Thanks for stopping by. If you prefer video,  I have a Dtube post attached towards the bottom of this article!

"An investment in knowledge pays the best interest." - Benjamin Franklin

In 2009, Bitcoin rose from the ashes from a crumbling global monetary system that has been losing trust year after year from investors young and old.

Our current monetary system allows governments and central banks to manipulate the supply up and down of the currency. This can cause massive imbalances in the financial system, and by no accident, but for the profit of a few wealthy insiders.

Bitcoin was designed to counter our current monetary system by having a finite supply of 21 million, divisible up to 8 decimal points. It can be sent anywhere in the world, peer to peer, with no government or corporate middleman intervention.

In 2010 it was considered the money of the dark web, today it is being called "digital gold."

A New Asset Class

Bitcoin and cryptocurrencies are seen as a new asset class. Bitcoin was once seen as dirty money for trading on the silk road. But now important institutions like the SEC are recognizing Bitcoin as both a currency and commodity. It is a store of value and a means of payment, and overall an increasingly viable investment for individuals.

While corporate America is still playing catch up, there are some forward looking individuals in the financial sector recommending Bitcoin to be an essential part of ones portfolio.

The institutional investors have their targets on Bitcoin, but I believe they are patiently waiting for a change in sentiment so they can pick things up for 25 cents on the dollar, like big players do with most investments.

Asset Cycles

If you spend time studying markets and economics, you will understand that every asset class has a cycle of its own. These cycles contain periods of decline and consolidation followed by run ups in price. These two parts of the cycle are called bull and bear markets. One thing to remember is that assets MUST go through periods of downturn and turmoil, they cannot go up forever.

Bitcoin was widely adopted by the millennial generation. A generation that had never experienced an economic or market downturn first hand. These circumstances set up a lot of people for a short-term burn as they watched their investment depreciate in nominal value. 

After reaching a high of $19,700 in  December of 2017, Bitcoin took a nose dive into a brutal bear market now trading at around $6,200.  The 66% decline in such a short period of time has put some in fear, some in denial, and some on the edge of their seats. 

With all of the noise out there about what will happen with the price of Bitcoin in the short term,  I wanted to come to you with a valuable outlook on how I see things progressing in the long-run.

Let's take a quick look at how things went for the Bitcoin market during it's last boom and bust.

A Long-Term Perspective

Bitcoin's Last Boom and Bust

Overall, I am have a positive outlook for the price of Bitcoin. But in the short to medium term, we have to go through some rough times of consolidation and a drop for prices. 

On the logarithmic chart, Bitcoin should follow these long-term trend lines. It is coming up on the first line which I believe will act as support for a short term. But it needs to make its way down below its 200 day moving average, then on to the next trend line. In order to do so, it must consolidate in price for an extended amount of time.

The chart that we have here from Bitcoin's cycle from 2014 shows us how it tends to be traded. After a swift rise in price, it goes through a lengthy and difficult period of consolidation. Notably we see the price drop below its 200 week MA. Today Bitcoin has yet to drop below it.

Relative Strength Index (RSI)

The relative strength index is a tool used by traders and investors to show when an asset has been overbought or oversold. in 2014 Bitcoin reached a point of oversold. This gave investors an idea that it was a good point to enter into this space.

You can read my tradingview post here.

Bitcoin Today

Bitcoin's price action looks very similar to 2014. We can see it has been consolidating, making lower highs while holding a base at $6,000. This pattern is known as a descending triangle and is known for explosive moves. These can go to the upside or downside. All we know that after this amount of sideways movement, we are due for a big move.

There are two things that have my attention here.

One being that we have yet to test the 200 week moving average. We are approaching it during a time when price is consolidating in a descending triangle which makes me lean more towards the narrative of a big move down. But, again, it could go either way.

The other is the RSI. Bitcoin has yet to reach an oversold condition. I believe that Bitcoin must reach an oversold condition to put this markets valuation back at a healthy condition for growth and investment.

My Long Term Outlook On Bitcoin (Video)

▶️ DTube
▶️ IPFS

Overview:

Based on Bitcoin's fundamentals, it is bound to continue to rise in price in the long-term. However, I do believe we need to see the sentiment in Bitcoin hit more negative levels. People are still too bullish in my opinion. Also,  I believe we need to see a break below the 200 week moving average and an oversold condition in the RSI. I am remaining patient in this market even though I am so tempted to be apart of it!

Thanks for stopping by! Until next time.

 Disclaimer:
The information in this article is meant only as educational content, expressed opinion, and not investment advice. Investing your money in openly traded companies is risky and can result in the loss of principle. Investing in commodities is more risky than trading company stock as commodities are open to more risk since they are traded on the global market. This means that the ETFs of the underlying commodities (GLD and SLV) are at risk to having big movements in price while the US markets are closed. Cryptocurrency carry a great amount of risk as well. Only invest what you can afford to lose, and always do your own research. 

Resources:

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