TA pessimism vs. FA optimism
Overview: I've treated 42k-30k range as a no-trade zone, but I'm getting ready to make an exception for this bounce off the top of the triangle that was a couple of weeks in the making. TA pointed to us breaking down to a sub-30k btc, but bitcoin's fundamentals are proving to be more resilient than most expected. Someone is buying the hell out of the mid 30's.
TA: The technicals here are ugly. No denying that. If you had no social media or insights into the fundamentals of bitcoin, you might think we're headed far below 30k for an extended winter. There is a NASTY head and shoulders in play on larger timeframes, the only flag on the chart is clearly of the bearish variety, 40k is slippery as a snake, and there seem to be willing sellers well into the 30's.
On the other hand...
FA: ...this has turned out to be, in my estimation, *the* cycle where bitcoin's volatility is not scaring people away the way it used to. We consistently hear about various, big-name investors touting their diamond hands, while sovereign states across Latin America and Africa demonstrate unprecedented interest in embracing bitcoin as legal tender. The energy debate is shifting in bitcoin's favor, thanks to the work of a few bitcoin ambassadors, and although there is a long way to go on that front, it would be difficult to frame the move of bitcoin mining out of China as a negative development for the space.
What do I think it means? I think the remaining pressure on bitcoin price action is due in part to Chinese mining pools needing to liquidate hastily as their authoritarian regime clamps down, along with traders front-running this news. Additionally, in immature, speculative assets, we know that fundamentals are hard to come by as models haven't had time to evolve, so technical analysis (and narcissistic CEO's) can have overstated effects on price.
What I'm doing: As I stated above, I wanted to wait for a breakout above 42k, or a breakdown below 30k, but I'm feeling progressively more confident in the 35-37.5k range as an optimal buy zone. We have some support there and bitcoin likes using the outside of a recently broken triangle to re-test and continue, so I'm looking to buy that range. My stops will be tight b/c this is still a fragile range for bitcoin, but I think liquidity is getting soaked up and we're creating a floor from which a steady rise will emerge. I'm not expecting fireworks until we break and hold 50k, but I think the bears have done their work here. If we break below 33k, I would consider this trade invalidated and plan for an extended bear market.
Good luck and manage risk!
TA: The technicals here are ugly. No denying that. If you had no social media or insights into the fundamentals of bitcoin, you might think we're headed far below 30k for an extended winter. There is a NASTY head and shoulders in play on larger timeframes, the only flag on the chart is clearly of the bearish variety, 40k is slippery as a snake, and there seem to be willing sellers well into the 30's.
On the other hand...
FA: ...this has turned out to be, in my estimation, *the* cycle where bitcoin's volatility is not scaring people away the way it used to. We consistently hear about various, big-name investors touting their diamond hands, while sovereign states across Latin America and Africa demonstrate unprecedented interest in embracing bitcoin as legal tender. The energy debate is shifting in bitcoin's favor, thanks to the work of a few bitcoin ambassadors, and although there is a long way to go on that front, it would be difficult to frame the move of bitcoin mining out of China as a negative development for the space.
What do I think it means? I think the remaining pressure on bitcoin price action is due in part to Chinese mining pools needing to liquidate hastily as their authoritarian regime clamps down, along with traders front-running this news. Additionally, in immature, speculative assets, we know that fundamentals are hard to come by as models haven't had time to evolve, so technical analysis (and narcissistic CEO's) can have overstated effects on price.
What I'm doing: As I stated above, I wanted to wait for a breakout above 42k, or a breakdown below 30k, but I'm feeling progressively more confident in the 35-37.5k range as an optimal buy zone. We have some support there and bitcoin likes using the outside of a recently broken triangle to re-test and continue, so I'm looking to buy that range. My stops will be tight b/c this is still a fragile range for bitcoin, but I think liquidity is getting soaked up and we're creating a floor from which a steady rise will emerge. I'm not expecting fireworks until we break and hold 50k, but I think the bears have done their work here. If we break below 33k, I would consider this trade invalidated and plan for an extended bear market.
Good luck and manage risk!
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