Bitcoin Bull And Bear Cases

Below is the chart of the bitcoin (BTC) vertical. I like to give the future its place in such charts, because in the end it’s the future we care about. The blank on the right of the chart is where we will either make or lose money so it is good to leave it blank sometimes rather than fill it like a frame with price action.

These are the bull and bear cases:

Readers should know I’m in the bear camp right now, but let’s have a close look at the price action.

Using the old 1950’s technique you would say this is what you have to watch to see if bull or bear is where it is at:

It is a primitive approach but one that often comes in very handy. The boxes encapsulate the volatility and moves beyond suggest a repricing is underway, but I can’t help feeling that crypto markets are quite simple, and that is because the market is not filled to the brim with a plethora of players like hedge funds and investment banks with their army of quants with their legions of bots.

It is an even wider range than at $40,000. For a bull that cares about the short- and medium-term, bitcoin really has to continue to rise on its parabolic curve if it is to maintain its vertical, and to do that it will have to go vertical again soon. For a bear there is plenty of insanity in the market in general, and in crypto in particular, to put them in a world of hurt, but of course you can avoid most of that if you do not short— and frankly if you short crypto you need to have a hot line put in to your therapist.

However, the clock is ticking for bitcoin to make the move above $60,000, but there is still time as you can see from this chart that examines the time to break out on the last equilibrium level:

Markets rarely go sideways and most would agree it’s either heaven or hell for crypto in the next few months and the current levels are only temporary one way or another.

Bitcoin is almost certainly not going to do this:

And even if it did it would be bearish.

There remains more downside with a greater likelihood and less upside with less likelihood so the only reason to hold now is because you are very sure indeed it’s going to go on another rally. A lot of people are and that is an impressive amount of faith. That kind of faith has worked out well for holders of stocks like Apple
AAPL
, Amazon
AMZN
and Tesla
TSLA
and believers will point to this as a reason to hold forever for a titanic ascent. I wish them well but valuations in billions is one thing, trillions is a different scale entirely and for bitcoin to break into a valuation of multiple trillions seems, at least for now, a hard goal to reach.

I’m out of BTC, ethereum and DeFi as far as position trading goes. If bitcoin breaks up above $60,000 I might re-enter DeFi; if it breaks down I will await the bottom and re-enter then.

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Clem Chambers is the CEO of private investors website ADVFN.com and author of 101 Ways to Pick Stock Market Winners and Trading Cryptocurrencies: A Beginner’s Guide.

Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.