Bitcoin | Out of the woods at last?
Updated
A while ago, I posted on why SPX was not in the clear.
Today, I will cancel myself out, like a common contradictory human being you will find out in the wild.
This chart above is the BTC rolled chart back in 2015. Back then, very few knew about it. So with this short idea, I will try to get into the mind of the trader in the past, our ancestor.
First of all, the elephant in the room: we missed a significant trendline. Price in the 2014 sell-off missed the trendline, and bearishly retested on it.
Now on to the 200EMA. Since the weekly one is too long for the history of the chart, we step into the 3D one.
What we see is that for the first time ever, we are below it. And VERY low at this point. It kept going down and down from 2014.
Let's see some retracements.
The November 2011 bottom is a good start to analyze from. Most tickers begin at around that time. We are below the .786 mark, by the looks of it. We should reach the .618 mark if we look for a bottom.
What would a trader think back then? Probably the same that they would think right now.
So what did price do back then with all that negativity incoming?
Just this boring wick... Anticlimactic I know.
Finally, look at this macro chart. Observe closely the RSI and the MESA Stochastic.
Absolutely identical.
Moral of the story? A failed EMA is not the end of the world. A violated "logistic growth" curve whatever that means, is not important. When charts grow for weeks, then months, then years, we should analyze them with longer and longer time intervals. For example the 200EMA on the 1W timeframe may not be significant now. We should switch to the 2W one.
Final note: I tried constructing a custom RSI indicator, which could need improvement. What I have basically done is add an ATR band around it (inspired from the Keltner Channel indicator - which doesn't work if we add it on top of another indicator). ATR bands are EMA based and I find them more useful/accurate than Bollinger Bands.
I will briefly explain one final thought.
This chart above shows us the times when on the 2W chart we had "capitulation". That is RSI penetrating the lower ATR band. A closeup view follows:
Back in 2015 we had capitulation on the 2W chart, now we have both in 2W chart and 1M chart.
And an extra chart for today:
This looks bullish mate... A Wedge pattern like a bull flag, with Stochastics giving us a big thumbs up.
Again, just like in 2015.
Bitcoin has grown up, it is now 14. It acts as a grown-up, in longer-lasting and more clear and decisive moves. If we wish to treat it as a grown-up, ourselves should grow up first.
Another moral of the story: One way traders fail, is when they expect further drop that the drop already occured. When they expect more growth than the growth occured. It is the fear of missing out, only in reverse. Many, myself included, are posting on why Bitcoin will fall to 10k or less. It is THE SAME thing we had back when Bitcoin reached 70k and we were sure of 100k. Again, time to grow up, myself included.
PS. Maybe we are in 2015 after all... I am a contradictory human being, don't judge me.
Tread lightly, for this is hallowed ground.
-Father Grigori
Today, I will cancel myself out, like a common contradictory human being you will find out in the wild.
This chart above is the BTC rolled chart back in 2015. Back then, very few knew about it. So with this short idea, I will try to get into the mind of the trader in the past, our ancestor.
First of all, the elephant in the room: we missed a significant trendline. Price in the 2014 sell-off missed the trendline, and bearishly retested on it.
Now on to the 200EMA. Since the weekly one is too long for the history of the chart, we step into the 3D one.
What we see is that for the first time ever, we are below it. And VERY low at this point. It kept going down and down from 2014.
Let's see some retracements.
The November 2011 bottom is a good start to analyze from. Most tickers begin at around that time. We are below the .786 mark, by the looks of it. We should reach the .618 mark if we look for a bottom.
What would a trader think back then? Probably the same that they would think right now.
So what did price do back then with all that negativity incoming?
Just this boring wick... Anticlimactic I know.
Finally, look at this macro chart. Observe closely the RSI and the MESA Stochastic.
Absolutely identical.
Moral of the story? A failed EMA is not the end of the world. A violated "logistic growth" curve whatever that means, is not important. When charts grow for weeks, then months, then years, we should analyze them with longer and longer time intervals. For example the 200EMA on the 1W timeframe may not be significant now. We should switch to the 2W one.
Final note: I tried constructing a custom RSI indicator, which could need improvement. What I have basically done is add an ATR band around it (inspired from the Keltner Channel indicator - which doesn't work if we add it on top of another indicator). ATR bands are EMA based and I find them more useful/accurate than Bollinger Bands.
I will briefly explain one final thought.
This chart above shows us the times when on the 2W chart we had "capitulation". That is RSI penetrating the lower ATR band. A closeup view follows:
Back in 2015 we had capitulation on the 2W chart, now we have both in 2W chart and 1M chart.
And an extra chart for today:
This looks bullish mate... A Wedge pattern like a bull flag, with Stochastics giving us a big thumbs up.
Again, just like in 2015.
Bitcoin has grown up, it is now 14. It acts as a grown-up, in longer-lasting and more clear and decisive moves. If we wish to treat it as a grown-up, ourselves should grow up first.
Another moral of the story: One way traders fail, is when they expect further drop that the drop already occured. When they expect more growth than the growth occured. It is the fear of missing out, only in reverse. Many, myself included, are posting on why Bitcoin will fall to 10k or less. It is THE SAME thing we had back when Bitcoin reached 70k and we were sure of 100k. Again, time to grow up, myself included.
PS. Maybe we are in 2015 after all... I am a contradictory human being, don't judge me.
Tread lightly, for this is hallowed ground.
-Father Grigori
Note
Bitcoin vs SPX giving us a quite bullish chart.At worst, we expect horizontal move for SPX for the following months. There is no indication as of now for the trend to fail.
Note
I've been thinking... how should a bottoming be defined? What are the fundamentals?Stock market is always looking ahead, the current price state is always in equilibrium. It is as high or as low as we believe based on the situation. And it is based ENTIRELY on the current state and how we interpret it, not the future. So if nothing changes on Bitcoin technicals, price should remain horizontal. Something more needs to break for the price to drop. So expecting a price drop is like expecting something to break.
No matter how bad a situation may look like on something, price is ALWAYS on equilibrium.
Price stops falling when there is nothing else to break.
For the financial system and equities there may be more that are about to break, like housing.
For the Bitcoin foundation, well... there may not be much else to break...
(Companies like FTX can go bankrupt because of derivatives of BTC, not the currency itself. That's what these companies trade, inexistent contracts. They don't hurt the foundation of Bitcoin. We don't know at what price it's foundation may be though...)
I attempted finding the foundation of Bitcoin in this idea below. It is not far below from here...
Based on the analysis I did, 13k could be a final bottom.
Note
Can Bitcoin be considered a commodity? It is scarce, since there are only a few actual coins in circulation. The rate the supply is growing is logarithmic and is significantly slowing down. At worst, Bitcoin can serve as a wealth preservation mechanism, like Gold. We also don't know how many coins are inert, how much money is invested in Bitcoin in cold storage.USOIL is going through a similar period. Production will stagnate in the years to come, and pick up the pace after 2030.
woo.opec.org/chapter.php?chapterNr=313&chartID=1630
Take a look at the similarities between these two periods:
Note
Honestly, it looks like we are in the 60sWelcome to stagflation!
The question again is... Will Bitcoin behave like a commodity?
Note
Bitcoin looks hopeful.Sometimes, you have to adapt in the situation.
As I said before, capitulation could be as simple and anticlimactic as this:
Note
Well???Trade active
This idea ended up surprisingly accurate. Bitcoin is now at over 20k. Just make sure you have an exit strategy...
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