Bitcoin is very likely to move meanginfully lower

8 Jun 2021

I like crypto but that doesn't mean XBT isn't going lower. Probably a lot lower.
Technical analysis is always a tool to help distance oneself from hope. Hope is not a predictable investment strategy.
Technical analysis helps us strip away the rhetoric, the laser eyes, the maximalism, leaving us with actual behaviour upon which we apply frameworks to help us asses the probability of an up or down move.
Part tealeaf reading but more analysis around distributions, exposure and risk.

And with that in mind, it looks very likely that Bitcoin is going a lot lower. The following indicators suggest that might be the case:

• after failing to break out of the wedge, it is more likely now that we are in wave five of motive wave lower (Elliot Wave)
  
• that suggests the uptrend is now broken and we need to wait for this move lower to play out
  
• it is more likely this is a repeat of the protracted '18-19 down cycle
  
• if that is true, the next 12-15mths will likely see rangebound trading between 16,000 and 26,500
  
• there is a possibility, should we stabilize above 33,800 (the 50% retracement), and should ATR and volatility bands have time to consolidate, that we could find a near term base
  
• if that is the case then a break through a consolidated true range resistance, and above 40,000, might suggest we are moving higher again
  
• but that is much less likely, in my opinion
  
• more likely is we break the head and shoulder support at 30,000 and end up in the previous mentioned range for the medium term
  

Be wary of claims of institutional interest. I think Raoul Pal (who I like and respect very much), read the state of adoption wrong and it appears a lot of the recent move lower has actually been institutional puking into unmanageable volatility.
Long term institutional money, rather than the faster more spivy trading flow, is going to need much much lower volatility before adoption picks up meaningfully. We are at least 12-15mths of consolidation away from that happening.
In the meantime we need to be sensitive to ongoing profit taking and risk management related headwinds.
This is excellent news. Not only do we want a higher base to form, but we want institutional money to have time to catch up.
We want slow and steady adoption not less educated FOMO buying.
We want regulators to clarify their stance, AML processes to become entrenched and pervasive and for more productive discussions around environmental impact, clearing the way for ESG investors.

Also, watch Cardano and Ethereum for a break in correlation with Bitcoin. That would be huge. It would suggest, amongst other things, that we have finally arrived an important maturity milestone for Crypto; where investors recognize the meaningful differences between Bitcoin as a store of value, and a macro diversifier, and blockchain crypto (Ethereum, Cardano, Polkadot etc) that use networks and decentralized applications to wreak havoc on legacy centralized business models. That will be a very special moment.
Unfortunately I don't think we are there yet.

16 Jun 2021

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We had the bounce and it has been really very difficult not getting involved. But the probability of another leg lower remains higher than a break back above the 200dma. The key question remains; are we in a Elliot motive wave, in which case wave 5 would suggest -40% downside form here or are we in wave c of a consolidation cycle? I think we are still in a longer term uptrend but the near term pattern, and strong resistance around the 200dma, suggests we move a lot lower.

17 Agu 2021

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Well.....we did go lower but we did not go a lot lower.
It is now possible we have completed an corrective rather than a motive cycle.
In which case we should buy on weakness.