Bitcoin
Bitcoin has soared: what should investors do?
Bitcoin has recovered.
to obtain
Mt Gox and German dump cracked bitcoin
Bitcoin
out of reach in a way that would test even the most bullish holder, let alone anyone who likes to interpret charts. The $60,000 level was a pretty strong line in the sand for anyone other than a diamond-handed, hodl-till-you-die bitcoin maxi.
However, bitcoin has come back with a vengeance.
Here’s that heart-wrenching move:
Bitcoin chart shows drastic upward movement
Credit: ADVFN
If as a holder you were not scared, as the saying goes, you clearly did not understand the situation.
I wrote here that because of this pause, I was no longer a bull, simply a holder of crypto for portfolio diversification. I can’t say that my position has changed. Here are the options:
1) Trade what you see
2) Grab
3) Run away
I remain a pessimistic hodler.
This is what I see:
Here’s what I see on the bitcoin chart
Credit: ADVFN
A trader would probably see a rally and buy the dips, but you have to have a speculative constitution to do that, or you wouldn’t know that it tends to end in tears.
You can play with the range, but the strategic position is the same as it was in March. We are trading at a breakeven point and something will need to happen to shift that breakeven point up or down.
You could argue that the breakdowns below $60,000 suggest that a downward move is more likely than a breakout. However, sharing details is never a good way to invest or trade. If you know, act; if you don’t know, don’t move.
I don’t know, that’s why I’m not moving.
Not all factors that drive repricing are acute; they are often chronic factors that worsen to the point of breaking the price barrier.
With bitcoin, that could be the miners. Miners are not having a good time:
Bitcoin Hashrate Chart Shows Miners Are Suffering
Credit: bitinfocharts.com
Often, a drop in mining foreshadows a rise in price. We are currently experiencing a 20% to 30% drop in hash rate, as you can see in this chart from bitinfocharts.com.
So this is interesting and bullish. You can see that in the past a drop in hash rate occurs before a rise in price and you could say, a drop in hash rate creates a supply squeeze.
Hashrate chart shows previous drops that were followed by price increases
Credit: bitinfocharts.com
Mt Gox’s bitcoin liquidation distribution increases supply, but the halving reduces it, so these are the factors driving the price now. For me, Mt Gox is out, but the new reduced supply is a given and a constant, and I can’t help but believe that a halving of supply equates to a doubling of price, all other factors being equal.
So for me, the way to play it is still the same old hodl position, watch the box and try not to get too nervous. A lot of people in crypto are trying to trade a life-changing situation with a big win, so they won’t want the following advice. Size your position so that you don’t care what bitcoin is doing day to day. Bitcoin is no more powerful than the right stock right now.
I continue to believe in the potential of the halvening as the driver of a final stage. I will wait until something definitive happens.
Disclaimer: I own bitcoin.