Round Pegs in Square Holes (Bitcoin)

This is not a quick read. I don’t apologise for that – it’s a really good post and it may teach you a lot about long-term BTC trends.


In a sea of crypto analysts, it’s important that you are able to differentiate the good from the bad from the ugly. The good and the ugly are fine (I’m both), but the bad are – by definition –
no good.

The New Year has heralded the dreaded return of price predictions, exacerbated in this case by the upcoming infamous Bitcoin halving. I tell you again, all the halving affects is short-to medium term price volatility, not long-term price! These two posts remain more relevant than ever:

· The Bitcoin Halving Event – Part 1

· The Bitcoin Halving Event – Part 2

I don’t bother myself with short-term Bitcoin price movements, I’m an investor, not a trader. What matters to me is not that Bitcoin has gone up (or down) today, but rather that it will have gone up a lot five years from now!

With this in mind, I focus more on long-term charting than on short-term charting. Long-term charting is more predictable, accurate – and to investors such as myself – useful.

If you are a trader, then by all means trade – but to me BTC is an investment asset. Traders help with liquidity and volume, so they do help the overall credibility of BTC a bit, but it is the investors who
BELIEVE in BTC and who are actively driving the adoption of crypto. Those who have the belief in BTC – enough belief to hold it as a long-term asset – they are the ones who are really driving the adoption of crypto and the
creation of a better world for us all. But enough about that, let’s get to the interesting stuff!

Round Pegs in Square Holes:

I often publish long-term BTC charts. On the majority of these charts you will find my “Long-term base trendline”, such as in this chart from the end of December post: “Bitcoin – Approaching 2020”.

But what is this line exactly? What does it mean? Is my line better than anyone else’s line?

Without the answers to these questions, my line is just another random line published by just another crypto analyst. It’s equal in status to any other similar line you may know of.

With the answers to these questions my line becomes a veritable tour de force – an answer to questions yet to be asked and a Sword of Damocles above the head of lesser analysts!

This line is thus very important to me, I stake not only my reputation on it, but also my own investment strategy.

Caveats: NEVER have I had a line on a chart which stays fixed indefinitely. It’s true that this particular line is about as fixed as they come, but it DOES move from time to time. So far the movements have always been very small – more “adjustments” than “movements” – call it “fine tuning”. Just note that the line is not 100% fixed and is consequently not 100% accurate. Also note that while it is valid 99% of the time, there ARE times that price can momentarily dip below it when BTC has serious negative momentum. Such dips never last, but they have occurred in the past, and will probably do so again in the future. That being said, I have great faith in this line and have spent so much time on it that I am absolutely satisfied with how accurately it is dialled in right now.

But not everybody would agree with my line – and they have strong reasons not to. This post shows you why, and then explains why I have chosen what I have chosen. As always – YOU must decide for yourself!

Round Pegs

While I choose to use a straight line, there are those who prefer curved lines. They are in the majority.

[Pause for quick rant]:

When has “Majority” ever equated to “Right”? Anyone with an understanding of politics, the media or propaganda can quickly point out the logical flaws in using populism as a basis or substitute for correctness!

[Rant over]

Don’t ignore that rant, it’s important. Now let’s look at curved lines:

There is considerable evidence to show that logarithmic curves can be made to fit the history of BTC price. You will often see charts such as this one:

On the face of it that’s a great looking chart. The indicator lines do what they should: they hit the tops of the peaks and the lows of the troughs. They are consistent curves which account for all prices during the time period, and they narrow together over time – accounting for reduced volatility as the market matures.

It all sounds so very credible – right?

It really does, so much so in fact, that I was quite impressed the first time I saw such curves used (about two years ago).

But taking something at face value is not a Bit Brain trait, especially if there are flaws in the logic or rationale behind it.

Look: the model is good. I am genuinely impressed by it and I think it does a pretty good job of accounting for BTC price at the moment. But I am concerned because I have found flaws with it and I don’t know how well it will hold up over time.

I DON’T KNOW the right answer here, because I can’t tell the future. I look at the data available to me – ALL the data – and then I try to make the best judgement calls I can based on that. These curved lines don’t account for all the data, which is where the problem come in. I KNOW that I’m not always right, but I have a higher chance of being right because I’m not looking for the simple answer. I’m not looking for that one curve that fits all the data. Similarly, I’m also not ignoring all the data that doesn’t fit, or making overly broad price brackets to try to account for all anomalies (here’s looking at you stock-to-flow!)

But Bit Brain, what’s wrong with these curved lines? What don’t they do?

I’m glad you asked…

They simply don’t fit all the observed data. Spot the problem on the chart below (which goes back to mid-2010 as opposed to the mid-2011 chart seen earlier):

It may not look like much, but it’s there at the beginning. The curve simply doesn’t fit all available data.

Can ANY curve fit the all data? As an experiment, I tried to construct my own curve to fit all the data, or at least the data with respect to the low end of the BTC prices over time (similar to the bottom curve on the chart seen above). Here is what I got:

That’s the best I could do.


The line I drew is about as close as you can get to an all-data-encompassing-curved line for BTC base price over time. It’s no good because the BTC price is way below it near the beginning, but it’s still about the best you can do. This is how it looks next to the curved log lines that are commonly used:

“Houston, we’ve had a problem.”

Remember that there is another year and a half of (unavailable on my charts) data before this time (mid-2010) which only makes the problem far worse!

The commonly used logarithmic curves don’t fit. So what now? How bad is the problem? Is it really a problem? How will this play out in the future?

Once again I DON’T KNOW, but I DO KNOW some other things and I will use those to show you why I use what I do.

Summing up the Round Pegs:

It is my suspicion that the curved lines are working semi-well for a moment in time. The curves are not too far off reality, even though they can’t account for outlying information, so they look good. But I suspect that they will begin to degrade at increasing speed over time. Anomalies and/or a price trend shift away from the curves may well render them useless in times to come. I suspect that the curves will hold true for the next five years or so, but doubt that they will last for a decade. During this time (if I am right), they will become increasingly useless as prediction tools, because their lower and upper limits will begin to stray away from the lowest points of bear markets and the highest points of bull markets.

I believe that the curves fit a snapshot of time: for now that time is June 2011 to date. I suspect that they may have useful a shelf-life of approximately 15 years.

While we’re at it…

I mentioned stock-to-flow earlier. It’s not strictly related to these log curves, but Stock-to-flow is wrong in the same way that I say the curves above are wrong, but only more so – MUCH more! In addition to this, there are FUNDAMENTAL REASONS WHY STOCK-TO-FLOW IS WRONG! Those reasons are the same as other supply-sided arguments which I debunk in my “Bitcoin Halving” posts, as linked to at the beginning of this article. Go check them out.

Before I let Stock-to-flow off the hook and move on, let’s take a look at a chart or two:

Having trouble getting all the data to fit? Just make ridiculously broad price bands to encapsulate all the data! Ignore the fact that some data STILL doesn’t fit your model!


Or how about this, from PlanB themselves: Remember that EACH VERTICAL BLOCK represents a factor of 10x. So if an arrow is one block high, then PlanB’s predicted price is ten times too high or too low!

From; modified by Bit Brain

The largest of those arrows shows that the real price is about 14 times higher than the predicted one! I mean, come ON! Why would anyone use this? Remember my rant earlier about the difference between being popular and being right? Now you know why I say that…

Square Holes

Right, now here comes the tricky part: I’ve ripped the arguments of the majority apart, now I have to justify and explain my own standpoint. Here goes:

The key to my long-term trendline is this: I don’t try to fit all the data into one all-encompassing line.

I do not believe there is a way to fit all the data neatly into one indicator (short of using ridiculously wide price bands to account for all anomalies). I look at the markets and their history, I take the fundamentals into account, and then I try to project what is left in the form of usable indicators.

Below is another look at my long-term base trendline, this time seen in its entirety. Note where it begins: mid-2013.

I have often stated that I do not trust BTC data from the early years of BTC trading. I normally state that mid-2013 is the time that I start to find data sufficiently representative to provide useful statistical value.

The reasoning behind this is simple: Prior to 2013 Bitcoin simply wasn’t big enough, I’ve said this before but it bears repeating. There were not enough people invested in Bitcoin. They were not financial investors, they were not trying to to find fair price or make winning trades. They were tech geeks, cryptographic geeks, computer scientists and programmers who were playing with a new toy – taking a long shot that had little chance of going mainstream. The further you go back, the more true this becomes.

Any big buy had a radical effect on the price of BTC – which traded for less than $10 for most of that period and for less than $0.50 prior to 2011. You have to understand that even though logarithms do an excellent job of accounting for both small and large numbers in the same data-set, those numbers have to be consistent in order to provide good data without corrupting the model. Early BTC data is NOT consistent enough! It’s not something such as cell division which happens at a predictable rate and then to leads smooth, chartable exponential growth. Filling an equation with anomaly prone data taken from an overly-small data set is scientifically incorrect and will not yield a correct result! You have to have a sufficiently large sample size in order for the statistics to become valid. In the early days of BTC, the sample size was simply too small.

I’m really not comfortable with the way that logarithmic BTC price explanations try to incorporate all this old garbage data into their models. That’s why I ignore the early data entirely on my charts. From a fundamental perspective I haven’t ignored it, I’ve realised that it’s not proper data. I know why the data is bad and I know which data is bad. Thus my method incorporates all the given data, while remaining accurate by filtering out that which is not relevant – at least that’s the theory – a theory which is better than any mainstream ones I know of.

So that you don’t have to take me at face value, let me show you a chart or two which should help you make up your own mind on this topic:

The chart below expands on one of the charts we saw previously; the one with the “This is a problem!” section at the start of the log curve data. Here we can see that region in context, along with the regions which come after it (which I described earlier). The log curves are overlaid on the chart too.

My own model doesn’t use either of the first two regions.

Below I have removed the log lines and replaced them with an ascending channel, the base of which forms my long-term base trendline.

Starting to make sense now?

But wait, I’m not done yet…

I watch other major markets too. No market exists in isolation, they tend to influence one another. Some display similarities and correlations – we have such a case which effects BTC.

Early growth of BTC

BTC price shot up very rapidly in the early days – too rapidly to fit comfortably into accurate price models. Now: whether you believe me or not about the lack of BTC data in the early days making it impossible to accurately analyse and model that data, you will have to pay attention to the next point:

Bitcoin is often compared to Gold (whether a certain grouchy anti-BTC gold bug likes it or not). Both store value well, both are constantly climbing in value, albeit with some retracements and corrections when the fiat-based markets are booming. So here is an interesting little fact for you all: between the time of the Bitcoin Genesis Block and the start of 2013, Gold flew up in value. Gold went from approximately $830 at the time of the Bitcoin Genesis block, to over $1900 in August 2011, and then slowly dropped to around $1300 at the time I started trusting Bitcoin price data in mid 2013.

If market pressures were such that Gold got a huge boost, then such pressures may well have influenced Bitcoin too. Whether is was people looking for a store of value or just having money available with which to speculate is irrelevant; Gold went up very fast so it makes sense that Bitcoin should have done the same (much as Gold and Bitcoin have been doing since mid-December 2019).

The chart below illustrates this graphically:

It’s not just Gold – I used Gold because it’s easier for most people to see how it compares to BTC. You can look at the S&P, or the Dow or other large indices / commodities / etc. You’ll see the same thing.

Explanation / Summary

Here’s what I think happened: BTC was born after the market crash of 2008. It was born into the rapid recovery phase of that crash. Combined with its inherent early growth, this supercharged BTC in the early days – creating unrealistic and unsustainable growth rates for most of the first four years of its existence.

As can be seen from looking at Gold, the hype phase died away throughout the duration of 2012 and things went back to normal, which is why I only start to trust BTC after it settled down in 2013. It’s hard to say exactly when BTC data becomes trustworthy, there is no clearly defined line. I normally choose to use 1 July 2013 – the halfway mark. The reality is that it could have been a few months earlier, but not as early as 1 January 2013.

To put thing into perspective, BTC had a total market cap of roughly $150 mil on 1 January 2013. That grew to well over $1Bn in less than three months! At that stage BTC got noticed and became a serious investment asset. It then corrected downwards to below $1Bn by mid-year – which is when I start using the data – before starting to climb again. I attribute the climbing after June 2013 to organic BTC growth instead of to external market driving factors; which is why BTC then continued to climb – but at a different rate to what it had previously – while Gold continued to lose value and stagnate for the rest of the decade.

In basic terms: BTC only matured as an investment asset in early to mid-2013. Data before that time can be ignored – as long as you understand why it can be ignored!

Notes on Square Holes:

My straight line approach to the BTC base trend comes with a few caveats of its own. While my line is normally well labelled, it is commonly misunderstood. The Long-Term Base Trendline I show is NOT a price prediction! It is a BASE PRICE which BTC should remain ABOVE most of the time. Please bear that in mind if using my data or posts for information.

As I stated earlier, it can change over time. The changes will probably be hardly noticeable, but may occur. If BTC were to make a definitive drop below $7000 today and stay there, then my long-term trendline would have to either be significantly adjusted, or thrown away altogether. Here’s an interesting implication derived from that:

You won’t see Bitcoin selling for below $7000 again. Bit Brain has spoken.

(That excludes a whale tanking the price on individual exchanges, price display errors, Bitcoin being replaced by something better 10 years from now, etc)

I won’t go into the details because this post is long enough, but continued constant growth of BTC can also be largely attributed to the S-curve of technology adoption. I wrote about the S-curve in one of my earliest STEEM posts two years ago: check it out here “BITCOIN PRICE PREDICTIONS – Chart Display – Part 3 – The S curve (More good news!)”.

Footnotes and Conclusion

There is also a lot I can say about the nature of logarithms and using them in charting. I spent hours running common logs vs natural logs scenarios in preparing for this article – research which I am choosing not to include in the interests of keeping things on topic. But here are the sentient points:

  • The BTC price curve MIGHT be a natural log function, but this would only apply to more recent data (mid-2013 and beyond) and not before.
  • There is no log function that works for all BTC price data.
  • Log functions straighten out over time. Using a straight line might be an approximation of an log function, we will only know this after a few more years once either the logs or the straight lines start to diverge from the data observed.
  • This is what you get when you plot the natural logs of the base values of BTC on a chart .
    • You can see that it’s not a straight line (as a correct log function that explains all BTC price action would be), but that using straight lines over specific periods might work.
    • This ties in with what I said earlier about BTC normalising towards mid-2013.
    • The x-axis is the number of days since the genesis block.
  • My straight lines ARE actually log lines because they are only straight on Log (base 10) charts.
    • No I’m not elaborating on that now – this is a blog, not a mathematics class!
Made by Bit Brain using PlanMaker from the FreeOffice suite

If you’ve made it this far then well done – you may print this medal out and frame it as a reminder of your fortitude:

The truth is that right now there isn’t much difference between my straight line and the curved log lines, but over time this WILL change! In 2026 the commonly used base log line puts BTC crossing $500 000 while my trendline will puts BTC crossing $1 000 000 per coin. That’s a factor of two and is no longer negligible!

Continuing to put round pegs (log lines) into straight holes (straight trendlines) will work for a few more years, but if I am right about the holes being straight, then eventually those round pegs will no longer fit.

Yes I know I should have broken this post up. Once again I DIDN’T break up a long article because it loses it’s coherent logical flow and then you end up with two half stories instead on one whole one.

I hope that this article has achieved its purpose: to provide you with the UNDERSTANDING of why I use a straight trendline as my BTC base. I hope it shows you the difference between an analyst that develops and refines his own methods – questioning everything along the way, and those who use what is already available and merely try to fit lines and curves to what they see on the charts. I may not always be right, but I have a damn good understanding of the fundamentals what I do and how it works. When I am wrong, I make sure that I find out why and I take steps to correct that (and God knows I do make mistakes!)

So off you go now, the ball is in your court. Believe quantity or believe quality. No – you can’t take the middle ground – that’s just being wrong from both perspectives! I hoped you enjoyed reading this post as much as what I enjoyed writing it.

See you again soon.

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

Bit Brain recommends:

Crypto Exchanges:

Bitcoin and Cryptocurrencies 2020

Yes I am still alive. (Sorry to disappoint you politicians, mass media journalists, bankers and other scum – you don’t get off the hook that easily!)

My recent silence has not been voluntary, unfortunately I am once again looking after an injured wife. Sadly this takes up the majority of my time, but now that she is slowly on the mend, I will try to get
back to my neglected blogging.

Let’s take a holistic view of the markets, looking at Bitcoin in particular but also at a few related events/issues/etc.

The year started with a bang – a literal bang if your name is (was) General Soleimani of the Iranian Revolutionary Guard Corps. Let us pause for a moment on this single issue, because the ramifications of that attack are potentially far-reaching. I’m not going to go into whether the attack was justified or not, what Iran did to deserve it etc – go down that path and you get lost in the nitty gritty – that I will leave up to you to decide for yourselves. Since this post is more about BTC than about how the world works, I’ll skip the detailed political/military/economic analysis and will merely mention the high level interesting effects that I think this attack has brought to light.

Bit Brainian thoughts to ponder over:

  • Media coverage was immediate and widespread – to a disproportionate degree if viewed against similar events.
    • This is exactly like the disproportionate amount of coverage received by Greta Thunberg. If you want to know more about how and why this happens, then don’t miss this spectacluar eye-opener: “When Children Cry”.
  • Wars make a very useful national distraction for presidents who are struggling with domestic opposition – Clinton launched a similar attack prior to his impeachment trial.
    • If you want to unite a divided population, then few things work better than a war. People forget their differences when they combine against an external “threat” – whether than threat is real or just a perceived threat created by the government propaganda machine (like the “threat” posed by Jews to Germany in the WWII era).
  • This was an inflationary move (in terms of tension and military aggression) that will destabilise the world. There is no telling how far this destabilising effect will go – a chain reaction is hard to control. With the global economy already on shaky ground, the tipping point of grand-scale economic systems-failure could come sooner (weeks or months) rather than later (within a year or two).
  • Bitcoin price shot up due to instability and uncertainty – or FUD if you prefer. Such a rise is a panic reaction and is based on very little fundamental reasoning.
    • The goldfish-like memories of investors may soon fade, sending the price of BTC back down by maybe $500 to $1000.
    • Ironically the more intelligent long-term investors will have been buying up BTC for years because of long-term instability and uncertainty of the fiat-based markets.
  • It’s interesting to note how BTC was clearly used as a store-of-value as soon as an international crisis loomed.
    • BTC’s transformation into “Digital Gold” in the eyes investors has spread beyond the realm of early adopters and is entering the mainstream collective psyche.
      • …which just makes Peter Schiff’s incoherent panic-ranting look ever more pathetic!


My last post of 2020 “Bitcoin – Approaching 2020” showed how everything was running exactly according to plan and prediction. Well, it was running exactly according to MY plans and predictions – if you follow lesser analysts and their incorrect tales of weak TA fiction, then that’s your own problem.

The post mentioned above was published on 16 December and I haven’t actually needed to update you since then, because that post has been right on the money ever since. Let’s recap a little and see what’s happening now.

The day after I wrote that post I posted this Tweet:

16 hours after Tweeting that, the price of BTC hit a seven month low and turned (generally) positive. The prediction was based on a triple-line convergence point, the details of which may be found in “Bitcoin – Approaching 2020” and which remain valid.


Until BTC has conclusively broken through the top of the descending channel, the scenario that BTC may continue to trend downwards remains. I BELIEVE that the price movement of BTC (and of crypto in general) has now turned around, but at this stage I am still willing to concede that I may be mistaken – though the evidence suggests that I am not.

To break out of the channel, BTC will have to break through the red zone depicted on the chart below.

Note in the chart above that BTC price is currently well above my projected price line (yellow), so (as I said earlier) don’t panic if the FUD-based buying comes to an abrupt halt and the price drops into the mid $7000s.

On the other hand, this buying spree and obvious faith placed in BTC as a store-of-value may well trigger another bull run and send crypto prices to new ATHs. At this stage we can’t tell what will happen yet, so just keep calm and take it day by day, remembering that crypto investing is a long-term game.

The performance of altcoins in 2020 suggests that crypto sentiment has indeed swung positive. Those who didn’t pick up alts in December (or earlier) may have missed the best opportunity to do so, though seen in the greater scheme of things altcoins are still ridiculously cheap and are well worth buying! Just remember that many altcoins are utter rubbish (even some big name alts, hey XRP? Hey BSV?), so choose carefully. Sure, the price of the bad coins will probably Moon when the other alts do, but so did the price of BitConnect once upon a time…

With the apparent change in sentiment, I have begun constructing new positive Fib levels (as opposed to the negative ones I was using in the descending channel – as seen above). These are still in the test phase and will require considerable tuning before they start to yield information worthy of “prediction value”. For what it’s worth, my positive Fib levels look like this for now:

I will probably keep the positive Fib levels away from my primary BTC chart for the time being, until such a time as I have confirmed that the descending channel is no longer governing BTC’s price movement. Adding too much data to a chart just becomes confusing and is undesirable, the fewer lines there are on a chart, the more I can see.


As described in my older posts, I expect BTC to now hover just above my Long-term Base Trendline for the foreseeable future – probably most of 2020. At some stage (or possibly stages) BTC will rise sharply up from that line and we will have another bull market – probably an unbelievably strong record-breaking one. Maybe it won’t be one big one, but rather a series of smaller bull runs, much like the mini-run we saw in mid-2019.

Whatever the outcome, I remain more bullish on BTC than ever before. I’m a long-term investor, when I buy something I’m looking at least five years into the future, more likely a decade or longer. I got into crypto because I saw the long-term potential of decentralised blockchain technology, a potential which will surely be realised.

I think that 2020 will be the year that the masses warm up to the idea of BTC, this will be the year that Bitcoin moves from “geek money” to “legitimate alternative investment”.

Remember that crypto is only a part of a balanced portfolio. I believe that crypto is very important, but I also believe in not putting all one’s eggs in one basket. You can, for example, be a fan of both Bitcoin AND Gold, or even Bitcoin and Stocks – don’t let short-sighted fools like Schiff of Buffett polarise your views.

I wish you all a merry 2020, and I look forward to interacting with all of you wonderful blockchain-friendly visionaries over the course of the year.

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

Bit Brain recommends:

Crypto Exchanges:

Bitcoin – Approaching 2020

Oh how I wish we were seeing the kind of Bitcoin price action that we saw back in December of 2017! Alas, it can’t always be a bull market. However, while reading this post, remember that when looking at investments it is LONG-TERM performance that counts! Everything else is just “noise”.

Let’s fall into the trap of getting lost in some of that noise – just for the hell of it, and thereafter we’ll zoom out and see how the long-term market looks.

All is well

Everything is still going according to plan (almost uncannily so), even if the trend is negative. Counter-intuitively, this is a positive sign: a predictable market is more stable and easier to analyse accurately, it has less chance of giving (good) analysts a shock.

The current market has been incredibly predictable. My post of 27 November (uncreatively titled “Bitcoin – 27 November (Don’t Panic)”) shows exactly how predictable that market is, and how I am still calling the market today based on analysis that is now five months old. I strongly recommend reading that post as background to this one, it gives a much better indication of the age and accuracy of these predictions, as well as an explanation of what they are based on.


The yellow price prediction line seen in the post mentioned above is still in play. Remember: it is a rough indication of expected price movement – a “best guess” scenario and should only be taken as such.

The fact that it is still doing a good job 29 days after its creation is a positive sign. With BTC price sitting where it is right now, we can see that the prediction line is sitting about $500 below it. Again, don’t read too much into that, but – it is likely that price may drop another $500 or so before reaching the turnaround level.

The descending channel (you DID read that post I recommended earlier, didn’t you?) is still the dominant local price-governing pattern.

You can see my faint Fib-levels within the structure of the channel, levels which determine short-term price jumps, but which will ultimately become inconsequential in the long-term. Like other savvy investors, I have been making use of these levels to stack sats when BTC dips to the lowest levels, it helps a little with ROI in the long-term.


Looking at 2019 in isolation, it is noteworthy that despite not being a great year, BTC is up 91.69% from its start-of-year price ($3691.87 on Coinbase at 00:00 GMT on 1 January; measured to time of writing). Annual performance is a trivial and arbitrary figure, but the more traditional financial markets are fascinated by such numbers, so why not ask them how many of their assets can match that figure?

Far more importantly on this chart, we see the triple convergence point of three support lines: medium-term, semi-long-term and long-term. We are just passing the end of that convergence point right now!

An explanation of this convergence point can once again be found in the previous post, though we will cover it briefly on the next chart. The significance of passing this point is that BTC price movement should now turn positive.

Hark. Bit Brain has spoken.

“Turning positive” implies that BTC price will start to move towards the top of the six-month-old descending channel and eventually break through it. For what it’s worth, my charts place that breakout date in the second week of March 2020. Consider that date to be highly flexible, though it shouldn’t happen much later than that.


As I said above, this chart gives an idea of where the other two converging lines originate from (the third line of the convergence point being the base of the descending channel). This is why BTC is now crossing a triple-support threshold.

The “Long-term base trendline” is the most important of the three lines by a country mile. It is the only line that will carry and meaningful significance into 2020.

It is critical that BTC does not execute a definitive break through this trendline. At five years old, it has been Bitcoin’s reliable support level for half of BTC’s life, a situation which I deem unlikely to change soon. A small break below it (such as that of late 2015) is fine, but a big break would mean that all bets are off and that I need to go back to the analysis drawing board.

It is worth nothing that long-term BTC trends may curve slightly downwards as opposed to being straight like this trendline is. But beware of taking the majority of curved-line posts too seriously! I’m sure you’ve all seen the popular “stock-to-flow” charts circulating around; it’s a pity they are just very broad and largely useless “predictions” – much like a TA version of “psychic” readings or astrology. Perhaps I’ll write a post to debunk them sometime, or perhaps you can just read these two posts and figure the problem out for yourself: (in addition to the problem of the ridiculously wide channels they use – which still get breached.)

In fact, ENSURE you read those posts, since the economics behind halvings is still ridiculously misunderstood in the crypto space.


Passing the convergence zone today finally puts us back on the path towards higher prices. The mini bull run of May/June did us no favours – prematurely pushing the price of BTC high above the base trendline and causing it to fall for the remainder of the year. That fall should now finally come to an end, though is has already caused further damage (after that caused in 2018) to the altcoin market and its credibility.

I see this as a great time to buy: we are at the (probable) end of a descending channel, near the bottom of that channel and about to hit firm support and an upwards trend. The altcoin market lies in tatters, meaning that many literally unbeatable deals await the brave investor. Having spent a little money on large-cap alts recently, I think that I may be ready to chance a little on smaller cap coins now. The opportunity to buy into genuinely good crypto projects with a total market cap of $1 mil or less is too good to pass up on!

If anyone is going away soon and won’t be reading my blog for a while: I wish you a very Merry Christmas and a Happy New Year! Please travel safely and don’t do anything silly like drinking and driving. I did some of that in my younger days and it is nothing to be proud of – it’s just incredibly stupid and selfish. Be better than I was.

May Santa bring all of you big bags of cryptocurrencies!

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

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Bitcoin – 27 November (Don’t Panic)

I meant to type this post on Monday, but I was WAY too busy trading. Yesterday my usually quiet family suddenly became super-communicative – ruining my chances of getting a proper post out.

However, here IS a post at last. I believe this post is important to write because – as I often lament – the media is littered with ABSOLUTELY CLUELESS crypto analysis (some purposefully so, some real). I need to set the record straight and to remind people (in the words of the immortal Douglas Adams): “Don’t Panic!”

Background (important)

I need to stress that what has happened to BTC during the last few days is:

  1. Perfectly normal
  2. Expected

If you did not expect it, or if you don’t think it is normal, then I can only shake my head at you and make the universal disappointed clicking noises “tsk tsk”, because it means that you did not listen to Uncle Bit Brain. Maybe next time you will…

When reading and interpreting crypto predictions:

It is important to remember that crypto is inherently unpredictable and that even the best analysts (like me) can’t predict short-term events with a certainty of more than about 60%, even when they are very certain. With that in mind, remember that we WILL get things wrong and that our predictions DO change over time. But also note that the more long-term a prediction is, the higher the chances of it being right. It sounds counter-intuitive, but I can predict BTC prices in 2022 with a much higher certainty than what I can predict BTC prices next week.

Confirmations are vitally important in this game. My regular modus operandi is that usually see a pattern emerge, I wait a day or two for initial confirmation, I publish my idea and then I confirm it with increasing certainty as price movements tie in with my predictions. The confirmation process usually requires the fine-tuning of my predictions or, if they are not working out, abandoning my predictions altogether.

Now that you have the background, let’s look at BTC:


I have long been predicting the movements of BTC which we are seeing now. I’ve been Tweeting about them, blogging about them and displaying my ideas both graphically and in text form.

With this post I aim to set your mind at rest by showing just how far back these predictions go, and also showing you (once again) why you should always listen to Bit Brain…

To keep this post of realistic length, I’ve limited it mainly to graphical Twitter posts, with a few blog charts dotted in between.

The first time I correctly identified and wrote about the BTC descending channel was on 23 July. That’s really not bad (if I do say so myself); it was only this past weekend (four months later) that I first noticed most other analysts at last referring to a descending channel. Some still haven’t realised it… Here is my 23 July chart (from THIS post):

Price movements in early August confirmed the channel, and my faith in it grew (and allowed me to fine-tune it). This chart is from the 5 August post BTC – Beginning of the Week Analysis:

Further mid-August confirmations as BTC rode the top of the channel lower:

At this stage of the game I was still rather optimistic about price, not realising how long the channel would last (it’s now 5 months old, and will probably last for about another month).

September brought us another channel confirmation (with the possibility of turning it into a pennant):

This late September chart is the kind of information that I buy on: a well confirmed trend indicating that prices are relatively low, but can be expected to recover significantly at a later stage. I feel very comfortable placing buy orders based on charts like this:

…so confident that I can even risk missing out on mid-channel dips in favour of better opportunities later (not recommended).

October movements (the next two charts are from THIS post of 24 October) allowed me to modify my channel and to differentiate “Mean Highs” from “Absolute Highs”. Note that my channel has not needed to be modified since then.

Very importantly; October gave me an indicator that the channel was a long-term one and that I shouldn’t expect it to end before the end of 2019. That is still my current thinking.

When BTC dipped through a smaller local channel on 8 November, I was very confident that we would soon be heading down to the bottom of the main channel again. Once again I set buy orders with supreme confidence (note that “65%+”!) and realistic target prices.

Expecting the price drop, I pencilled in a rough sketch of an expected BTC price trajectory. It’s still on my charts today and I’m still using it as a realistic estimate of what may happen.

Which brings us to today:

Everything that is happening is ABSOLUTELY NORMAL and expected. I’m still perfectly happy with the channel and am confident in its long history of predictions and adjustments.

The keen-eyed may have observed that I have just placed my good old diagonal Fib levels on the chart – I believe that they may help a bit in predicting minor resistance/support levels while this channel remains active.

The medium-term chart gives better perspective and introduces a very interesting possibly coincidence/possible important indicator: the convergence of the bottom of the channel, a long-term support/resistance line and the long-term BTC price support line. No I did not cook the books, the lines just worked out that way. The chart after this one better illustrates where the latter two lines come from.

I think there is a very strong possibility that BTC will receive considerable support from the (white dashed) support/resistance line, as well as from the long-term base trendline. that means that BTC should continue to follow my rough little yellow prediction line, and that we should hit 2020 headed in a positive direction.

It also means that we may dip further during the next couple of weeks as the bottom of the channel continues towards lower lows. I expect a final trend reversal in the vicinity of 16 December.


  • It’s not about catching the very bottom of the dip, it’s about getting in at a good enough price. I would rather buy a few hundred dollars away from the bottom of the dip, than miss it altogether.
  • Many excellent altcoins are very near to All Time Lows. DON’T FORGET THE ALTCOINS! As I Tweeted yesterday: if you don’t buy them now, then when will you buy them?
  • Trade with your head, not with your heart.

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

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BTC update: 21 October

As BTC grows so it slows. This is a little frustrating to those of us who have grown used to the rapidly changing BTC market of old, but on the other hand, it’s a positive sign of adoption and of maturation.

While on that subject, I would like to remind everybody just how far we’ve come since late 2017 (when BTC was at the height of a major bull run). We may not see the developments taking place on a day-to-day basis, we may not notice how much the market has changed since then, but it HAS!

Think of the primitive wallets you used two years ago. Think of the clunky exchanges and their primitive user interfaces. Think of all the new crypto derivatives products, the regulations which make institutional investment possible, the constant mainstream news coverage. The price doesn’t reflect it, but crypto has made good use of the bear market and subsequent consolidation period. Crypto has grown – something that will stand it in good stead when hype picks up again. For example: Bitcoin’s hash rate is currently about six times what it was when BTC was at its All Time High. Crypto is fully ready for the next bull run, now it’s just a question of waiting for the investors to catch up!

Without further ado, let’s look at some charts:


My last couple of posts on Twitter have looked something like this:

It is my belief that BTC price is forming a bear flag, from which I expect it to drop into the low $7000s, possibly even into the $6000s if the $7000 psychological support level fails to hold.

For this reason I have made the mid-to-low $7000s my “Buy Zone”, while anything in the $6000s is my “Buy Like Crazy Zone”. I do not anticipate a scenario where BTC drops below $6000.

However, my already-published Bear Flag Charts can not be quite correct. I say this because BTC broke below their base this weekend, but then recovered. Analysing this, I have concluded that the most likely scenario is that a bear flag is still forming, and I have adjusted my charts accordingly to incorporate the recent price dip. My latest interpretation of the flag is depicted by the shaded rectangle on the chart below.

The most likely short-term future scenario is now that BTC will climb in price until it reaches the top of the flag again. This will occur at approximately $9000. Thereafter, BTC should drop back to the bottom of the flag and break through into the “Buy Zone” (at least I hope it will). I expect such a downwards break to occur in the last three days of October.

You may have noticed a thin, dotted, horizontal red line at $7600 on the charts, this is merely a price alert that I have set at that level. If it triggers, I will fine-tune my own buy prices, because I’m looking to buy from $7500 downwards.

Accuracy and probability:

My original bear flag was a text book example of a bear flag. For this reason I had fairly high confidence in it, though flag and pennants are never a sure thing. After the adjustment of the flag, it may be that it becomes more of a Descending Channel than a bear flag, but this doesn’t really matter because:

1) The outcome of the two patterns is identical,
2) The two patterns have similar levels of predictive reliability (around 70%).

Unfortunately there are many different possible scenarios that could occur from this point forwards. For this reason it is difficult to confidently predict any specific scenario with certainty. BTC may continue to rise now and break out of the top of the flag – destroying it completely, or it could continue sideways and begin to create some other pattern.

What I have described in this post in my best guess, based on current levels of market hype (low), volume (stagnant), previous price movement patterns and long-term trendlines. I am about 50% sure that BTC will take a dip to the low $7000s/$6000s, find the long-term trendline and then move gradually upwards again. It’s also worth remembering that during times such as these, markets often plunge unexpectedly, followed by a very rapid recovery. Such a price movement may move well beyond the levels predicted, and could be exploited by shrewd traders who have their order prices set to catch it.

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

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Buying BTC for Investors – Current Market

The market remains lacklustre, but relatively predictable. I’ve had more success with recent BTC price predictions than what I normally have – which gives me added confidence in my current buying strategy. This post explains that strategy.

It’s no secret that I have had BTC buy orders in the $8000s for a good few weeks now, if not months. I constantly check the charts and update my TA in order to ensure that my buy orders remain valid. At the moment, I am happy that they are set at the right prices. I will now explain why:

Firstly, take note that I have done away with my regular diagonal Fib levels for the time being. As the bullish price action drew to a close, so those levels started to lose their relevance. The nature of the current market correction is such that diagonal Fib levels no longer a reliable means of price prediction. Obviously this will change at a later date, but for now I find no value in using them.

I predicted a BTC reversal of fortunes and a price drop over the weekend (on Twitter and in the TIMM Trading Pits). That price reversal/drop occurred late on Friday.

Calling the price turnaround was not hard, the TA was pretty clear. What is still unclear for now, is whether BTC is in a bearish converging triangle or a negative channel. Fortunately this doesn’t matter much – as the outcomes of the two are fairly similar – at least for investors.

Below we can clearly see how BTC respected the top of the channel/triangle and became negative – a trend which should now continue for the remainder of the working week, possibly longer.

Made by Bit Brain with TradingView

It could be that the top of my channel/triangle is not correct (because I have excluded short-term outlier candles), but thanks to the latest data, it looks as if making the top of such a channel/triangle less steep does not tie in with the observed price movement data. The upper limiting line which I have created ties in nicely with the bottom of the channel, i.e. it runs parallel to it, giving credence to my theory that what looks like a triangle may still be a channel.

Made by Bit Brain with TradingView

Channel or not, we are seeing support at $9500 – giving credence to my theory that BTC may be in a triangle despite looking as if it is in a channel. Looking at the bigger picture, I see no reason why BTC can’t be in a triangle within a channel – which I now believe is actually the most likely state of affairs.

Upon reaching support at $9500, I believe there is a good chance that support will not hold (as indicated on the chart below). Perhaps I’m wrong and it will hold. Perhaps BTC will bounce back up to the top of the triangle, before turning negative again. Much like I said in my post a week ago, other indicators such as trading volume and various momentum indicators show that a positive breakout for BTC is very unlikely at this stage. What this means is: if BTC does not break downwards through the bottom of the triangle this time, then it will probably do so the next time it tests the $9500 support level.

Made by Bit Brain with TradingView

Looking at the chart above in more detail, we can see a historical support level exists between roughly $8100 and $7500. Provided that BTC price does break lower, I expect this support level to arrest the drop in price. Should it fail to do so, then price should stop dropping when it reaches the bottom of the channel – roughly at $7000 (that price changes over time due to the downwards slope of the channel).

So where should an investor look for a buy point?

Bit Brain’s BTC Buying Tactics

There is a risk that BTC hits the bottom of the triangle, and then bounces back upwards, never to return so low again. Chances of this happening are slight, but not negligible. For this reason it may be a good idea to buy at the turnaround point of $9500. I am making $9500 an “Optional Buy Point’ for myself. 

If BTC price decline slows significantly as it approaches $9500, I will assume that it does not have the momentum to break through, and will set a buy order just North of $9500 to avoid missing out on the dip. This will not be a big order – perhaps about 20% of my allocated funds – because there is still a fair chance that price will drop lower later on.

However, if BTC approaches $9500 at speed, chances are that it will shatter the support there. In such a scenario I will not buy at $9500, instead I will wait to buy in the $8000s, as I have been for the last couple of months. Since there are no other meaningful support levels in the area, I will not buy in the low $9000s. If BTC does break downwards through $9500, it should hit the $8000s – which is where I will start buying (as indicated on the chart below).

Made by Bit Brain with TradingView

“Buy Zone 1” is my main buying zone, it lies between $9000 and $8100. I plan to spend 60% of my allocated BTC buying funds there – with the option of spending more if it looks like BTC won’t go any lower than $8000. I have buy orders at around $8900, $8500 and $8200 – these vary as my local currency fluctuates against the dollar, so I have to adjust them from time to time. At $8100 we once again encounter historical support – so that is where I stop buying.

Should BTC break through that support, I will be ready to pick it up at prices of between $7400 and $7000. This is “Buy Zone 2”. $7000 is the bottom of the channel (at least for now). If BTC fails to reach Buy Zone 2, then I will spend all of my BTC buying funds as the price moves back upwards through “Buy Zone 1”.

I do not see a scenario where BTC will drop below $7000. Firstly, because $7000 is the bottom of the channel, but secondly (and probably more importantly), because BTC can’t drop below $7000 without breaking through the Long-term Base Trendline. (as seen below).

Made by Bit Brain with TradingView

The Long-Term Base Trendline is four years old and well established. It is highly unlikely that BTC can remain below the level of this trendline for very long. As a side note: I believe this trendline to be a measure of BTC adoption as well as the baseline from which any rally is launched. Interestingly, if I’m right about that, it means that reaching the trendline indicates that there is no hype in the market at that time.

If BTC does break though the long-term trendline, it will become incredibly unstable and likely to bounce back fast and hard. It also means that I will be willing to place even more money into it – money I will rob from my normal fiat money savings accounts. Obviously this is risky and not something I would recommend for most people. I’m telling you what I will do under such circumstances, not what you should do. 

This unlikely buying opportunity is labelled “Unlikely Buy Zone” on the chart below.

Made by Bit Brain with TradingView

That rounds up my latest weekly look at BTC. As for the rest of the market: altcoins remain in decline – providing excellent buying opportunities for shrewd investors who are willing to do their homework. In the bigger picture, I watched in amazement late last week at how money floods out of stores of value and back into the fiat-based markets on the slightest little whiff of optimism wrt US/China trade talks. They’re not even building a house of cards anymore, they’re building a house of rice paper. And it’s starting to rain…

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

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Bitcoin Technical Analysis – 02 September

In “BTC analysis – 26 August” I updated my latest thoughts on Bitcoin’s medium-term movements. Since then a price reversal in the $9300s has forced a reassessment of that situation.

Previously I spoke of a bull flag. That flag was forming in a descending channel and was adhering to diagonal Fib levels as it did so, something like this:

But what appeared to be a series of higher lows caused me to reconsider and change the flag into a pennant, as seen in my BTC post last week:

Now things have changed again – or at least may be about to change.

The price movements of this last weekend may have altered the bull pennant into a more bearish converging triangle pattern.

At this stage we require a confirmation move, which we will get, one way or another.


The chart below shows the two main scenarios that we may now be dealing with.

In Scenario 1 BTC is forming a converging triangle with a near-horizontal base. Scenario 1 will be confirmed if price continues to rise to about $11000.

In Scenario 2 BTC is still in a descending channel. Scenario 2 will be confirmed if BTC ceases to rise well short of $11000 and then falls below $9300 for a sustained period (more than just a few hours).

Scenario 1

If Scenario 1 is correct then it is most likely that BTC price will remain in the triangle until the final quarter of 2019, after which it will probably break downwards. We can see that a downwards break is more likely, because a flat-bottomed triangle is an indication that support is continually being tested. Eventually that support “runs out” (as buy orders are filled and traders decline to place new orders that high in a market which is turning bearish). In addition to that, most momentum indicators (such as the MACD, RSI or long-term MAs) will show that momentum is becoming/has become negative. Most telling of all is the volume, which is still steadily declining.

In the likely even that BTC does break out of this (unconfirmed) triangle in a downwards direction, the big question will be “How Low?”
Recent support lies in the high $7000s/low $8000s. That is enough to catch the dip, but don’t get a shock if it fails to hold there. If support breaks, then the next recent support level only lies at $5600 and below. I think that any dip that low will be very short lived. If you do see BTC that low then buy like crazy! Between the high $7000s and $5600 is another possible support level in the mid to low $6000s. This is the support level established in 2018, though its continued existence is uncertain because:

  1. It broke conclusively in November 2018.
  2. No resistance was encountered at that level when BTC climbed through it in May of 2019.

After the dip, we can expect a rapid recover and then a steady climb along the long-term base trendline for BTC – until the market turns properly bullish and hype sets in.

Scenario 2

If Scenario 2 is correct, then BTC will most likely decrease in price all the way to the bottom of the channel. Since the channel is downwards sloping, the price level at which BTC hits the bottom of the channel continually decreases over time. Were price to reach the bottom of the channel today, then it would be at around $8000. But if it only reaches it a month from now, then it will be in the mid-$7000s.

Scenario 2 is still reminiscent of a bull flag, which means that it precedes a swift increase in price after hitting the channel bottom. It is unlikely that price would then bounce up and down for yet another cycle within the channel, that would be too unusual.


I consider Scenario 1 to be a very likely Scenario. I allocate a probability of 55% to Scenario 1.
Scenario 2 is not very likely anymore. I allocate a probability of 20 % to Scenario 2.
The remaining 25% is for “something else” – an as yet unforeseen price movement or variation of one of the above scenarios.


Whatever happens, I am predicting a relatively bearish two or three months. I think we will see a decent sized dip soon. I have been waiting with Buy orders in the $8000s for a few weeks now. Depending on what happens next, I will consider shifting some or all of those orders a bit lower, and/or perhaps placing additional Buy orders at even lower prices.

I do not see the market really picking up before December 2019 at the earliest, but on the other hand, I’m predicting a stellar (not Lumens) 2020 for BTC and crypto in general! For now I will continue to stack little bits of BTC if I can afford it, AND ALTCOINS! There is blood on the streets, this is the time to accumulate alts!

Yours in crypto

Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

Bit Brain recommends:

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BTC analysis – 26 August

Until now I have been analysing the BTC movements from late June to date along these lines:

(Taken from this 5 August post):


But the price movements of the last few days are indicating that a channel (or possible flag) may not be the correct way to view BTC at the moment.

Instead, BTC now looks to be limited by the rising base of a converging triangle, as opposed to the descending base of a channel:

Made by Bit Brain with TradingView


The triangle itself is neither inherently bullish nor bearish, so in isolation it tells us nothing about the direction of future price movements. What it does do is give us a time: soon. Price is already in the breakout zone of the triangle, and should breakout any time between now and mid-September.

Previously I was of the opinion that the channel was probably part of a larger bull flag pattern.


But now it looks more likely to be a bull pennant:

Made by Bit Brain with TradingView

But now it looks more likely to be a bull pennant:

Since these two patterns predict the same bullish outcome, this doesn’t fundamentally change my medium-term outlook. This may make a difference to those trading the pattern, but as my blogging is generally geared towards investors, I consider that to be beyond the scope of this post. If you are a trader, then take a look at the posts or videos of an analyst such as Working2005 who regularly discusses crypto trading.

For my part I am not ready to see this “2019 bull run” continue yet. As I discussed in my recent “Crypto Market Cycles” series, I am still expecting a drop before we have another rise. This is somewhat contrary to what a bull pennant may indicate, but I have my reasons for saying so.

Volume is declining slowly but steadily, which puts BTC at risk of a sudden drop. Such a drop would tie in nicely with the information I discussed in “Crypto Market Cycles”, where I showed BTC to be trading at a higher price than what we would expect for a low-hype market:


I addition to this, I still believe that the current price movement (of the last couple of months) strongly resembles those of 2017:


…meaning that a strong and sudden dip could well occur soon. I am expecting such a dip. It is only after such a dip that I expect prices to climb again – as predicted by a bull pennant. This won’t necessarily be a “bull run” per se – just the following of the general BTC base trendline further upwards.

The bull run has yet to come…

Yours in crypto
Bit Brain

“The secret to success: find out where people are going and get there first”
~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful”
~ Bit Brain

Bit Brain recommends:

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BTC – Beginning of the Week Analysis

So far, BTC has been bullish in August of 2019 (well – actually since the final day of July).

As usual, the mass media is throwing its theories around (such as THIS one) as to why this may be. Most of them are wrong, but let them throw their theories around anyway – it keeps them busy.

Looking at the market broadly, I would suggest that investor confidence is still relatively shaky, despite good 2019 BTC gains. This is evidenced in the poor performance of altcoins, a good indicator that “Adventurous” and “Confident” are not words to be attributed to investors at this point in time. Instead, I think that BTC price has been growing on the increase in trading volume alone (i.e. increased adoption): by now you are all well aware that 2019 volume is massive – even when compared to that of the 2017 bull run. (See volume on chart below)


Exciting news! I have started working on a new cryptocurrency metric: a quantitative metric used to determine the investor confidence of the market. Honestly I haven’t checked if such a metric exists yet, perhaps I am just re-inventing the wheel. It’s not the “Bitcoin Misery Index” (I’m using a very different method to what Thomas Lee uses) – but it will give similar results. Either way I’m still busy developing it – learning (mostly by trial and error) the right formulas to use in Google Sheets to make it work. Hopefully I will have it finished soon – I’ll be sure to show you the results when (if?) I do finish!

Back to BTC:

While the ever-fickle media with its goldfish-duration memory is certainly suddenly bullish again, I caution against becoming bullish too fast. The charts below will show you why.

BTC has been in a channel for about a month. Back in this post of 16 July, I identified the top of the channel, but the bottom had yet to be formed, so I took it as a pennant instead.


This made me bullish on BTC in the medium-term, though I soon found out that my pennant was not a pennant at all. Strangely, this has no affect on my medium-term projections for BTC.

Later on BTC dipped, thereby forming a channel, which I then indicated in my 23 July postwhere I concluded that BTC may be forming a Bull Flag.


While BTC has not dipped all the way back down to the bottom of that flag/channel, it has also not yet broken free of it.

Here is BTC today:

As you can clearly see on the chart above, BTC is at a turning point. Either it can breakout of the channel and climb, or it can dip sharply back downwards. I will only turn bullish if BTC breaks out of the top of channel and stays out for a day or more. Obviously this is short-term bullish, in the medium and long-terms I am bullish thanks to the bull flag and to the fundamentals of BTC respectively.

Should BTC fail to breakout, then the rejection dip should look something similar to this:

The bottom of the channel also coincides nicely with an already-consolidated support/resistance level in the mid-$7000s to mid-$8000s region. This will provide strong support and should prevent BTC from breaking through the bottom of the channel if it does head back in that direction.

Having said that: take note that similar price movement patterns in 2017 did sometimes end in a flash crash, followed by an equally rapid recovery (the crash and recovery taking only 2 to 3 days in total). The chart below from “Bitcoin – possible next moves” illustrates what I am talking about. See that post for more details and further examples.



If BTC does breakout within the next day or two, then we may well see an new 2019 BTC high this week. The next most likely option is that it will drop down to the bottom of the channel – still remaining within the confines of the Bull Flag and buoyed by the consolidation which took place in May/June.

Percentage allocation for possible future BTC price movement:

  • BTC breaks out of the top of the channel: 35%
  • BTC heads back down to the bottom of the channel, or perhaps the 0.786 retracement level (as it did last time): 30%
  • BTC heads back down and breaks through the bottom of the channel: 10%
  • Something else (e.g. Sideways movement, movement along diagonal Fib lines): 25%

Yours in crypto
Bit Brain

All charts made by Bit Brain with TradingView

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

Bit Brain recommends:

Crypto Exchanges:

Bitcoin – possible next moves


Bitcoin continues to tread water – with gradual negative changes to its buoyancy

Here is what I think may be happening now, and what may happen next.

As BTC is clearly no longer rising in price, I have abandoned my bullish channel diagonal Fib levels and have replaced them with downwards sloping diagonal Fib retracement levels.


Viewed in the medium-term, the new levels look like this:


Seeing the above chart, my immediate thought was that BTC may be forming a bull flag. If it is a bull flag, then the most likely next move would be for BTC to break upwards out of the flag and to continue rising on the previous trajectory. This is not to say that BTC will not dip further before that happens.


My confidence factor wrt the bull flag scenario is not extremely high, it’s more a possibility than a probability. I place a likelihood of 40% on it being a bull flag. Because of this I would be cautious in trading it as a traditional bull flag – not that I trade BTC anyway, because I’m a hodler by nature.

Bull flag or not, BTC is dipping at the moment. While the drop in price may be arrested sooner, the new diagonal Fib levels indicate a possible bottom at around $8800. Remember that the Fib levels are sloping downwards, so if BTC dips later than expected, or if it dips again after that, then $8800 will no longer be the bottom of the dip. If BTC were to dip again in August, it would only find support in the $8500 – $8000 region.


Another thing I can’t help noticing is the similarity between this price movement, and that of various BTC price movements in 2017. Here is what BTC looks like now:


And here are similar BTC patterns from 2017:


…and similar patterns from earlier times too.


The important take away message from this is that this pattern is invariably seen during bull markets and usually precedes a price climb – before it reoccurs.


I can’t tell what BTC will do next, but I am expecting a dip. After the dip there may well be another dip, or even multiple dips before BTC climbs again. It looks as if BTC will resumes its climb after the upcoming dips.

I think we are seeing a consolidation period, a time when weak hands are selling their 2019 gains and stronger hands are replacing the weak ones every time the price dips. Once this transfer process has completed, strong hands should dominate and the climb should resume.

I still think that 2019 bullishness kicked in too soon. The 2018 bear market is still fresh in the memories (and on the charts) of most investors: a reminder to be cautious. This is causing the price rise to be a case of “two steps forward, one step back” which is probably a healthier way to climb than an all out run to new highs. Consolidation makes a climb more sustainable, less volatile and less likely to lead to a big crash at the end of the climb – so it’s a good thing for investors.

Even though I am out of spending money, if BTC dips into the $8000s, I will consider using some of my fiat savings to buy more. This reasons for this are twofold:

  1. BTC has become more legitimate than I expected, sooner than I expected. It features prominently in mainsteam media and is often commented on by world leaders. Whether the press is in favour of it or against it, the exposure is good for BTC and the man in the street is starting to view it as a real contender/threat to fiat money.
  2. My faith in fiat diminishes by the day. Unfortunately, the majority of my saving are still in fiat. I am actively seeking good stores-of-value to place some of my fiat savings into. Crypto is risky, so one must be very careful about shifting money into crypto, but if I am going to be taking money out of fiat, then I might as well put a little more of that money into crypto. The rest will probably go into precious metals, I’m still busy deciding and watching the markets closely.

Yours in crypto

Bit Brain

“The secret to success: find out where people are going and get there first” 

~ Mark Twain

“Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful” 

~ Bit Brain

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