MagicPoopCannon

BTC Tests the 50 Day MA. Here's Why The Bottom is NOT in!

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Bitcoin and the crypto space continue to rally, as investors react to evidence that the coronavirus is slowing down. However, this is simply a bear market rally. Knowing that, it's extremely important for cryptocurrency investors to understand that we are only in the BEGINNING STAGES of a massive recession/depression. The stock market has put in the final top. I am extremely confident in that. I've shown you my recession indicator for months, and told you that a recession was just over the horizon. Despite the recent and accurately foretasted relief rally, stocks are poised to fall massively lower, and that WILL drag crypto down with it.

But MagicPoopCannon, how can you be so sure!? Crypto has never experienced a recession until now, and the performance has been exactly in line with stocks. Why? Because (as I've been warning) crypto is a RISK ON investment! It's possibly the most speculative, risky, and volatile investment class available, and it isn't even being used in an economically meaningful way right now. So, I can practically guarantee you, that as the economy continues to slide deeper into recession, investors will scatter from risky cryptocurrency investments.

Think about this. We all know that retail investors make up a large percentage of the cryptocurrency investment space. As retail investors begin to feel real pressure from this recession, rather though job losses, pay cuts, hospital expenses, etc, they will be more than compelled to liquidate their crumbling cryptocurrency investments, to take care of essential living expenses.

Another major group of cryptocurrency investors are institutional investors. They're far less likely to remain exposed to risk during a major downturn. So, they'll be heading for the exits too, looking for safer areas to park cash during the recession. Economically speaking, we are nowhere near the end of this recession. The damage has been done, and the entire global economy is basically on life support right now. However, as credit spreads widen, and debt exposure becomes exacerbated by this recession, things could get much nastier than most people anticipate.

Looking at the daily BTC chart, you can see that it is now running into some resistance, in the form of the 50 day moving average (in orange.) However, BTC has managed to get above the 50% retrace, and it's flirting with the bottom of the falling Gaussian channel. If we close a daily candle above the 50 day MA, I think there is a decent chance that BTC could run up to the 61.8% retrace, as it converges with the 200 day moving average (in purple) right around the 7970 level. I've got to stress, that is entirely dependent on whether or not BTC can close above the 50 day MA.

When we were retesting the 200 week moving average, I posted an analysis showing that I was expecting a relief rally. It was called "Look at That. Bitcoin is Right Where I Said it Would Be!" (attached below.) Now that we've held the 200 week again, I want to officially say that I fully expect the 200 week moving average to eventually be broken, and not recovered for a significant period, for the first time in Bitcoin's history, provided that a miracle doesn't rescue the world for this recession/depression. So yeah, I think things are going to get very bearish .

Honestly though, I don't care what BTC does in the short term. I don't care how much it rallies here, because I KNOW that the stock market HASN'T BOTTOMED. Therefore, I know that Bitcoin hasn't bottomed. Bitcoin's entire life has been spent in the comfortable backdrop of a massive RISK ON eleven year bull market in stocks. Now that the stock bull is dead, and investors are RISK OFF, BTC is set to show HODLers a side that they never thought was possible. Dreams will be crushed. Tears will fall. Towels will be thrown, and white flags will wave. When that day comes, it will be time to buy. But probably something other than Bitcoin , because Bitcoin has no real use case, no adoption, it consumes way too much energy, it's ridiculously inefficient, it can't scale, and third party solutions like the Lightning Network are incapable of fixing the shortcomings of the underlying technology. So, yeah. Not trying to hate on BTC . We all love and thank Satoshi for the innovation, but where is Napster today?

I'm The Master of The Charts, The Professor, The Legend, The King, and I go by the name of Magic! Au revoir.

***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***

-JD-
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Comments

I have saved a PDF print-out of this idea to look back on in 4-years...

You have misunderstood many fundamental aspects of Bitcoin.

1) Bitcoin's correlation over weeks or months is irrelevant; over the past 10 years the correlation to stocks is < 4% (Statistically irrelevant); no such asset like this exists on the planet. This is rational because Bitcoin's network grows based on Metcalfe's law, which is a function of the number of unique nodes - or in Bitcoin's case - users.

2) Bitcoin's base layer is NOT intended to be like, or compete with, a payment system like VISA, Mastercard, or other 0.1s transaction speed cryptocurrencies. Visa and Mastercard work just fine - why would one go through the trouble and tax complications to adopt such a network? It is a final transaction settlement network intended to compete with the US Swift Network and intended to give users an option to opt-out of the fiat currency system altogether. The SWIFT network takes 1-7 business days for final settlement, and international transfers cost 3.5% - 15% unless it is interbank.

3) You COMPLETELY ignore the reliability, anti-fragility, and transparency of Bitcoin's monetary policy which is what derives Bitcoin's scarcity (21 million coins will only ever exist) in a Macro environment in which all Central banks are flooding the planet with fiat currency at an increasingly accelerated pace. Supply and Demand economics tell you if you flood the market with supply of a specific commodity (in this case, the most important one in the world "money" itself) the value of that commodity will drop. Brilliant institutional investors and individuals with a questioning mindset have already figured this out.

4) You COMPLETELY ignore Bitcoin's network effects - and just presume that with respect to becoming the dominant electronic "private money" peer-2-peer protocol for the internet, that none of these factors matters whatsoever and can be overcome by some "cool, flashy, new coin":
- A 10-year head start on consumer and merchant adoption, albeit it, yes, this is still in the early stages from a merchant prespective
- The most secure computer network on the planet by orders of magnitude
- The financialization of Bitcoin (CME futures/derivatives, already functioning BTC loan markets, etc.)
- Overwhelmingly deepest and most talented developer network; the only one even remotely close is Ethereum
- Liquidity - which is paramount for institutional adoption

Bitcoin and Gold are the only two monetary assets on the planet with the scarcity and supply in-elasticity (in response to increasing price) that give investors a way to hedge against (or opt-out completely) the money-supply growth shenanigans going on around the World and a 10x scale up of the greatest every Central Bank monetary experiment ever conducted..... It is now so obvious, even to the mainstream, that something is not right with this. Choose to ignore it at your own peril, but remember in this case, ignorance is not bliss
+187 Reply
GuruMeditation TradeHappyKyle
@TradeHappyKyle, Great post. Great!
+8 Reply
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