What a pure chartist is thinking today...
There are two main camps of investing and trading knowledge. Fundamental analysis and technical analysis. In the last 25+ years or so, those in the fundamentalist camp of investing, have decided that the technical chartists know a thing or two about price movements. It is advantageous for a fundamental investor to learn the basics of charting.
Technical Analysis Charts
Below are some snapshots of what is going through the head of a technical analysis person today. Most technical analysis people are traders. The sort of position they might open would be something like... if bitcoin hits 2500-ish, I am going to watch it on a minute-by-minute chart, and enter a multi-week short position against bitcoin when the moment is right with a stop loss to manage risk.
For bitcoin's history, this coin has had a very predictable price movement. Just to demonstrate this, this is a chart I published in October 29, 2015 on an internet forum:
It actually went past the 8X I was expecting, and hit something like a 12X increase at the 3k mark.
This is how the big money thinks. This large bounce off a fast bottom, in bitcoin's past would result in a rally near the prior top but not quite as high. From that rally, we would see a decline back down to the low, or further down than the low.
My Optimism
As a fundamental investor, I am more optimistic that we do not go through a "bitcoin is dead" phase which spans 2 years. For one, we have a whole new round of SEC evaluations of ETF approvals for Bitcoin and ETC.
That said, while these ETF decisions might be great events to create a rally, unless they result in approvals, they will not be able to sustain any rally in and of themselves. My expectation is all the ETF's will be denied.
This time around, there is also enough traditional investment interest in bitcoin and crypto to keep it from being considered dead by outside investors. Rather, I think when it finds the baseline support level where a new round of long-term buyers will be accumulating, at that point it should rally off that bottom relatively fast like it did in late 2016.
Such a bottom should coincide with an attitude shift in crypto media and others who turn sour on crypto. Then on the way up higher, I expect to see a lot of skepticism just as we saw late 2016 into early 2017.
A final point of optimism is that once the market is done with steep declines, decent alternative cryptocurrencies may rally significantly apart from what Bitcoin or Ethereum is doing.
As a fundamental investor this is very interesting and I agree with your opinion that alternative coins will start to separate from the BTC derivative complex as I like to call it. I've quit trying to time markets with charting b/c frankly I ended up spending exorbitant amounts of time on it with pretty dismal results, so I have really focused on fundamentals.
The ETF approvals is something I hope never happens with cryptos I feel it would result in the loss of the one free market we have left, but I also know it's only a matter of time before this becomes reality. Great post as always brother!
It's a hard call for me with the ETF's. My personal viewpoint is that if crypto becomes an ETF, you then get enough big money into it, that US legislators back off of ruining crypto in the US by regulating it, since all the people bribing them now own crypto. Just as an example of this, notice how Google and others actually defended some technological liberties with things like SOPA and PIPA. Google and others had enough financial clout to protect something for the rest of us... they didn't do it for us, they did it for their own pockets, but it still protected it for us as well. Where as if that issue had come up in the mid 90's, we would be living under those regulations.
The US government has so far gone down the path of undermining itself by basically allowing crypto to exist legally. ETF just further solidifies that position, and if enough money gets tied up on that side of things, the bribes start flowing to protect it legally, even if crypto ultimately undermines our entire government's method of operation.
That said, once they do go down that road, we may end up with the annoying regulations. "Well, only cryptos operating along certain guidelines are legal." Kind of how they outlawed internet gambling in the USA, but you could still do it anyway.
The liberal left will one day realize how damaging cryptos are to their ideology, and we will see US democrats trying to regulate it big time in the USA. But hey... governments are slow, so maybe they just stay in the ignorant phase until its too late.
You bring up some excellent points. I agree wholeheartedly that crypto undermines the way our government and in particularly, the banking system operates. This has always worried me and kept me out of the space for far too long b/c of this. Regulation or outright making it illegal can happen in an instant, just like the banning of online gambling. I had imagined regulation would be the road they would go down b/c of the money they could garner from online gambling, but one thing I've learned with our government here in the states is, what makes fiscal sense isn't what makes sense to them.
Excellent points regarding SOPA and PIPA as I've never looked at it from that point of view before, but you're correct.
I agree also that if crypto becomes an ETF, that greases the tracks for keeping it legal and bringing it to the mainstream, but of course we'll have to deal with yet another rigged market. If this does happen though I believe the early adopters who are here now could make incredible gains by holding the right coins due to the massive inflow of money that would soon follow.
Great response and much appreciated!
The chances of bitcoin going down after bip91 is locked in, is 0% charts won't matter now.
Great to see you're Australian! #teamaustralia
Haha, no, sorry not an Australian. @sirknight recruited me for #teamaustralia however! And I do like to support your guy's content.
you are doing great i upvoted you
Haha thank you for supporting regardless. Also would love to see more videos! Keep up the great work. You have great advice.
Perhaps I'm not understanding, but are you saying this bit of a rally we're having will be temporary and we'll drop again? What are your market cap levels that you're watching? I was about to buy in again around 70 bil, but I missed it because I wanted to wait one more day. Are you suggesting we'll see another downturn before the eventual upswing?
Yeah, this rally today will drop again. It's the perfect bear rally. It should be dead obvious to everyone that's what it is, but it's not dead obvious... meaning the market doesn't have it fully figured out, which means the call should be pretty spot on. Like another viewer said who holds the same position I do about this rally, it could reach 100 bil before it starts declining. In another post, I commented, I believe the bottom is between 45bil and 60bil. If it dips that full amount of 45bil, we could see bitcoin go down as much as 1,500.
I've been through the Tech Bubble Wreck around the turn of the millennium and the Gold/Silver stock run up into 2008 and onward to 2013. Technical analysis was always there and always helpful.
Still, wishful thinking, fundamental belief in "the way things ought to be" and naive hope usually keeps me in too long. Ride them up and ride them back down. It always feels like we've never been here before, and indeed, we haven't.
Buy and hold has only worked for me with the physical metals, while all the stocks were eventually decimated. This is a new game. Or is it always the same game?
Great Analysis. Upvoted 100% and resteemed!!!
I've been using the same chart analysis to invest since 2015! Only I think this time the fall will be smaller. I'm expecting something close to 45-50 billion marketcap and the increase will be only 5 fold and also I don't think Bitcoin will get below 1500. for maybe a month tops. The small and short term investors are quickly getting priced out.
Already gaming how high the next spike is, I like it.
Yeah, Bitcoin has an S-curve of technological adoption whose limit will be reached by 2021 when half the bitcoins are mined by that time prices will be flat as a pancake or downwards. That's the fundamentals. The technicals is that we are getting closer and closer to the top so variation is getting reduced logarithmically. I catched the double bottom this time at 1800 invested in other coins and am selling short when marketcap reaches 100 billions. Just like the pattern shows. then one last ride and waiting for the plateu to go all in again.
Hahaha I have always thought 'technical analysis' was for those to lazy to research the fundamentals. However, you are starting to win me over Ted. SK.
I'm not an economist or chartist, but have some idea on the concepts controlling these movements. They are probably less novel and intelligent than I think they are though xD