Cryptocurrencies

Bitcoin – What’s happening?

I’m glad I got yesterday’s post published in time. Though (as always) it was my “Scenario B” that happened to play out, at least my readers can’t say that they weren’t warned about the breakout.

Recap and update of yesterday’s post:

A quick recap of what I said about the breakout scenario (before it happened) yesterday – with comments on each statement now that the breakout has occurred:

After a general climb of nearly eight weeks, Bitcoin has finally reached the “GO / NO GO” point.

A “GO” situation means that BTC will break free from the current pattern – a converging triangle – and reach new 2019 highs. This would be the real beginning of the next bull market

And “GO” it was indeed! The converging triangle is a thing of the past, I have removed it from my standard working TA chart. This is the official proper launch of the next bull market.

By zooming in we can see that the upper limit of the converging triangle has almost been reached. This means that either a bounce or a breakout is imminent.

I award myself full marks for timing. Obviously the “bounce” is no longer a factor.

I do not consider a breakout likely at this stage, I believe it still too early. It’s not impossible, but I only allocate a probability of less than 20% to a breakout scenario.

For some reason, unknown to me, it’s always my lower probability scenario which plays out. If you see me allocating probabilities to scenarios in my posts, then rest assured that the lowest probability one is the right one! In the words of the best fantasy author of our generation: “million-to-one chances crop up nine times out of ten.” ~ Terry Pratchett

If BTC breaks and sustains a price level of above $4400 or greater, then I will consider a breakout to have occurred and will consider quickly increasing my BTC position with fiat.

$4400 was broken and is being sustained. I did indeed buy BTC first thing this morning. That’s not FOMO: $4400 is an “emergency buy” level that I have had in mind for a couple of months now. I executed my entire April buy this morning, as well as the left over March money which I still had sitting in unfilled orders on the exchange.

Either way I’m buying, because (strangely enough), both of those situations can be considered a win for crypto buyers. With long-term projections looking solid and getting more positive by the day, this really does seem to be the prime time for buying crypto. Volume is unprecedented and growing, it also has a predictable stability to it which is something that the 2017 bull market could not boast. that stable and growing volume should also make the upcoming bull market a very large one.

That’s the really important part and is why I bought. Yes, buying a day earlier would have been better, but I’d rather be in at a sub-optimum price than not in at all. In the long-term it will matter very little.

Points to ponder:

Rather than elaborate on anything in detail, I’m going to share with you a few of my very latest thoughts about the crypto market:

Short Squeeze:

I’ve heard a short squeeze blamed for the sudden, large increase in BTC price. To a degree this makes sense, but there are caveats:

  • This was not triggered by a short squeeze. As I showed in my post yesterday, I think traders should have expected price to drop. There was no reason to start covering short positions from a TA perspective, not until after the rise was well underway.
  • The shorting crowd are a weirdly optimistic bunch – have a look right now: shorts are climbing in price, even though longs are doing the same. I don’t think that the short squeeze squeezed hard enough! I suspect there are still many open short positions out there (which can cause even further price rises).

Volume:

I’ve mentioned the climbing volume on many occasions lately (as seen in my last quote above). Volume reached the same levels today as what it reached from mid-December 2017 to mid-January 2018 – the ATH time of cryptocurrencies. Unlike a typical price spike, the volume has not just fallen away immediately this time. High volume translates into high price. 

Best part: at its price peak earlier today, BTC volume was $13.2 Bn. Volume has only climbedsince then! At time of writing it is now over $19 Bn (coinmarketcap figures).

Altcoins kept up:

BTC led the charge, but the altcoins didn’t get left behind. To put that into perspective: BTC is only ranked 16th in 24 hour performance on my coinmarketcap watchlist (the coins I hold). This reinforces the theory held by many crypto investors that altcoins will not initially be left in the dust during the bull run (as they have been in the past).

Oversold and suppressed:

I believe that BTC and the market in general were, and still are, grossly oversold. Today’s jump was a partial recovery of that. There will be more to come. Because it was oversold, today’s jump is sustainable and it is not necessary for BTC to crash down again – quite the opposite in fact. I would not be surprised to wake up to BTC of well over $5000 tomorrow.

Early break:

This break was earlier than I expected (well done to https://steemit.com/@newageinv who did expect it and said so on my post yesterday!) and earlier than many other investors expected. This is good and bad. Good because it means sentiment was more positive than I had realised (which translates into a potentially enormous bull run), but bad because overly positive sentiment causes hype which causes instability – exactly what crashed the market at the beginning of 2018. That’s not a worry now, but may become a concern a year or three from now as history repeats itself. 

Tether was weird:

During this little BTC adventure I looked at the top market cap coins on coinmarketcap, and was amazed to see Tether at $1.01 – it was in the green! People were buying BTC and alts, yet Tether was growing in price. My only logical conclusion was that people were buying in to the crypto market with so much fiat that everything was rising, even Tether. If you have another theory on this then I would love to hear it.

I’ve found the new Fib levels (I think):

After moaning for the entire first month of this year that I was unable to find reliable Fib levels, eventually I found them – diagonally. I have been using diagonal Fib level since February, and they have been working. By maintaining the same diagonal slant as before, I have had no problem adapting the Fib levels to the new data, in fact they seem to fit better than ever before – lining up with some unexpected old price levels from 2018.  No doubt I still have some refining work to do, but this is what my Fib levels look like for now:

Made by Bit Brain with TradingView

Don’t worry about the prices associated with the levels, they don’t mean anything important on this chart. I expect BTC to bounce up and down between these levels, perhaps at least until it passes $6000, perhaps much longer. If BTC does jump upwards again soon, it may well pass $6000 when it does so. According to the Fib levels seen here, If BTC jumps upwards to the 1.618 level today, then it’s price will be around $6110. That price will only climb with time.

Conclusion:

Certainly earlier than I wanted, but the bulls are back! Of course prices could drop again. I’m sure people are muttering “Dead Cat Bounce” all over forums (this isn’t a dead cat). I really don’t care if prices do drop, today was an indicator that the positive sentiment needed to drive the next bull market is already alive and well. This was the bulls starting their engines. Even if they stall now, soon they will begin to run properly. We are in for a spectacular 2019!

Yours in bullish 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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