Bitcoin - All About That Cup of Coffee
Updated
As Bitcoin' consolidates after a bullish swing what better time to do a little fundamentals on the space as a whole. It starts with a cup of coffee' and the understanding of how payments are processed. But first lets take a look at the chart.
Yesterday we posted that we were looking for a Friday close above 6900. This would show that there is still some underlying momentum left, and we can look for a further impulse move toward our target levels. After finding support at 6800 Bitcoin' was able to close above 6900 forming a pinbar. We are seeing continued consolidation around the 6900 level which, as we mentioned on S.C., has us staying on the sidelines patiently waiting for an opportune trade.
IF Bitcoin' can hold the 6900 level by the end of day, it is very likely we see a final impulse move up and into the 7200-7500 area. The low to mid 7k range has been our target for weeks now, and in hindsight closing our position trade at 6700 was a little early. These are very difficult areas to trade out of and like poker, when your ahead sometimes you take what is simply on the table and do not let the others see a turn or river card. We choose to close out position early as we believe it is likely we get another opportune to buy lower.
We still have an open position which provides some exposure with the goal to trade around this position reducing the average cost for the longer term. Simply we are looking at this point for opportunities to add long term.
So what about that cup of coffee'''?
Many of you may be to young to remember when online e-commerce evolved in the late 90's early 2000's. At first many of us were skeptical about buying stuff online and it took years for it to become mainstream. In 1999 less than 0.5% of retail sales was Ecommerce. By 2006 that had grown to just under 3%. By 2017 this was 9% of total US sales. I remember myself thinking "who would want to buy online when the store is so much more convenient?" How times have changed. eCommerce disrupted the traditional way we bought products, and cryptocurrencies have the potential to disrupt how we buy them. It starts with a cup of coffee'.
There was a comment on my last article where someone believed Bitcoin' was going to zero because he couldn't buy a cup of coffee' with Bitcoin'. This is no different then in 1999 thinking eCommerce was a dumb idea because you couldn't buy your coffee' online. At that time you couldn't. Yet merchants found they could sell more coffee' buy selling online and now I can buy any type of coffee' I want online and have it delivered next day. Unthinkable 20 years ago.
The key word here is merchants. As an owner of a restaurant, we take credit cards. Our typical monthly fees for credit card purchases are just under 3%. Doesn't sound like a lot, but when you are doing 60k a month in credit cards that equates to 2k of your profits just to do transactions. This is 24k a year. A typical restaurant profits about 10% +- in gross sales. Adding 2% to this is a 20% increase in profits. HELLO! Yes we are actually beta testing a new crypto payment platform for our restaurant.
Many companies like Subway are already taking cryptocurrencies for this exact reason. Starbucks' will soon be taking Bitcoin' as well, and others will follow. See cryptocurrencies is not just a fad, it is disrupting the financial' institutions' that have held merchants at bay, by scalping money off of every sale they do. You have processing fees, points fees, bank fees, and the transaction fee itself. All these middle men take profits away from businesses. Why do you really think Jamie Dimon (Chase' card) really hates cryptos? This is not going to happen over the next 3 months, or 1 year, but it will happen. Once the growth starts, like eCommerce, it will be unstoppable.
These same banks have been profiting from conversion of one currency to another. Do you think there is a reason why every country in Europe still has a native currency and the Euro'? Banks make money when you convert and a lot of it. Buy something in the U.S. from Canada on eBay' and you will likely see a 2.5% conversion fee from PayPal'. Gotcha! Convert at the airport or bank before you leave, and you will pay a premium over the current market conversion rate. Bank of America is currently converting at 1.2298 EURUSD' where the spot price is 1.1670. Nice 5%+ conversion fee for the bank.
Fiat only has value because two parties agree to the value in trade and barter. Nothing more nothing less. I am not stating that all fiats are worthless or they will go to zero, but their intrinsic value approaches zero over time. Remember in 1968 the cost of a BigMac was 50 cents, gas 35 cents, a new home 26k. Today that dollar has only 10% of its purchasing power. 30 years from now it will have less purchasing power, which is why gold' went from $35 an ounce to $1200 today. Were you better off holding fiat or gold?
Bitcoin' and cryptos are changing the way we transact, no different then the internet changed the way we buy goods and services. Whether Bitcoin' becomes the gold' of cryptos only the future beholds, but looking at crypto funds and their allocation to bitcoin' puts the odds in favor that it does.
As merchants realize the fee savings by taking cryptos, and customers realize the savings in conversion fees, the market will grow. No different then when we finally realized we could buy coffee' online cheaper than the store and it was more convenient. 15 years ago, who had an Amazon' account? Today who doesn't? This is how cryptos have the potential to change the way we trade, barter, and transact. Because there is a loser, namely the banks, who have controlled our money for so long, they are fighting every step of the way. Yet demand will increase and crypto's like Bitcoin' will change the financial space forever.
Just because your coffee' shop does not take cryptos now, and thinking this implies bitcoin' is worth nothing. Just ask yourself, did your coffee' shop have a website, app, or take apple' pay' 10 - 15 years ago? Were you that guy in 2010 that thought, ohhh pay' wallets on your phone are stupid because I can't pay for my cup of coffee' with it. Now Applepay' is accepted in many places. It took time to adapt, so to think cryptos won't is ignorance at best. So enjoy that cup of coffee' this morning and think how did you pay for it. Credit card, apple' pay, cash? 1975 most retail outlets took cash and checks only. Maybe I'm showing my age, but I still remember the rotary phone, and having to be home before the street lights came on. I've seen many spaces evolve and missed opportunities. I'm not missing this one!
Many banks will become the Sears' and K-Marts of retail. Look at bank stocks, do you think there is a reason they are so cheap?
Yesterday we posted that we were looking for a Friday close above 6900. This would show that there is still some underlying momentum left, and we can look for a further impulse move toward our target levels. After finding support at 6800 Bitcoin' was able to close above 6900 forming a pinbar. We are seeing continued consolidation around the 6900 level which, as we mentioned on S.C., has us staying on the sidelines patiently waiting for an opportune trade.
IF Bitcoin' can hold the 6900 level by the end of day, it is very likely we see a final impulse move up and into the 7200-7500 area. The low to mid 7k range has been our target for weeks now, and in hindsight closing our position trade at 6700 was a little early. These are very difficult areas to trade out of and like poker, when your ahead sometimes you take what is simply on the table and do not let the others see a turn or river card. We choose to close out position early as we believe it is likely we get another opportune to buy lower.
We still have an open position which provides some exposure with the goal to trade around this position reducing the average cost for the longer term. Simply we are looking at this point for opportunities to add long term.
So what about that cup of coffee'''?
Many of you may be to young to remember when online e-commerce evolved in the late 90's early 2000's. At first many of us were skeptical about buying stuff online and it took years for it to become mainstream. In 1999 less than 0.5% of retail sales was Ecommerce. By 2006 that had grown to just under 3%. By 2017 this was 9% of total US sales. I remember myself thinking "who would want to buy online when the store is so much more convenient?" How times have changed. eCommerce disrupted the traditional way we bought products, and cryptocurrencies have the potential to disrupt how we buy them. It starts with a cup of coffee'.
There was a comment on my last article where someone believed Bitcoin' was going to zero because he couldn't buy a cup of coffee' with Bitcoin'. This is no different then in 1999 thinking eCommerce was a dumb idea because you couldn't buy your coffee' online. At that time you couldn't. Yet merchants found they could sell more coffee' buy selling online and now I can buy any type of coffee' I want online and have it delivered next day. Unthinkable 20 years ago.
The key word here is merchants. As an owner of a restaurant, we take credit cards. Our typical monthly fees for credit card purchases are just under 3%. Doesn't sound like a lot, but when you are doing 60k a month in credit cards that equates to 2k of your profits just to do transactions. This is 24k a year. A typical restaurant profits about 10% +- in gross sales. Adding 2% to this is a 20% increase in profits. HELLO! Yes we are actually beta testing a new crypto payment platform for our restaurant.
Many companies like Subway are already taking cryptocurrencies for this exact reason. Starbucks' will soon be taking Bitcoin' as well, and others will follow. See cryptocurrencies is not just a fad, it is disrupting the financial' institutions' that have held merchants at bay, by scalping money off of every sale they do. You have processing fees, points fees, bank fees, and the transaction fee itself. All these middle men take profits away from businesses. Why do you really think Jamie Dimon (Chase' card) really hates cryptos? This is not going to happen over the next 3 months, or 1 year, but it will happen. Once the growth starts, like eCommerce, it will be unstoppable.
These same banks have been profiting from conversion of one currency to another. Do you think there is a reason why every country in Europe still has a native currency and the Euro'? Banks make money when you convert and a lot of it. Buy something in the U.S. from Canada on eBay' and you will likely see a 2.5% conversion fee from PayPal'. Gotcha! Convert at the airport or bank before you leave, and you will pay a premium over the current market conversion rate. Bank of America is currently converting at 1.2298 EURUSD' where the spot price is 1.1670. Nice 5%+ conversion fee for the bank.
Fiat only has value because two parties agree to the value in trade and barter. Nothing more nothing less. I am not stating that all fiats are worthless or they will go to zero, but their intrinsic value approaches zero over time. Remember in 1968 the cost of a BigMac was 50 cents, gas 35 cents, a new home 26k. Today that dollar has only 10% of its purchasing power. 30 years from now it will have less purchasing power, which is why gold' went from $35 an ounce to $1200 today. Were you better off holding fiat or gold?
Bitcoin' and cryptos are changing the way we transact, no different then the internet changed the way we buy goods and services. Whether Bitcoin' becomes the gold' of cryptos only the future beholds, but looking at crypto funds and their allocation to bitcoin' puts the odds in favor that it does.
As merchants realize the fee savings by taking cryptos, and customers realize the savings in conversion fees, the market will grow. No different then when we finally realized we could buy coffee' online cheaper than the store and it was more convenient. 15 years ago, who had an Amazon' account? Today who doesn't? This is how cryptos have the potential to change the way we trade, barter, and transact. Because there is a loser, namely the banks, who have controlled our money for so long, they are fighting every step of the way. Yet demand will increase and crypto's like Bitcoin' will change the financial space forever.
Just because your coffee' shop does not take cryptos now, and thinking this implies bitcoin' is worth nothing. Just ask yourself, did your coffee' shop have a website, app, or take apple' pay' 10 - 15 years ago? Were you that guy in 2010 that thought, ohhh pay' wallets on your phone are stupid because I can't pay for my cup of coffee' with it. Now Applepay' is accepted in many places. It took time to adapt, so to think cryptos won't is ignorance at best. So enjoy that cup of coffee' this morning and think how did you pay for it. Credit card, apple' pay, cash? 1975 most retail outlets took cash and checks only. Maybe I'm showing my age, but I still remember the rotary phone, and having to be home before the street lights came on. I've seen many spaces evolve and missed opportunities. I'm not missing this one!
Many banks will become the Sears' and K-Marts of retail. Look at bank stocks, do you think there is a reason they are so cheap?
Note
Correction: many european countries not every. still early and only one cup of coffee ;)Note
NAILED IT!!! LMAO I just had to say it!
Unfortunately we closed all but one partial trade that was entered in at the 7600 level. My point is there are a lot of weather forecasters. From my chart I really nailed it either direction. DOH!!!
If there is not a Buy:6100 Target 7200 Stop 5800 then you are not issuing trade signals and nailed nothing, you are simply pointing out the obvious. Bitcoin could go any direction, the reality is posting real trades with real money vs "we could go to 7500" is what separates traders from weather forecasters.
Note
To be transparent we closed our swing trade at 6824 and our position trade above 6600 but posted to close at 6700. Keep in mind swing trades have triggers, targets and stops, position trades have buy with no stop or target. This was mentioned in my previous trading view article.
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