit a diagonal Fib line, and been rejected by the resistance there.

Incidentally and significantly, it broke the psychological resistance level of $10000 in the process. As seen on the chart below, this is the second time that this diagonal Fib level has been tested in the last nine days. This is a mildly bullish sign.

While I struggled immensely at first, I have now succeeded in defining the latest diagonal Fibs to a degree that I am happy with them.

This means that (among other things) I should now be able to better discern any change in medium-term market sentiment, such as if the market becomes bearish after the halving.

Speaking of the halving: I attribute current volatility to a combination of it and the general Covid-19 market madness. It is good to see that the Bitcoin market has now fully recovered. By that I mean that the old price levels and trajectory have been regained (after the major crash of early to mid March). My good old long-term base trendline is once again serving as a rough “base level” for BTC, and should return to having predictive value in a non-hyped market.

Of course “non-hyped” is a tall order at this stage, there is no telling what effect global macroeconomics may have on Bitcoin over the next few days, months and even years. Economies are in SERIOUS peril – and that could go either way for Bitcoin. My gut feel – largely informed by the behaviour of stores of value during previous economic crashes – is that Bitcoin will crash again when the stock markets do, but will then recover fast and surge ahead with renewed vigour. You could see the period of early March until now as a trial run for what is to come next. At least that’s my opinion of a “most likely” scenario.

Investing and Risk

So in the long-run, nothing has changed: keep stacking sats and hodl like there is no tomorrow. Looking at my chart above you’ll see that I consider BTC to be cheap at current prices – the price is in the “unhyped” pricing zone – very close to the long-term base trendline itself.

Having said that, I’m not buying here. I am taking an optimistic view and have set buy orders at VERY low prices. If there is a major market crash that takes BTC down with it, then I want to profit from that. The shakier my fiat holdings look, the more that may change. There is not much point to holding fiat if interest rates turn negative (the same applies to bonds). Though it is against my principles to over-invest in crypto, the future of fiat currencies is looking so risky right now that I may turn to Bitcoin as a less risky option, as crazy as that sounds to conventional thinking. Normally I would advocate diversification into other limited supply assets, but physical Gold and Silver are ridiculously expensive right now and I’m not interested in buying futures. The property market is prohibitively expensive (at least to me) and is probably going to suffer an enormous dip – from which it will take years to recover. So that leaves me with BTC as the most logical investment in terms of risk and ability to store value (or even grow it). As always I will divert a small amount of BTC into altcoins too, though my focus remains primarily on BTC.

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“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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