Bitcoin Compared to 2011 Silver Parabolic Move
I traded precious metals from 2007 to 2011. I had a huge silver position built over years and I got nervous at $40 and sold. I was shocked to watch it rise over $50 and even considered buying back, but I came to my senses. In hindsight I am very happy with my decision even though I missed the top.
Bitcoin has gone full parabola just like silver. Parabolic moves are fun, exciting but they don't end well. And no matter how good you are at trading, its a bitch to find the top of a parabola. They can go on and on for a long time.
People are going to claim that its a paradigm shift. That there is only so much bitcoin to go around. That bitcoin is easily going to $1 million. That might all be true. Maybe bitcoin does reach monster highs in 3, 5 or 10 years, but nothing ever goes straight up. Even in a paradigm shift.
This market is trading on pure speculation, heavy emotion and heavy margin. Possibly tether printing. There is low adoption of bitcoin so fundamentals don't match up to this kind of price rise. Since its a hard asset to value, its price is what people are willing to pay. The exuberance of new young investors is heavier than anything you'd ever see in stocks, bonds or futures. FOMO is as strong as humanity has ever witnessed.
The bitcoin market is strong no doubt. Stronger than any parabola we've seen in history. So yes, it could scream up for 10, 20, 30, 60 more days. It could blow past 20k soon. But eventually it is going to come down hard.
This silver chart is just an example of what a parabolic move looks like. It won't follow the exact script. Bitcoin is much stronger and will have bigger moves.
At the time, everyone in metals was calling for USD hyperinflation and that China was going to cash in all its treasuries. People scrambled to buy gold and silver trying to protect their wealth (I still kept physical metals from long ago). The dollar was suppose to be doomed. All of that was just story to feed the speculation.
The problem with moves straight up is that the market runs out of sellers. It doesn't take a lot of money to move the market. And there isn't enough consolidation to build a strong base of support. When markets get like these people get nervous and all it takes is one catalyst to spook it and reverse everything. In 2011, there was a rumor that George Soros thought the silver market was too high and was going to sell his entire stash of precious metals. This may have caused initial jitters and led to the sell off.
One of the following scenarios could easily trigger a sell off in bitcoin:
I will be starting to move to cash now. I expect a small dip then another new high and I'll scale more. I will fully exit my trading position on a bearish candle similar to this chart and go to USD and some alt coins. The only reason I'm even staying in is because I'm playing with house money. And it's exciting and certainly is capable of going to unimaginable highs so I want to take the ride.
But I am 100% emotionally ready for a disastrous ending. And my words of caution are that you fully understand what can happen and be emotionally prepared for it.
Bitcoin has gone full parabola just like silver. Parabolic moves are fun, exciting but they don't end well. And no matter how good you are at trading, its a bitch to find the top of a parabola. They can go on and on for a long time.
People are going to claim that its a paradigm shift. That there is only so much bitcoin to go around. That bitcoin is easily going to $1 million. That might all be true. Maybe bitcoin does reach monster highs in 3, 5 or 10 years, but nothing ever goes straight up. Even in a paradigm shift.
This market is trading on pure speculation, heavy emotion and heavy margin. Possibly tether printing. There is low adoption of bitcoin so fundamentals don't match up to this kind of price rise. Since its a hard asset to value, its price is what people are willing to pay. The exuberance of new young investors is heavier than anything you'd ever see in stocks, bonds or futures. FOMO is as strong as humanity has ever witnessed.
The bitcoin market is strong no doubt. Stronger than any parabola we've seen in history. So yes, it could scream up for 10, 20, 30, 60 more days. It could blow past 20k soon. But eventually it is going to come down hard.
This silver chart is just an example of what a parabolic move looks like. It won't follow the exact script. Bitcoin is much stronger and will have bigger moves.
At the time, everyone in metals was calling for USD hyperinflation and that China was going to cash in all its treasuries. People scrambled to buy gold and silver trying to protect their wealth (I still kept physical metals from long ago). The dollar was suppose to be doomed. All of that was just story to feed the speculation.
The problem with moves straight up is that the market runs out of sellers. It doesn't take a lot of money to move the market. And there isn't enough consolidation to build a strong base of support. When markets get like these people get nervous and all it takes is one catalyst to spook it and reverse everything. In 2011, there was a rumor that George Soros thought the silver market was too high and was going to sell his entire stash of precious metals. This may have caused initial jitters and led to the sell off.
One of the following scenarios could easily trigger a sell off in bitcoin:
- [*People panic to buy and sell bitcoin, causing a lot of transactions and the mempool goes back over 100k, slows things down and people get concerned
*Miners get concerned of btc long term price and decide to move hashrate into bitcoin cash
*The CME sees this price action and realizes bitcoin isn't ready and cancels the futures market
*CME futures start and JP Morgan opens a $10 billion short on the market and people panic
*SEC launches a multi-country campaign to shut down the Tether operation]
I will be starting to move to cash now. I expect a small dip then another new high and I'll scale more. I will fully exit my trading position on a bearish candle similar to this chart and go to USD and some alt coins. The only reason I'm even staying in is because I'm playing with house money. And it's exciting and certainly is capable of going to unimaginable highs so I want to take the ride.
But I am 100% emotionally ready for a disastrous ending. And my words of caution are that you fully understand what can happen and be emotionally prepared for it.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.