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:

Forecast:

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

Bit Brain recommends:

Crypto Exchanges:




Cryptocurrency Quarterly Report – Q3 2019 (by CoinGecko)

Hooray, it’s that time of year again!

The time of the next CoinGecko Quarterly Report on cryptocurrencies.

Bit Brain readers may remember that I’ve spoken about CoinGecko Quarterly Reports before. Back in July I wrote this post “Cryptocurrency Quarterly Report” about the Q2 2019 CoinGecko report.

As before, I want to use this post to give you an idea of what is in that report, so that you can be sufficiently tempted into reading it for yourself. Once again I want to start by praising the high quality of the report, and stating what a smashing job CoinGecko does in the cryptospace. CoinGecko remains Bit Brain’s go-to site for general crypto information – especially related to token/coin prices and trading. The reason I use CoinGecko so much is simple: it is the best site.

Remember that I don’t work for CoinGecko, they don’t pay me to write this, and I’m not affiliated with them in any way (not that I would object to any donations *cough cough* ? ). What I write here is thus an honest representation of my findings and experiences. With no further ado, let’s take a look at what can be found in the Q3 Quarterly Report.

CoinGecko Quarterly Report for Q3 2019

Firstly – where do you find it? On the CoinGecko site, click the three horizontal dots in the main links bar and select “REPORTS”. From there you choose the latest report “Q3 2019 Report”, and voilà – the information is yours to absorb!

The CoinGecko team have stuck with the formula of producing something long enough to be complete, but short enough so as not to bore you. As before, this report is comprised mainly of diagrams, charts and infographics, as opposed to boring walls of text. The report is 53 pages long (“slides” is probably a more accurate term than “pages”), of which about 5 pages are non-content intro and outro sections. etoro has sponsored this report, so thanks to them for that..

This report begins with the usual “Founders’ Notes”, whereafter it dives into its first major topic: Market Dynamics.

The Market Dynamics section is ten pages long, and is a must-read for crypto aficionados. Much of the information will be old news to those who watch crypto closely, but even so there is value to be had from seeing this information from CoinGecko’s perspective. Even arrogant people like myself can appreciate an objective and intelligent overview of the crypto market when presented in this manner.

I find that such information helps to put things into perspective and to check that my own predictions are in keeping with a realistic and unbiased view of the future (and past).

The next section of the report deals with CoinGecko’s unique “Trust Score”. While I have already reviewed CoinGecko’s Trust Score in detail, that was during its infancy and much has changed since then. For those who may not know: CoinGecko assigns a score to each trading pair for each cryptocurrency listed on its site. How they arrive at those scores is briefly outlined in this report. They indicate the differences between their new Trust Score 2.0 and the previous Trust Score 1.0, as well as mentioning upcoming features to be integrated into the Trust Score system.

The next major section of the report is dedicated to Derivatives.

Crypto derivatives are becoming ever more popular, especially as crypto companies are eventually starting to get approvals from conservative regulatory bodies such as the United States SEC.

On a personal level I should state that I am not a fan of any form of crypto derivatives and that I don’t use any of them. It’s not that I don’t trust them, it’s just that I am opposed to a system that deals with derivatives as opposed to the underlying assets. I believe that many of the problems of current fiat systems are tied to a runaway derivatives market.

My old-school beliefs aside, derivatives are exciting for crypto and are an indication of a more mature market that should gain more credibility and public acceptance. They also provide new on-ramps into crypto. Much good can come from crypto derivatives, such as greatly increased publicity.

For those who are keen to start trading derivative but don’t really understand them; CoinGecko gives a fairly complete high-level overview of crypto derivatives. You will be introduced to all the major types of derivatives and the terms associated with trading them.

The explanations are very simple and are written for the layperson, so most people should have no trouble understanding them (see the pumpkin-based example below which explains how Futures contracts work).

For more experienced traders there is a “Derivatives 201 – Serious Traders’ Handbook” section. It’s also not rocket science, but explains some of the more advanced terms of derivatives trading.

The Derivatives section of report ends on an exciting note: that CoinGecko is working on their own Derivatives Market tracker (much like their existing coin tracker). If you want to see a screenshot of what it looks like in prototype – then go read the report!

The News section of the report deals with the big news stories of the quarter, just a very short introduction into each. I learnt that I had missed news of a “shitcoin index”. Interesting…

This page dedicated to Binance shows just how much binance has been up to in the last quarter: quite amazing!

I keep suggesting that Binance Coin (BNB) is a really good coin to hold…

I would love to see a similar slide for KuCoin, that exchange has been REALLY active in the last quarter! (How about it next time CoinGecko?)

While you’re out buying BNB (at ridiculously low discount prices right now), you may want to check out some (far cheaper) KuCoin Shares (KCS) too…

The next big section of the report deals with DeFi (Decentralised Finance). DeFi has quickly become a buzzword in the crypto community, though it remains poorly defined and possibly misunderstood.

The CoinGecko Report delves into with DeFi in surprising depth, and should therefore give anyone a very good idea of what it is, why it exists and what it means to the future of finance.

DeFi should be old news to the crypto stalwarts, but will be valuable information to those who have only started learning about crypto this year.

The final main section of the report deals with DApps. A series of tables and charts analyse DApps by blockchain, activity and type. This is probably my least favourite section of the report, because I would like to see more of the big name blockchains added to it. Having chains like TOMO and IOST in the report while excluding chains like NEO, Waves or Cardano makes little sense to me. I know that Cardano is largely a bunch of unmet promises, but it still has a very high market cap. It would be good to include it – if for no other reason than that its over-optimistic bag-holders realise that…

The report finishes up with a brief look at the CoinGecko Changelog platform hosted at Coindesk’s “Invest: Asia”.

Finally there is the usual page with links to their (many) social media accounts. I follow them on Twitter and STEEM and I have an account on CoinGecko itself. I also use CoinGecko API calls for my personal crypto-tracking spreadsheets.

Conclusion

Well done to CoinGecko for producing another very fine market report. For those who haven’t read one before, I suggest you take a look at it. For those who don’t use CoinGecko, I strongly suggest that you do. Since I started using CoinGecko as my main coin tracker (about a year ago), I haven’t looked back.

As we move into the final quarter of 2019, I expect to see the market take its final dip before finally turning around properly. Altcoins are well overdue for some serious attention, and have been heavily neglected and even openly mocked throughout 2019. That situation will not last, and while I think that BTC will have to regain popularity before altcoins do, I think that this final quarter is the period where that process will begin. We should have an exciting Q4 of 2019 – but not nearly as exciting as what 2020 will be… I hope to see some increasingly bullish CoinGecko reports next year!

Yours in crypto

Bit Brain

All images are taken from the CoinGecko Quarterly Report for Q3 2019. Note that Bit Brain has been granted permission by CoinGecko to use their images.

“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:




CryptoMood – an app review

Note: This post is written as an entry into the CryptoMood Content Competition hosted on Trybe. Why don’t you make a note to enter it yourself? Prizes are pretty decent and you have until the end of October to check CryptoMood out and to write your own review.

Let’s begin

The competition rules state that this post/review “should be written as an answer to the question “What would you have done if you had access to CryptoMood 3-5 years ago?” “

I’m going to make things really simple by answering that question immediately. My answer is this:

“I would use it the same way as I do now.”

This post tells you how I use it

I’ve been trialling CryptoMood for well over a month now, and I can happily report that it has passed the Brain Test.

What’s the Brain Test?

Like most ancient people (I’m in my 40’s), I’m stubbornly set in my ways: I like what I like and I don’t want to move outside of my comfort zone. I stick with what works for me.

But: I’m also well aware that technology moves ahead at a rapid pace, and that you neglect it at your own peril. I look in dismay at Octogenarians in my own family at the moment: at risk of being cut off from the world because they can’t send a simple e-mail message or operate a touch screen phone.

True story: A year or two back, I setup a laptop for a certain old lady. ALL she had to do was turn it on – one button. I configured it to boot up, connect to the internet through her cellular dongle and open her e-mail program for her, all without displaying any pop-ups or screens where she had to click “Okay” or “Yes” or anything like that. It was still too confusing for her, she still managed to get it wrong.

Trying not to end up like the poor little old lady I just spoke of, I make a habit of continually trialling new things. I keeps me abreast of the latest developments and teaches me how to use them. It also gives me a good idea of what is unique in the market, what works (or doesn’t work), and most importantly: what I should continue to use (and what I should just ignore).

This last part is the Brain Test. To have ‘passed the Brain Test’, means that something has been used by Bit Brain throughout the trial period, and now continues to be used by him. CryptoMood has passed the Brain Test.

Look, I’m not here to shill products, you know me better than that. I’m not saying that you must use CryptoMood. I’m not saying that it is my number 1 crypto tool or even that I use it daily. My primary crypto TA tools remain the raw charts. For monitoring the prices of coins, I still use CoinGecko. My primary FA tool remains the many crypto news sources which I check continuously.

What I’m saying is that CryptoMood does have value to me. Like most tools, there is more than one way to use it, it certainly offers more than just one function.

Personally, I use it mainly in two ways:

  1. Crypto Market Sentiment Analysis
  2. Missed News

Crypto Market Sentiment Analysis

CryptoMood does this very well, in fact, it’s designed around it. The app correlates news stories about different cryptocurrencies and then obviously performs some sort of quantitative algorithm on them – thereafter allocating each a score of “positive”, “negative” or “neutral”. That’s not really the part I use, as I already read most of the important crypto news reports (or in some cases just the headlines). The part I like are their sentiment charts:

The sentiment charts are a graphic format of the above-mentioned news analysis, as well as a chart of social media interaction.

To me, there is not that much value in tallying up number of positive or negative news stories about a coin. Obviously if a coin is, for instance, openly discovered to be a scam, then all the reports will be negative and that will be indicated as such. But in general the news reports we read tend to be subjective. It is more important for me to read the context of such information in the full news reports and to ignore the extremely large number of very poor crypto journalists out there, than what it is to see such information correlated into a single positive or negative news sentiment score. Mainstream financial journalists are notoriously poor at any form of crypto reporting.

Of much greater value is the social media score. There is a direct correlation between how often a coin is mentioned on social media and how popular it is at that time. For example: Chainlink has been trending lately, and we saw how that affected its price (even though it ended up climbing too high and “bubbling” a bit). Ravencoin would be a similar recent example.

Because markets are fickle, that which receives the attention at the time has got a far greater chance of rocketing up in price than what other coins do. For this reason, when social media sentiment on Cryptomood goes up, then one can expect the price of a coin to follow suit. Obviously the rise will not last forever. Social media trending will remain high as FUD sets in, and will continue to stay high when the bulls and bears fight each other during the inevitable price correction – so a modicum of common sense is still required when interpreting the charts.

Nevertheless, I find this feature to be very useful and it is one which most often prompts me to open my CryptoMood app.

Missed news

Though I read a lot of crypto news, I don’t read all of it. I also don’t follow every news service. Some days, when the market looks very dead (as it has done a lot of recently), I don’t even bother reading the news at all. This is when CryptoMood once again becomes very useful.

CryptoMood consolidates important news and presents it in a format that I can easily use to get myself up-to-date. It does this in various ways and you can pick which of them suits you at the time.

You can catch up on the days headlines, the latest social media posts or the trending headlines. Even better, you can select which one of the major coins you want to see news for, or you can see the news for all of them at once.

It is worth nothing that CryptoMood doesn’t have news for all the coins, but it does a good job of catering to most of the big names. You can make a Watchlist of the coins you are interested in, and then select which one you want to see news about from your homescreen. At the moment there are 18 coins to choose from. Note that the focus is definitely skewed towards the bigger name coins. For example, there will be no lack of Ethereum news, but you may struggle to find much happening in the Ontology feeds. Hopefully the smaller coin newsfeeds will be developed over time. In addition to giving you the news from your watchlist coins, CryptoMood will also tell you which coins are trending in the news, which is a useful feature in its own right.

Those are the two main things that I use CryptoMood for. But before I go, I should mention that there is a feature which allows you see the amount of crypto senton exchanges vs the amount of crypto withdrawn from exchanges to wallets in the past 24 hours. I’d be lying if I said that I used this, but for regular traders this could be invaluable information.

In conclusion 

CryptoMood forms a part of the very small group of crypto apps which I keep on my phone. That alone is high praise coming from me. I suggest that you check it out if you haven’t already done so. It’s free and easy to use, so what have you got to lose?

Yours in moody crypto

Bit Brain

Attribution: all screenshots from the CryptoMood app. Available on Google Playstore. Featured image from https://cryptomood.com.

“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:




In Case there was Ever Any Doubt

Only a fool is supremely confident in themselves

(think of the politician of your choice as an example)

Even I (for all my arrogance, experience and intelligence) frequently question myself.

I predict a lot of upcoming doom and gloom for the fiat-based markets of this world. I know I’m not the only one who does this, but that doesn’t make me right. On the contrary: life has taught me that the majority are usually incorrect on any specific point-of-view.

The internet is packed full of conspiracy theories, some with merit, most without. I believe that it is important for me to “check my compass” often, to ensure that I have not strayed from the path of truth and down some rabbit hole dug by someone wearing a tinfoil hat.

So even when I say that financial markets are on the brink of collapse, that debt to GDP ratios are unsustainable, that control of interest rates and market liquidity is about to be lost, that major banks will go under, that the derivatives market has spiralled out of control, that lending is once again reckless and irresponsible – even though I can support all these statements (and many more!) with a long history of evidence, I have to stop and ask myself “Am I sure?”

Yes.

I’m sure.

I’m sure I want to get out of fiat. I’m sure fiat markets are nearing the top of an enormous bubble. I’m sure that far too many people are making far too much money far too easily. I’m sure that it can’t last.

Today I want to share with you just one little shred of evidence, one which I accidentally happened to stumble upon yesterday.

I’m a car nut

Before I could gurgle my first words, I loved cars. I have been learning everything I possibly could about cars from as soon as I was first capable of communicating. That continues to this day. It was during the course of such a “learning session” yesterday that I read a very specific number, one I had heard before, many years ago…

Of all the cars I know and love, the supercars have always been my favourites. The supercars are the ultimate road machines, engineered above and beyond everything else, designed to define the limits of speed and handling. They are the benchmarks of the industry.

Growing up it was easy for me to know the supercars: there were so few of them. There was the Lamborghini Countach, The Porsche 959, the Ferrari Testarossa and… yeah that was about it.

And that’s the way it remained for some years. Eventually we started seeing cars capable of hitting magical figures in the 200 mph (320km/h) region: the Ferrari F40, Lamborghini Diablo, Jaguar XJ220 and Bugatti EB110. But while these cars were household names and the dream of every car-crazed kid, they didn’t sell well. 

The thing about the best cars in the world is that they are incredibly expensive.

  • Only 1311 Ferrari F40s were produced.
  • Porsche only produced 300 production model 959s – each of which it had to sell at about $225000 – less than half the cost of producing each car!
  • Lamborghini sold 2900 Diablos, but took over a decade to do so.
  • Despite being a critically claimed masterpiece, Jaguar failed to hit its 350 car target for the XJ220. It built only 281 cars – and then struggled to sell the last few. They remained on showroom floors three years after production ended.
  • The Bugatti EB110 was the fastest of the lot – you’ve probably never even heard of it. Only 139 were built before Bugatti went bankrupt in 1995.

There just wasn’t enough money around to keep so many supercars in production. Times were hard and even the best engineering money could buy was not enough to save some cars from being prematurely discontinued.

History is made

And then the car world changed forever

Prior to 1992, the title of “King of the Supercar World” was debatable. There was no clear leader of the pack, no definite winner. That changed…

In 1988 a Formula 1 car designer named Gordon Murray had an idea for a revolutionary new supercar. Fast forward four years and his vision was born as the McLaren F1 – publicly launched in May of 1992.

Now this is not a post about the McLaren F1. I could happily speak about the car all day, but I will try to refrain from doing so. 

What is important is that you realise just what a massive departure the F1 was from the supercars that came before it. Its technology was cutting edge with things like a carbon-fibre monocoque chassis and a gold-foil lined engine bay (for heat dispersal). It featured luxuries such as air-conditioning (very uncommon back then), a variety of unconventional lightweight but strong materials such as kevlar and titanium, and a seating arrangement whereby the driver sat in the middle of the vehicle, with a passenger seat slightly behind and to each side of him. The engine was a specially built BMW plant, revered to this day for being a conventional engine. Murray refused to use superchargers or turbochargers because of the way they affect the drivability of a vehicle.

The F1 immediately became the new benchmark, the indisputable “King of the Supercar World”. It set speed and acceleration records which remain impressive even by today’s standards. Even now, in 2019, there are few supercars that can match it, it’s still one of the fastest naturally aspirated cars ever built. In addition to that, it handled like a dream and of course it had the brakes necessary to match its extreme potential speed.

To this day the McLaren F1 remains a legend in the automotive world, probably the most advanced supercar ever created relative to its time period. It remained the benchmark production supercar for well over a decade, eventually the Koenigsegg CCR was able to better its performance figures in 2005. The F1 remains a highly sought after collectors item! 

McLaren only built 106 F1s.

Of those 106, 7 were prototypes and 28 were racecars.

It took McLaren six years to build and sell all the F1s, with production coming to an end in 1998.

106 cars. The best in the world. Six years. Virtually no competitors at the time.

…Twenty years later

In October 2018 McLaren announced a new car: the “Speedtail”. There have been other great McLarens in the last two decades, but the Speedtail is significant.

Why?

Because – and this is the figure that caught my eye yesterday – only 106 of them are going to be built.

Seen that number before?

These days supercars are a dime a dozen. I can literally name hundreds of them, including other recent McLarens such as the P1, the 720S  and the Senna. Competition is now extreme in the supercar domain, it’s not the three or four-horse race of yesteryear! In fact, the cars have become so advanced that the name “supercar” apparently no longer does them justice, with the more extreme of them now being known instead as “Hypercars”.

How does this related to our 106 Speedtails?

Like this: with all these many other cars available, all this choice of wonderful technology, with the McLaren Speedtail NOT being the revolution that the McLaren F1 once was, despite not being road legal or officially supported in the US and despite having a price tag of £2.1 Million (over $2.6 million), the Speedtail has already sold all 106 planned examples. Delivery isn’t even scheduled to begin until December 2020.

Clearly, something wrong with this picture!

What’s wrong?

You know what’s wrong, I’ve told you many times!

What’s wrong is that all those doom & gloom fiat scenarios are right! What did I say earlier?

“I’m sure fiat markets are nearing the top of an enormous bubble. I’m sure that far too many people are making far too much money far too easily. I’m sure it can’t last.”

The fact that McLaren redefined what a supercar is a quarter century ago, and then sold hardly any of them, and the fact that it churned out just another supercar (or hypercar if you prefer) today, and instantly sold all of them before they were even produced, is clearly indicative of a major problem!

I have no problem with people getting rich and making money, more power to them (though I do have a problem with it if they exploit others to achieve their wealth). I don’t mind people buying themselves nice toys, hey – with their money I would do the same! I just need people to realise that this is unsustainable: that such wealth isn’t real, that the piper has to be paid sooner or later.

As usual, I have already taken the trouble of playing devil’s advocate and of analysing the logical counter-argument: “What if the supercars of old didn’t sell because the world was in a recession at the time?”

It’s a valid question, and my answer is this:

What is a recession if not a reality check? What is a recession if not the reduction of hype to realistic base levels – those at which the economy can actually support itself in concrete terms, i.e. how much it really produces?

Remember, this isn’t Bitcoin we are talking about here! These are our wonderful government-sanctioned fiat currencies! Apparently they are better than gold; they replaced gold didn’t they? They threw away their gold backing to make the financial system even better, not so?

Surely such a great, well managed, official government system can’t dip below the levels of natural economic support – and indeed I would argue that that is the case. BUT, I would also argue that such systems can inflate WAY above their inherent value! Thanks to derivatives/inflation/fractional reserve banking/etc we have economies worth many times what they should be! We have mountains of alleged value supported by little to no base assets!

We have had recessions in the past. We have had financial crises, we have had banking panics. I put it to you, that never before have we been in such a perilous position. I put it to you, that never before have we supported so much on top of so little. Make no mistake ladies and gentlemen: we have not been in this position before. We don’t know what’s going to happen next and we have little to no control over it. We are sailing deep into uncharted waters – without a compass.

I do not see a repetition of the myriad little “economic crises” which litter the history of the last 100 years. I do not see just another dip on the financial charts. I see something revolutionary happening, an event for which few are prepared.

I don’t know when it will happen, the hairs on the back of my neck suggest “soon”. It could be that the economies of the world take another little dip and quickly recover – that will only make things worse in the long-term, for cataclysmic financial failure is almost certainly on the cards.

Conclusion

I’m not a soothsayer, I can’t tell the future. I’m correlating information, drawing deductions, and sharing with you my best guess of the path which lies ahead.

I strongly suggest hedging in concrete assets like property, precious metals – and now – cryptocurrencies. Crypto may not seem concrete to the layman, but it is built on something far better than what fiat money is! It’s not inherently corruptible and susceptible to the whims of the greedy, greed being what is causing the downfall of fiat as a whole.

I’ve said before that if fiat fails tomorrow, crypto may not yet be ready to pick up the slack. That’s debatable. But every day that passes, every day that fiat hangs on a little longer, crypto becomes more and more ready, and more likely to pick up the slack when fiat fails.

I’m planning accordingly. Do what you must.

Yours in crypto 

Bit Brain

Acknowledgement: featured image from Wikimedia Commons (https://commons.wikimedia.org/wiki/File:McLaren_F1_LM.jpg) by robad0b [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)]

“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:




Personal Crypto Strategies

I doubt that many of you have studied “Strategy” as an academic subject. It’s hardly something used in the everyday life of most people.

But in military circles and in the upper echelons of civilian National Strategy, it does play an important role.

Before I relate strategies to cryptocurrencies, we need to level the playing field. When I say the word “strategy”, we need to all have a common understanding of what that means. 

What is a “Strategy”?

Warfare is conducted at various levels. The three main levels are tactical, operational and strategic.

Tactical happens on the battlefield. Tactical decisions are made by unit commanders and their teams. The choice to use grenades instead of suppressive machine gun fire is a tactical one. The option of detaching a squad to flank an enemy that your platoon is fighting is a tactical one.

Operational decisions are made by those in charge of several fighting units. The operational commander would make decisions such as deploying the platoon to the battlefield in the first place. He would be given an objective and a variety of forces. How he (or she) employs those forces is an operational level consideration.

Strategic decisions are made by those who earn too much money and are too far away from the real action. Okay, that’s just me being facetious (but it’s still true). A strategy is an overarching plan encompassing all available forces. A strategy tells you how you are going to meet a specific goal, and what that goal is e.g. “repel Hussein’s invading forces from Kuwait”. At the national level you can also get “Grand Strategies” – which are basically very long-term goal that your shorter-term strategies align with. Don’t worry too much about Grand Strategies.

Ends, Ways and Means

In very simple terms, a strategy is comprised of three main things: Ends, Ways and Means.

If we are to apply a strategy to crypto, then we need to understand the relationship between these concepts.

Ends are the goals of strategies. As the name suggests, they are your desired endpoint. Once your ends have been achieved, your strategy has succeeded. Depending on what those ends are, your strategies may no longer even be required after reaching them. 

Example: “To neutralise all enemy military forces in the Pacific theatre of war”.

Ways are the methods of achieving Ends. The Ways are the “How?”, “When?” and “Where?” – they are what you are going to do.

Example: “We will cut off fuel supplies to enemy air and naval assets in the Pacific, thereby causing them to run out of operationally deployable fighting forces over the period of the next month”.

Means are the tools used to execute the Ways. The means are the “Who” and the “What?” of the Ways

Example: “Special forces will be deployed from submarines to destroy the enemy’s hardened underground fuel depots. Naval forces will destroy fuel refineries and pipelines from over the horizon. Air Force units will destroy fuel transport vehicles and ad hoc targets of opportunity”.

We can apply this to crypto.

Crypto Strategies

On the Grand Strategy level we can say that crypto exists to replace world money systems and to disrupt and replace the existing money/power dynamic. That’s way beyond what we as individuals can do. We all play a little part of that larger game, but it’s not what this post is about. Let’s rather look at whatyou can influence to a large degree, what You can do for Yourself.

So you’re a crypto investor, or a trader, or both. Perhaps you work for a crypto company, or perhaps you started your own crypto company. Maybe you just enjoy writing about it in blogs like the one you’re reading now, or maybe you watch adverts on Brave browser all day so that you can build up free BAT tokens and give tips to sites that depend on voluntary funding. 

Whatever you do with crypto, it’s time to start asking yourself: What’s my endgame?

Why are you doing what you are doing? What is the logical conclusion? What are you trying to achieve? Where and when does it stop?

In other words: What are the Ends of your strategy?

Do you have them? Are they well defined? Do you know exactly what you want crypto to do for you?

Admission of guilt

I don’t have a proper crypto strategy! 

I have broad crypto investing strategies. I have a few fairly well-defined goals which I aim to meet, but honestly, I lack that endpoint. I’m writing this today because when I realised this, I realised that others may be in the same boat.

A Crypto Strategy is NOT:

“I want to reach a total of 100 BTC by 2030” or “I want 1 million USD worth of crypto” or “I want to survive the fiat crash by investing in crypto”.

Why not?

Because crypto ISN’T an End, it’s not even a Way; it’s a Means to an End.

You’ve heard the expression “means to an end” before? Now you know where it comes from. ?

Get a strategy

I was walking around my garden earlier today, playing with my dogs and enjoying relaxing outside under the clear blue sky. I was extremely content, but bothered because I knew that my contentment came from shutting out the many evils of the world that I am only too aware of.

For now I fight those evils daily. I have been very active in challenging my government this year: there is a long paper trail of me, both in my personal capacity and aligned with multiple civic groups, opposing injustices at every turn. Similarly, I try to fight the bigger international fight (in support of the Grand Strategy of crypto mentioned earlier), some of which you can see on this very blog or on my Twitter account.

But I’m just one man and I can’t do it alone. I realise that I am not doing it alone: many great people fight alongside me – some in small ways, some in big ways. You may be one of them. I won’t stay young forever. I also know (thanks to years of high stress military deployments) that my capacity to endure a high intensity struggle in a negative environment is finite.

In simple terms: I can’t do this forever.

At some stage I need to say that enough is enough, and hand the torch over to the next generation. I need to cash in my chips and leave the casino. I need to be able to sit in my garden and play with my dogs under the clear blue sky, while not worrying about the evils of the world.

But for now, I am still furiously playing the game. What I need to do next is to further align my daily activities with my desired end goal: I need to define the Ends of my strategy and work towards them.

Exactly how I do that will be my Ways. I can only firmly establish those once I know the Ends. I trust that my crypto investments will be the Means, or at least one of the Means I will use to execute my Ways.

The End State (Ends of the Strategy)

I may not have well defined end state to my strategy yet, but I know some of the characteristics that I want it to possess: financial freedom, a pleasant political and social environment in a country which embraces true liberty, a relaxed lifestyle in a safe environment, the ability to work on relationships rather than business and finances etc. 

It may sound idyllic and a bit like a pipe dream, but it’s something to work towards. I might not find something that checks all the boxes, but at least those boxes give me a target to aim for.

For those who seek to form their own strategies: an example of a Way to achieve something like what I stated above could be: “reduce fiat holdings to a bare minimum” or “aim to build up 10 BTC in crypto” or one of those other things that I said are not a strategy in themselves.

Conclusion

Life is a journey, and crypto is a part of that journey. God willing, my journey will allow for a period of rest towards the end, a time when I can pull off the busy highway and spend a few years at my final destination in peace and quiet. I can’t tell if that will be possible, but I will do what I can to make that an eventual reality. That is my plan, my End, my strategy.

Until then, I will keep fighting the crypto (and other) battles. Evil triumphs when good men do nothing. If evil is ever going to triumph, then it’s going to have to go through me first. I still have a good couple of decades of fight left in me, before I retire and seek out my version of a Utopian little house with a white picket fence. 

Advice time: if you are still young, plan for your future as if you were suddenly going to turn 80 tomorrow. You have no idea how fast time and ageing catches up with you. I did a pretty good job of planning for old age when I was still young, but even so I wish I had done more. Your generation has so much more available to it: electronic banking, broadband internet, cryptocurrencies, easily accessible trading options for precious metals/forex/etc – you can do a LOT more than I did if you start early!

Despite a very strong American and international business culture to the contrary, money is not everything. Money is not “success”! Money will NEVER make you happy. As long as you can lift yourself above the level of “financially struggling” (which can be very hard to do), you can be happy. Try to make a few clever investments while you are still young, so that money is no longer a worry when you are older. Then you can enjoy life. 

Look at Warren Buffett: 89 years old, worth 84 Billion USD – but do you think he’s ever enjoyed his life? Do you think he’s ever stopped to smell the roses? I think he’s a miserable old sod, a greedy and small-minded man who cares far too much about wealth and not nearly enough about the things that matter. He’s too busy greedily hoarding his money to ever enjoy spending it! Don’t be like Warren.

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.

https://twitter.com/brain_bit/status/1169959815923273728

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.

Scenarios:

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.

Likelihood

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.

Conclusion

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

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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):

From https://old.trybe.one/archives/btc-beginning-of-the-week-analysis/

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

Scenarios:

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.

From https://mentormarket.io/cryptocurrencies/bit-brain/bitcoin-possible-next-moves/

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:

From https://mentormarket.io/cryptocurrencies/bit-brain/crypto-market-cycles-part-2/

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

From https://mentormarket.io/cryptocurrencies/bit-brain/bitcoin-possible-next-moves/

…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

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Crypto Market Cycles – Part 2

I can see that I’m going to have to type this quickly.

The comments on “Crypto Market Cycles – Part 1” are already drawing me into discussing the Part 2 subject matter! Okay *cracks knuckles*, here goes:

Yesterday we looked at the market cycles of traditional markets. In truth, I didn’t really look at the cycles per se, rather I pointed out that the future nature of long-term cycles has become unpredictable. Thus to assume that they will continue as normal would be a mistake. Basically I pointed out that an upset was looming.

Part Two – the market cycles of Bitcoin and the altcoins

If you think that tracking the cycles of the regular markets is tricky, then you must see just how tricky it is to track Bitcoin!

I have already stated that mistakes are made when analysing Bitcoin cycles. I firmly believe that the large majority of analysts with their 4-year Bitcoin cycles based on halving events are talking utter rubbish! We’ve just gone through a Litecoin halving event, did you notice the change? No? Nor did anybody else for that matter. In fairness, you could say that the big bullish climb comes some time after the halving event – and you would be right – but you would be dead wrong if you thought that it was because of the halving event. I have debunked this halving cycles hype nonsense in some detail – take a look:

Bitcoin is cyclic. It does follow repetitive patterns at the macro and micro scales. We know that, we’ve seen them.

BUT:

WE DO NOT YET HAVE THE ABILITY TO PREDICT THOSE CYCLES WITH ANY DEGREE OF ACCURACY!

Why not?

Some of the reasons were mentioned in the halving posts linked to above. From a technical analysis perspective – we simply do not possess sufficient reliable data. It will make it simpler to explain if I illustrate this graphically:

Made by Bit Brain with TradingView

You CAN NOT trust the information of a time when Bitcoin sold for $100 a coin. The market was TINY! Every significant buy or sell had the power to skew the charts radically – giving a false perception of market conditions and manipulating it (intentionally or not) to an enormous degrees. There were simply not enough people trading Bitcoin at the time, with the result that general trading could not smooth out anomalies. The problem compounds as you move back in time: the sub-$50 Bitcoin of early 2013, the sub-$10 Bitcoin of 2012, the sub-$1 Bitcoin of 2011. The anomalies thus reflect on the charts of the time and make them unusable.

I normally cite mid-2013 as my cut-off point after which data becomes usable. It’s a thumb-suck on my part, but it’s an “educated thumb-suck”. Taking an average over time does work, but only when there is sufficient data. Pre-2013 data is insufficient to create a meaningful average!

That leaves us with only about six years of usable data.

Six years.

And from THAT alone you want to deduce market cycles? I’ll have some of what you’re smoking thanks!

It’s hard enough just to establish the basic trendlines of such a short period, it’s IMPOSSIBLE to deduce accurate market cycles!

Anyone who claims that they can do so is either:

  1. Lying
  2. A fool

This is about the best you can do under the circumstances:

Made by Bit Brain with TradingView.

That’s the kind of chart which I have been showing in my long-term posts for well over a year now. From a TA point of view, you really can’t do much more than that when looking long-term. We SEEM to have some sort of channel or trend with a fairly firm baseline and parallel market peaks. We don’t have enough of them to predict the timing of the next peak, or how smaller bull/bear runs may behave within the confines of the channel. We don’t know if the channel should curve, or even which way it should curve. Yes I have seen the downwards curving charts based on data that goes back to 2010. No, I don’t agree with them (the trend may curve downwards later, but the data they are using to show that already is wrong to use in that fashion) – see above.

For this reason I turn to fundamentals when making long-term BTC predictions. I’m not going to break the market down in fundamental terms now, that would take days. Instead, I’m going to tell you what I foresee from a fundamental point of view.

I believe that the rough baseline you see above will continue to be followed in its upwards direction. Importantly, I believe that the BTC capitulation of late 2018 did NOT end due to the return of bullish sentiment, but rather because it crossed into critically oversold territory (reaching and possibly breaking through the baseline). I believe that price was bought back up to where it should be (in around April of this year), that the buying was largely interpreted as a bull run, and that it then caused some hype – which is why BTC ran up to $13k before stagnating. I believe that price will continue to fall slowly until the baseline is once again approached, this is because (as I said earlier) bullish sentiment has NOT returned yet! (That’s also why my own BTC buy orders are sitting in the $8000s.)

To put it another way: I think that the baseline represents the adoption of BTC. As more people adopt it, so demand pressure on price increases and value derived from Metcalfe’s Law (which deals with the size of a network) is reflected on the charts. Any dip below that baseline becomes unsustainable. Thus price is forced upwards by organic growth.

When bulls take charge, then price shifts Northwards of this baseline. When that will happen and for how long are questions that we can not yet answer – we do not have that data or sufficient prior data to extrapolate from.

I have said multiple times that the 2019 “bull run” started too early to be sustainable. This is why I say so. I maintain that we have NOT seen a proper bull run this year, just a little hype which is still dying down. I maintain that the proper bull run is yet to come – and from fundamentals, it looks like it will be BIG!

Which brings us back to the traditional market cycles. If fiat systems were to collapse today, would BTC be ready to pick up the load? I often doubt it…

BUT

I may be wrong to do so.

Recent catastrophic fiat-crisis events in Greece, Turkey, Zimbabwe and Venezuela have shown us that a population is capable of VERY RAPIDLY turning to BTC in times of crisis. BTC may not rival gold as a legitimate store of value YET, but its benefits over gold become obvious when you need to procure a lot of it quickly! Argentina is showing us that right now – as they also join the group of nations whose fiat currency is no longer trusted by their people. I honestly believe that the demise of ALL fiat is inevitable, as human beings we simply can not be trusted not to exploit a system which is so easily corruptible, the temptation will always be too great. It only takes one greedy person to ruin it for everybody!

I know that the mindset shift is a big one. When things are going well – which is basically the ONLY way that those who have grown up in First World countries are familiar with – then it is very difficult to justify not trusting your fiat and swapping it into “riskier” assets. You don’t know how good you’ve had it…

But when your country/currency suddenly becomes chaotic, then you very quickly realise that it is in fact your FIAT which has no value and it is your fiat which is the riskiest asset of all!

Let me put it to you like this: if the global economy crashes tomorrow, people will pour into Bitcoin. If the global economy crashes next year or three years down the line, people will pour into Bitcoin even quicker. Once they pour in, they won’t pour out again. Bitcoin will get a chance to prove itself globally, and the end of fiat dominance will be a fait accompli.

Before I end this…

That’s all I needed to say today. Don’t worry about the cycles too much – because nobody knows what they will do next. When the world needs it, Bitcoin will be ready and waiting.

Oh, one more thing: you didn’t think that I had forgotten the altcoins did you?

If you have been following this post so far, then you will know why the altcoins continue to perform poorly this year: no bull run yet. (Ah! It all makes sense now, doesn’t it?) Altcoins run when sentiment is high. They are the spillover of funds destined for BTC, but looking for better returns offered by lower market cap investments. When BTC does run, the altcoins will run too – faster than BTC. But as long as sentiment is low, altcoins will stay low. Take a look around, the crypto blogs are DEAD! Even I am struggling to remain motivated as a blogger, I’ve been focusing much of my attention elsewhere lately.

Sentiment is down. The bull run has yet to come. Altcoins will follow BTC when it does. That’s the altcoin “cycle” – do whatever BTC does – only more so, and with a slight delay.

Remember that not all altcoins are equal. We can expect the good ones to do well. We can expect dead ones to stay dead. We can expect new ones to get hype which they do not deserve. Shop carefully! My advice is still to go and find the good projects which have survived the altcoin winter – and invest in them. They are far cheaper than new projects, and they have proven staying power. There are FANTASTIC deals out there TODAY!

The End

…not that cycles have an end…

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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Crypto Market Cycles – Part 1

Altcoins continue to get hammered. Meanwhile, BTC is plodding along steadily in a sideways direction, the bulls trying to break to new 2019 highs, but not having the power to overcome the bears who could plunge prices back towards $8000. The old 5 August chart (shown below) from THIS POST is still valid from the bearish perspective. I consider the market to be in favour of the bears at the moment, so this is still the chart which I am basing my own BTC buying prices on.

From https://mentormarket.io/cryptocurrencies/bit-brain/btc-beginning-of-the-week-analysis-2/

What we are watching is the interplay of market cycles. Lately I have found myself discussing market cycles in the comments sections of various posts on multiple platforms.

I would like to thank CryptosDecrypted in particular for inspiring this post. If you read his post titled “The Sunday Recap – Down the Rabbit Hole 42“, you will see that he chats a bit about market cycles, a chat which we continued in the comments section of that post. Incidentally you can follow him on Twitter if you don’t already do so. He’s a quality crypto analyst and blogger, so I recommend that you keep an eye on what he has to say: https://twitter.com/GordonBuckley3

Bitcoin price moves in cycles. Altcoin prices move in cycles – generally together and closely tied to that of Bitcoin. The major financial markets of the world move in cycles. In his blog post, CD remarked:

“My two cents – we are a full economic cycle from BTC (and only BTC) becoming established as a reliable counterweight to global market corrections.”

That got me thinking a bit, to the point that I believe I must share my own views on the topic (hence this post). Note: I’m not saying that CD is wrong, his opinion carries weight and is probably at least as valid as my own. Realise that none of us analysts own a working crystal ball, we all just call what we observe as best we can. Here is my take on it:

Traditional Markets

I doubt that we’ve seen a proper global stock market crash since The Great Depression. Bear (pun intended) with me here: I realise that the 2008 crash is spoken about in hallowed tones. But 2008 was akin to a failed suicide attempt: a dramatic cry for help, but a cry which averted the disaster. You see: the markets bounced straight back. The reason that we don’t call it “The Great Depression II” is that it was nowhere near that scale or duration. Yes, it has absolutely had a lasting effect on some asset classes, look at precious metals for instance, but the fiat based assets recovered and moved on!

We must now ask the “How?” and “Why?” questions. The answer is not pretty.

Zooming out on the situation and looking in retrospect, we can observe how fiat saved itself. Contrary to reason and sound financial practice, solid assets – good stores of value – were sacrificed in order to prop up the failing fiat house-of-cards. As analogies go, I don’t think you can do better then comparing fiat money to a house-of-cards. Ironically, the booming housing market played a role in the last “crash”, ironic because property is typically a good store of value. Regardless of the cause, the markets took a big dip, but they were prevented from crashing entirely. Governments stepped in to protect their house-of-cards from being blown down by the Big Bad Wolf. Unfortunately for them, there was no Big Bad Wolf. All there was was a very shaky arrangement of unbacked fiat-based derivatives built on top of an unbacked fiat money system.

The markets dipped simply because investors were no longer confident that what they held was worth what the markets said it was worth. That’s bad. That means that the fiat foundation of the house-of-cards has cracked. But fear not! The government came along and applied liberal doses of Quantitative Easing plaster and patched over the cracks. Then they painted it with a big tin of debt coloured paint, the special kind which contains micro-particles of Fractional Reserve Banking.

So we’re all living in the same house-of-cards which we lived in a decade ago, only now it is much MUCH bigger, is covered in considerably more debt, contains a wealth of inefficient private entities which should have died (but which were bailed-out with public funds), and is generally looking about as sturdy as a crowbar made of cheese.

This matters.

The reason this matters is because the really big crash has not been avoided, it’s been delayed. A healthy corrective crash – a correction which would have weeded out much of the unsustainable fiat rot – was prevented from occurring. What has happened is that the market’s have been set up to fail, far more than they ever would have a decade ago if they had just been allowed to crash organically.

That matters too.

That matters because it means something very important to us: There is no precedent for what will happen next.

We can talk about market cycles, but we will be kidding ourselves. What happens next will break new ground. Our best bet will be to look at what happened during the Great Depression. But even that was almost a century ago and in a very different world – there is only so much that we can take from that example. 2008 may look big to us, but that’s only because we don’t have something bigger to benchmark it against. We haven’t seen a proper crash since the establishment of Bretton Woods. That caused an upset of its own, but that was just the market reestablishing its footing at the time. Everything since then has been a mini-crash or a temporary correction, much like 2008 – fiat has yet to fail, so far it has not been allowed to do so in an unrestricted fashion.

Look at the cryptocurrency market of 2008. that was a crash, a proper crash. All the little altcoins that should no longer exist due to poor management, lack of funds, lack of performance or just poor marketing – they were wiped out. Nobody bailed them out, and the altcoin world is now far stronger for it. The fiat markets took the exact opposite approach, they did the equivalent of bailing out the shitcoins which should have died, be it the tiny little ones or BITCONNNEEEEEEECCCCTTT!!! itself!

From the public domain; modified by Bit Brain

Take home point: the market cycles may well soon “break” and behave unpredictably. The current system is an unsustainable house-of-cards. Something has to give, and when it does, it will definitely have enormous repercussions.

End of Part 1

Let that sink in a little. In Part 2 we will look at crypto cycles – BTC and the altcoins. Then we will determine if and how these cycles may influence one another.

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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