Bitcoin

Bitcoin is the legacy digital peer to peer cash system. It is not a scam. It is a terrific solution and fix on some of the problems that gold cannot solve so easily in that it does not need an intermediary, it does not need to be stored, and transactions are relatively quick and final given that some of them involve exchanges half way around the world across borders that are erected to control the flow of capital and labor and other things. It is not, however, more established than gold, nor is it as safe, if only because it still claims a relatively small market cap, and thus a narrow doorway (on ramp) in and out, made narrower by the efforts of competing traditional monopoly issuers of money and the regulators they have captured along the way. If you are new to this publication, read our guide for newcomers (click link) and Phil Champagne’s “Book of Satoshi”, on the collected writings of the creator in the members area. We have promoted bitcoin since virtually its inception and it became a formal part of the dollar vigilante portfolio in 2013. In 2019 we launched The Crypto Vigilante to help investors navigate the crypto markets in more detail. At TDV, bitcoin is still our largest exposure. We recognize that it still has fundamental problems that may or may not be solved so there is risk that the currency will fail or be usurped. TCV is where you want to be for that story. On this page I will however update you on my outlook for the USD price of bitcoin, which many investors still view as a benchmark for the cryptocurrency space. My 3-5 year target is $100k, but this is a speculative target, contingent on a continued improvement in fundamentals. I will keep you posted on both, its technicals and fundamentals, here.

Stock Chart

The chart is scrollable left and right.

B2Gold Corp trading to All Time Highs by PennyStock101 on TradingView.com

Updates

 

I see an 85% likelihood that the price of bitcoin continues to coil within the shaded range of a narrowing long term neutral consolidation pattern.

The bull market call in H1 2019 was obviously premature. A new bull market has not technically begun until the price breaks out of the triangular pattern in the chart here. Since it is a neutral pattern it isn’t indicating which direction it may break. While the shaded region demarks my own expectation for the rest of 2020, the levels that control the bull-bear signal demarcate a wide range from $3k to $14k. Previously it was around $3-6k with the upper bound defined by the 2018 downtrend.

The consolidation has seen a wringing out of some of the bad ideas and a steady advance in the technology and adoption of the leading ones, like Bitcoin, Monero, and others. The overall market capitalization of the sector has shrunk throughout. There is uncertainty still about the way forward but the market will make its choice and we will know sooner or later whether technologies like LN are catching on or whether the critics are right about the capacity constraints of the network, and other problems, like network privacy or security.

Intermediate View

My medium term outlook is for a rally back up to $10k in the next month followed by a correction to about $7k and the completion of a right shoulder over the summer months before the bulls begin to push through the $10.5k level in the second half to threaten a new bull market leg by the end of the year. The way I drew it in here is one way it could happen. But there are two other possible scenarios in my outlook. One is that the market drops to a lower low, like down to $3k, or lower perhaps in the midst of one more panic liquidation, before it rallies up to the $10.5k neckline. The other possible scenario is that it has already made its low in this sequence but may form more of a bottom before its rally back up to $10.5k. Maybe a pullback to $5k.

I think we have made our low so I am putting only a 15% likelihood in the second scenario, but as far as whether we pull back to $5k again now or break up through $7k in the next few days, it looks like 50/50.

Short Term View

You can see the three scenarios in this chart too. The shaded region, a price gap, also represents significant resistance, But if the decline to $3k was anomalous, i.e., as the result of a liquidity crunch, it shouldn’t keep the bulls down for long. They have been grinding back steadily with higher lows.

As previously noted, the sell off ended in a classic one day reversal wick on the daily bar chart.

The hourly chart here shows the triangle that it formed in reaction to the sell off, and the subsequent break out from that triangle.

The triangle itself has a classical technical price objective of between $9k and $10k on the upside, and the trading range it has found itself in now points to a target somewhere north of $8k.

Technically speaking it’s important for the bulls to recover that ground above the shaded region in this chart before the bulls can say they have recovered the bias, technically, in the intermediate and long term charts at least.

Conclusion

I can’t decide if we are going to break back up over $7400 without breaking that uptrend line in the last graph above or whether we will see a pull back to $5k or $6k first, say, this weekend, before we do it. I am more or less bullish in the short, medium and long term; except it is difficult to say which way the next $1k will go.