Bitcoin (BTC-USD) is down 46.2% for the year. It is down 65% from its high. It is no longer the conversation at the office. My grandma isn’t asking if she should invest anymore. Is Bitcoin dead?
Perhaps the primary reason I like to have exposure to Bitcoin in my portfolio is the almost unimaginable upside. I always hesitate to talk about the upside scenarios because these are so wild it takes away credibility from my analysis. But if you put the total value of Bitcoin that can be mined (21 million x market price) in perspective the contrast is pretty stark. Even if Bitcoin becomes “merely” a digital gold there’s opportunity for a 70x.
Continued User growth
The pace of growth slowed down a little bit from the end of 2017 frenzy but the hockey stick like growth of Bitcoin wallets can easily resume. In an absolute sense growth remains healthy.
Last year the financial industry started pioneering in the space and a large amount of crypto funds got established. Launches have slowed down with the crypto market down significantly. This is a classic pattern where it’s just much harder to raise money in a down market. However, these funds have now been established and once we enter another big cycle up the infrastructure is ready to accommodate inflows on a much larger scale.
There are now futures available to trade Bitcoin. An ETF did not yet make it to market although there are a number of ongoing efforts. At some point it’s going to happen. I think that could be a gamechanger for Bitcoin. In March 2003 the first Gold ETF (GLD). You can’t be certain but it looks like the introduction had a profound effect on the price of gold.
Bitcoin bears usually complain about transaction costs and speed. These are real issues no one’s denying that. However, they will ultimately be solved by technological innovation. The obvious example being the lightning network. The lightning network is already being used and it allows transactions that are less secure but much faster and cheaper. Many expected it to work by now but it doesn’t as there are still too many transactions failing and the error rate increases as the value of transactions goes up. Up to $0.03 it is reported to work flawlessly and it seems to me it should be a matter of time to get that $0.03 up to a value where the benefit of the lightning network is real. The lightning network is especially important for low value, cup-of-coffee type, transactions. I prefer to buy Bitcoin before these issues get solved instead of buying into the next frenzy as its ongoing.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 7,487.39.
The projected lower bound is: 5,843.72.
The projected closing price is: 6,665.56.
WARNING: These prices only contain closing prices. Thus, the candlestick analysis in this expert will be invalid (including the alerts, symbols, and this commentary). To detach this expert, right-click on the NYSE BitcoinIndx chart, choose Expert Advisor, and then choose Detach.
During the past 10 bars, there have been 0 white candles and 0 black candles. During the past 50 bars, there have been 1 white candles and 0 black candles for a net of 1 white candles.
A gravestone doji occurred. This often signifies a top (the longer the upper shadow, the more bearish the signal).
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 21 rising windows in the last 50 candles–this makes the current rising window even more bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 81.6883. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 48.60. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 5 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 74. This is not a topping or bottoming area. The last signal was a buy 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 5 period(s) ago.
Rex Takasugi – TD Profile
NYSE BitcoinIndx closed up 153.008 at 6,716.763. Volume was -0% below average (neutral) and Bollinger Bands were 63% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 6,404.19 7,497.46 9,110.83
Volatility: 76 72 125
Volume: 0 0 0
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NYSE BitcoinIndx gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NYSE BitcoinIndx is currently 26.3% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into .NYXBT (bullish). Our trend forecasting oscillators are currently bullish on .NYXBT and have had this outlook for the last 1 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
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