There are numerous trading pyscologies but a common one is to consider trading or investing in terms of fighting. There are campaigns, battles, victories and routs. I’m not a fan of metaphors when it comes to using them as models but right now Bitcoin is certain battling to break over $20,000.
The price is definitely all over the place and here is a chart of recent moves. This can be pretty hair raising if you are overweight Crypto, as I admit to be, so the question is clearly, is this the top?
To me this is just the start and this is my model as I wrote here weeks ago: Well here we are:
Of course all this voodoo charting is no guarentee that the bull rfun will continue. More importantly there are many support factors right now and demand is rising and supply is tight.
Im expecting it to take time to break out from the current level because when assets reprice that then settle into a level before moving either up or down dramatically from a new equilibrium level.
This is the basis of a solid trading technique that involves putting limits arouond such a level by judging acceptable volatility and buying, holding or selling depending on the following price action.
You would do it like this: To my mind the best thing to do is simply ‘Hodl’ and buy the dips.
At $300 billion dollars, Bitcoin is still a tiny asset class. At $1tr, that will be a level when you can start to wonder if the world has enough. There is $7 trillion of gold.
If Bitcoin goes vertical it will be a signal that a top is near but where that would terminate is hard to guess. My feeling is $40,000-$60,000 is reasonable and is frankly conservative in these money printing times.
Strangely enough bitcoin is its own autonomous QE, because like a gold strike in the past, Bitcoin is bringing new money to the table by being in itself a newly discovered resource of value.
Meanwhile all thins Ethereum will be dragged along, though DeFi on Ethereum itself will continue to be a growing driver adding value to Bitcoin. Services like Blockfi, backed by 9 figure VC money will pay 3.5% on Bitcoin, so you inflation resistant Crypto will not only protect you from central bank created inflation it will also release you from their financial repression.
That alone should validate a trillion dollar market cap for Bitcoin when the regulators of the world are spinning out trillions of new money every year and paying zip on their spiralling debt.
As to $20,000 being Bitcoin’s market top. I don’t think so.