I am not particularly interested in Bitcoin, and I personally wouldn't ever own it myself, but I am interested in it because of how it liquidated during the market crash when there was a big panic and rush to cash in February and March.
As a result, I started watching it to look for anything interesting because I have a general thesis about the marketplace right now. That thesis is that we could be entering a terrible economic period, perhaps even a devastating deflationary depression. If that's true (and I'm not saying it must be—I'm only saying that that is what my gut is telling me about the seriousness of the times), then many assets, including so-called "safe-haven" assets, should all be decimated in value. That means precious metals, Bitcoin, real estate, stocks, everything. Perhaps everything but cash. Now, that's not to say that we won't have a solid recovery or even serious inflation afterwards, and that some of these assets won't do quite well in the long run (that is a conversation we can have later), but in the short-term, say in the next year or two, a deflationary depression could decimate these assets.
I know some people feel very passionate about Bitcoin, and my remarks here aren't meant to discourage them from their desire to invest in an alternative form of currency, but I want to speculate about what the technicals might tell us about the intermediate future that faces us, and what I see on the chart is actually very interesting right now.
I have marked a long-term trend line (yellow), a very large multi-month bull flag (ugly pinkish) and within that bull flag resides a smaller multi-week bear flag (blue). Interesting!
So, on a longer time frame, Bitcoin seems like it might really want to shoot up higher, if it can push through the top of that pink bull flag. And yet, in the short term, it has been working its way up through a clear bear flag (blue) until, that is, just a few days ago. Instead of capitulating through the bottom of the bear flag, it did the unexpected move of pushing through that top of the bear flag, which is highly unusual. Normally, a bullish exit from a bear flag would involve some longer-term consolidation, but this popped right up through there, perhaps in anticipation of the imminent "halving" that is coming up soon, and about which I actually understand very little.
Now, further of interest is the fact that despite driving up and out of that multi-week bear flag, it was then stopped cold by the longer-term bull flag. And all week it has been testing and failing to break out of that channel (twice just today as a matter of fact).
Of further interest is the fact that if we extend the bear flag channel to the bull flag channel, a triangle is formed (I have it circled) that the price just happens to be squeezing itself into (successively higher lows and lower highs). And a triangle like that will often be resolved with a big move in one direction or the other. So what on Earth is going to happen next? I have no idea, which is why I don't invest in Bitcoin, but I have a feeling that when it moves, it's going to move very bigly. :) And, that it will do so in the coming days! There's just not that much room left in that triangle. I find it fascinating that we have this confluence of structures all coming together right now.
So, I have a super-duper-bearish bias on the market right now, so let's say the market crashes and Bitcoin does with it, in a liquidation event much like the one we saw in February and March. The Bitcoin price could fall to the bottom of the big bull flag, which would sort of confirm the bear flag it has been in, and reach very substantially lower prices. And yet, even if it does so, and even if it falls right through the bottom of that flag, as it did in March, it may, just as it also did in March, recapture that flag and go right on back up again to test the top of that bull flag and even possibly break out this time. Or will it, just as it defied the bear flag it's been in recently, then go on to defy the bull flag as well? And collapse unexpectedly right out the bottom for good? I have no idea whatsoever, but it''ll be fun to be a spectator during what very well could turn out to be a wonderful drama to behold.
As a result, I started watching it to look for anything interesting because I have a general thesis about the marketplace right now. That thesis is that we could be entering a terrible economic period, perhaps even a devastating deflationary depression. If that's true (and I'm not saying it must be—I'm only saying that that is what my gut is telling me about the seriousness of the times), then many assets, including so-called "safe-haven" assets, should all be decimated in value. That means precious metals, Bitcoin, real estate, stocks, everything. Perhaps everything but cash. Now, that's not to say that we won't have a solid recovery or even serious inflation afterwards, and that some of these assets won't do quite well in the long run (that is a conversation we can have later), but in the short-term, say in the next year or two, a deflationary depression could decimate these assets.
I know some people feel very passionate about Bitcoin, and my remarks here aren't meant to discourage them from their desire to invest in an alternative form of currency, but I want to speculate about what the technicals might tell us about the intermediate future that faces us, and what I see on the chart is actually very interesting right now.
I have marked a long-term trend line (yellow), a very large multi-month bull flag (ugly pinkish) and within that bull flag resides a smaller multi-week bear flag (blue). Interesting!
So, on a longer time frame, Bitcoin seems like it might really want to shoot up higher, if it can push through the top of that pink bull flag. And yet, in the short term, it has been working its way up through a clear bear flag (blue) until, that is, just a few days ago. Instead of capitulating through the bottom of the bear flag, it did the unexpected move of pushing through that top of the bear flag, which is highly unusual. Normally, a bullish exit from a bear flag would involve some longer-term consolidation, but this popped right up through there, perhaps in anticipation of the imminent "halving" that is coming up soon, and about which I actually understand very little.
Now, further of interest is the fact that despite driving up and out of that multi-week bear flag, it was then stopped cold by the longer-term bull flag. And all week it has been testing and failing to break out of that channel (twice just today as a matter of fact).
Of further interest is the fact that if we extend the bear flag channel to the bull flag channel, a triangle is formed (I have it circled) that the price just happens to be squeezing itself into (successively higher lows and lower highs). And a triangle like that will often be resolved with a big move in one direction or the other. So what on Earth is going to happen next? I have no idea, which is why I don't invest in Bitcoin, but I have a feeling that when it moves, it's going to move very bigly. :) And, that it will do so in the coming days! There's just not that much room left in that triangle. I find it fascinating that we have this confluence of structures all coming together right now.
So, I have a super-duper-bearish bias on the market right now, so let's say the market crashes and Bitcoin does with it, in a liquidation event much like the one we saw in February and March. The Bitcoin price could fall to the bottom of the big bull flag, which would sort of confirm the bear flag it has been in, and reach very substantially lower prices. And yet, even if it does so, and even if it falls right through the bottom of that flag, as it did in March, it may, just as it also did in March, recapture that flag and go right on back up again to test the top of that bull flag and even possibly break out this time. Or will it, just as it defied the bear flag it's been in recently, then go on to defy the bull flag as well? And collapse unexpectedly right out the bottom for good? I have no idea whatsoever, but it''ll be fun to be a spectator during what very well could turn out to be a wonderful drama to behold.
Comment:
I made a new post with a zoomed in view after I noticed a rising wedge forming on the hourly chart. I drew it with great precision once I saw that the price action has been carefully respecting the slope of that rising wedge. And having drawn that wedge, I now think something big could happen by tomorrow night. See my profile for that newer post.