BITCOIN ASTRONAUT ON FIRE? ... The Bull Vs Bear Case Laid Out.



That's a fire proof suite btw. It has been since 2010

Bitcoin Shall Rise. Respect the energy required to jump out the hole.




Bitcoin is “a hedge against the whole world falling apart” Peter Thiel

The only people at the crypto conference in Puerto Rico talking about the price of Bitcoin are the journalists. Everyone else is building. - Peter Thiel

Peter Thiel had three takeaways speaking at Economic Club in NYC last week:

1. Never bet against Elon Musk

2. Money is bubble that never pops

3. Long Bitcoin in a big way

To be fair, I get how many feel who especially came in during the peak frenzy period around December to January. If you weren't participating in much of the early 2017 breakout rally...then the start of 2018 has you more emotionally connected to lexicon REKT instead of lexicon MOON.


But rest assured, this too shall pass. If it passed in 2012, 2013, & the 400-day bear period of 2014 when Bitcoin went from $1100 to $150 ...then came back full circle and ripped higher by nearly 20x...I assure you that this is just yet again one of many bear cycles that will eventually resolve itself. Do not forget your history.

Eat a cucumber and be patient. This too shall pass. There's simply too much positive tailwind around Bitcoin and blockchain development at large. Yes there are already superior consensus models such as Hashgraph, but the integration of Bitcoin's lightning network is actually another beast on it's own that is paving the way for an entirely new concept of value delivery with the capability of ‘streaming money’. Think about it like this, instead of "getting paid your salary every 2 weeks, how about every minute?”@aantonop


In a separate post we will be going over one of the big mysteriums of Bitcoin's correction this year which is....is Bitcoin potentially being dethroned by Hashgraph and/or has the crypto market been pulling back in anticipation for a giant forking exodus which would essentially see a large majority of cryptos forking their codebase and moving over to Hashgraph's consensus model. It's a valid question / concern that deserves attention. We'll discuss this in detail in a later post as the dive-in requires it's own body of work. To get a head start I encourage everyone read the below bonus excerpt I've included at the bottom of this post. For now, let's keep on track with the subject of this post regarding Bitcoin's current technical setup and where we see Bitcoin most likely going from here.

Moving on, keep perspective that the maturity and evolutionary development cycle we are presently in during the present year, is night and day compared to where crypto was back in the 2012-2015 period. Crypto is NOT going anywhere. While this correctional period sorts itself out, developers are building consensus models & blockchain platforms galore of scale that will tokenize the entire global ecosystem of all things data, value, assets, & identity. Stay focused on the big picture of what's really happening. I assure you that the accelerated growth in capital inflows is all for not: The total cryptocurrency market cap has grown by almost 100,000% since 2013. Ask why.


So just acknowledge that this growth doesn't just turn around and evaporate.

The way you feel right now, is likely how your bitcoin ancestors felt midway through the highlighted monthly candles in 2014 compared to now.


Moving forward, we're going to layout the bull case vs the bear case for Bitcoin and update our forecast targets accordingly on the basis of that evidence. Both the bullish & bearish evidence are at war with one another, and they both have strong legs in making their case.

We're going to showcase evidence for why the correction is likely to see lower before we see a strong reversal take place. Either way, we are near the reload zone on Bitcoin here around the $5k to $7k zone. Whether you're nibbling long here and now or a few Gs lower...months later Bitcoin is likely to be much higher than the trading action you're currently seeing We are now at the point where the upside risk is attractively surpassing the downside risk.

Before we even dive in, let's make something very clear regarding the status of Bitcoin's trend...by every technical & fundamental standard...BITCOIN IS STILL IN A BULL MARKET ON THE PRIMARY TERM TREND. Keyword here is, "PRIMARY TERM TREND"

There are 3 key timeframes when evaluating the trend of any stock or coin:

1) Near-Term Trend: hours to days of data trend

2) Intermediate-Term Trend: Days to weeks, even months of data trend

3) Primary-Term Trend: Weeks to months & years of data trend.

The Primary Term Trend is the big picture MACRO TREND...and by all measure, Bitcoin is still 100% squarely in an CONFIRMED UPTREND on the primary term.

Refute this uptrend:



A stock/coin can be bullish on the primary term and bearish on the near-term and/or intermediate-term trend. And that's where Bitcoin is today. Bitcoin is bullish on the primary term trend, however bearish on the near to intermediate term trend.

Now that we got that preface out of the way, let's earnestly acknowledge what's currently happening with bitcoin on the smaller time frames, notably the near-term & intermediate term trend. In contrast, they're in FUBAR territory

I'm going to level with you here, the bearish evidence is damning and not to be ignored. There is stark technical damage on Bitcoins chart at the moment that suggest that the next macro bull cycle would likely occur late 2018 - to mid 2019...keep in mind that this statement is not fact...but I will explain why it's probabilistically growing as the most likely outcome due to the current technical setup that has been evolving. On the flip side, that statement can be flipped on it's head with the cultivation of a powerful bottoming pattern that negates the current bearish setup....so just keep that in mind. Bitcoin is still BULLISH by every measurement on the primary term, but the bearish technicals on the near to intermediate term trend will need organic time to mend. Why do I say this?

We're now on day 103 of this correction since the peak top when Bitcoin reached $19,892 back on December 17, 2017. We were originally modeling for a correctional pullback that was on par with historical reference points that consistently sported pullback models anywhere within a range of -31% to -41% corrections, none of which ever exceeded past 31days worth of downside...so that was the typical norm all throughout 2016 & 2017. We never once seen anything deeper than a -41% correction all throughout that period. Historical benchmark analysis is a viable tool that has strong merit in being used alongside a holistic TA approach. It is by no means the driving tool in which to model future outcomes but it does deserve acknowledgement in any analysis. Why? Because the axiom known as history repeats itself is indeed replete all throughout human behavior. Afterall, that's what TA charts are...plots of human behavior on a graph....so identifying patterns within those plots is by all means a valid form of how to structure the consideration of said model. With that being said, this is why we log all Bitcoin corrections. More importantly...we want to use data models like this to help distinguish the difference between a run of the mill pullback vs a protracted bearish period that feels more like a bear market ghost town.

RUN OF THE MILL PULLBACK

VS

PROTRACTED GHOST TOWN BEAR PERIOD.


So let's now consider historical context to help distinguish whether this is your run of the mill correctional pullback or what's likely to be a much longer & possibly deeper, bearish period. There are 2 main data points that are worth acknowledging: 1) DEPTH OF PULLBACK & 2) DURATION

Notice that this pullback has now reached as low as -70% from peak to trough and lasted, so far effective today March 30, 2018, a full 103 days since the top...so those are 2 main data points that ought to be acknowledged:

1) DEPTH OF PULLBACK:

We've already pulled back as deep as -70% so far. What that also suggests is that we're not that much closer to the historical record bottom of 2014's correction when Bitcoin dropped -87%. In other words...we're likely getting closer to the tail end of this pullback if it already hasn't happened yet. NOTE* As a reference point for the current pullback, if Bitcoin dropped -87% from the the last pivot high of $19,892 that would bring Bitcoin down to the $2500 level. I know that sounds ruff...but that's just the stat to be aware of.

2) DURATION OF DOWNTREND:

We're not on day 103 of this downtrend. We're going to ignore the metrics pre 2013 as this was a less mature cycle that the current bitcoin cycle. Notice in the chart above that your most common correctional period never for all of 2016 & 2017 never went more than 33 days. Well here we are on day 103 as of now.

I don't think we'll go as far as the 400+ days we saw back in 2015 due to the fundamental tailwinds behind bitcoin along with the maturing development & accelerating adoption that is currently being build presently. However the depth of the correction alone & that we've passed well over 30+ days of downtrend...that alone suggests that the the bullish uptrend while be stunted for a while.

Why? When you get this far into a corrective period...the odds of simply pulling the nose up anytime soon becomes even more unlikely due to the technical damage that has ensured thus far on the chart. The longer we languish down here in this area with no real conviction and strong buyers coming in tells you that super man isn't coming anytime soon. Now let's think about that for a moment ...it's simple psychology here:

→The higher the price goes on Bitcoin, the more the interest

→ that causes higher prices

→ which yet again causes more interest.

→ However, the lower the price goes

→ The lower the interest and the spiral goes on.

Here are the exchange volumes in a bear market as shown from February. March snapshot is not out yet.


Now let's take a look at how that interest plays out over real google search trends relative to price action:





So you can see how influential "interest" is dictating price. Sentiment & interest right now is. On google trends, the interest score for the term "buy bitcoin" is scored at a 7 value. The last time we saw this low of a value was back around April & May of 2017 when Bitcoin was trading around $1300-$2500 range.

So back to the concept of being on day 103 of this correction...what this likely means is that before the bullish uptrend can resume itself we'll need to see the cultivation of a giant bottoming pattern take place. Bottoming patterns can take months if not quarters or years to build themselves out. The stronger the bottoming pattern, the stronger the uptrend that will result once there is a breakout from that bottom. Notice that bottoming patterns are transactional cycles of energy that need to be fleshed out and 'transacted' through. The sellers need to get their fill and the fear needs to be washed out before an uptrend can sufficiently resume. This next chart is a very important one to understand. The sooner you grasp the mechanics of what this means, the more intellectually & emotionally prepared you will be in understanding the hows and whys of a how a trend reversal dynamically takes place. We're using a few different metaphors here to drive the point but I really want you to grasp this concept of JUMPING over a wall or out of a cage. Say it's a small little wall....you could probably jump over that wall on one leg right? But let's say it's a big big wall, you're going to need the energy of both of your legs to get over that wall...hell, you might even need several attempts/jumps to make it over the wall. Energy & strength are tested through a series of retests of both the lows & the recent highs. Each retest builds confidence & recoils energy capital $ energy that has gained more value from the last retest. Each time that capital comes back up to the resistance zone it likely has more capital firepower to break through the sell orders. This is just an example of what "coiling" means.



The point here is, don't expect Bitcoin to pull the nose up anytime soon just yet. There is work to be done before a resumption of the uptrend can flourish. We will see another bounce, yet followed again with further selling pressure is the most likely outcome. You can consider this bear trend over once we get our first SET of HIGHER-LOWS + HIGHER-HIGHS. Until then, we have to assume much of the same will continue until we get our first set of higher highs and higher lows. With that being said...Bitcoin right here and now is in the vicinity of what could potentially shape up to be it's first set of HIGHER-LOWS.


If that doesn't happen here then here are the following support levels to be on the look out for. These are the big kahuna, MACRO support levels.


Here on the daily chart, we can see that there's not much left in terms of downside. We're reaching triple bottom territory at this point.


This is not the most opportune area for shorts to place heavy short bets here. If anything, they're backing off and covering those positions. Short covering = buying...that's what happens when shorts cover...they effectively are buying back their borrow at the market price.

However, our biggest concern are the capitulators that usually show up in such areas. This area is not without it's own risk as weaker hands yell UNCLE! and throw in the towel. If that happens, then yes, we can see a break below $6k that pushes Bitcoin down to the next support level around $5k....which is not far away for that matter. Either way, our job here is to stay cool like a cucumber. For now, take view of this yellow box here in the chart below....expect that we'll see one of 2 scenarios unfold:

1) anything above the yellow box line of $7900 = catapult to the $10,000 area

2) anything below the yellow box line of $5900 = capitulatory flush to the $5,000 area.


Perhaps the most ideal scenario that we'd like to see is scenario # 2 however. Why would we want to see a flush to $5k...? Because it would increase the value proposition of heavy value buyers to come in and cause some authoritative-big-giant-candle-bars. AKA "Authority Bars"

The best bottoms & strongest bounces happen on the back of big, heavy green candle bars. So far, we don't have that showing up here in this area just yet. Take a look below for reference:


I understand this environment is frustrating for most right now. No one likes a bear market. But just take a deep breath and really understand what is fundamentally happening around this concept of value. The entire paradigm of money, value, assets have been rewritten by the laws of math in a fashion that is now UNFUCKWITHABLE.

People who lack mental dexterity and imagination struggle to understand crypto. This is something new. You have to detach from the analog world you know and embrace a digital world built on freedom.

Tokenized securities are merely a natural evolution of the financial system. We once had men yelling at each other on Wall Street, but now we have a global liquid market that you can participate in from your phone. What's more, no one can take that right or asset/value away from you.


Really think about this for a moment. The lock up that happened in Greece during the collapse...the richest and poorest of them all could not withdraw their savings. ALL BANKS & ATMS WERE FROZEN. Whether you had $1000 or $1 million worth of euros. The loss of Greek access to global capital markets and the collapse of its banking system affected everyone who had their money within that system. The greatest magic trick of our generation is when banks convince customers that the customer is still in charge of the funds deposited in the bank. We may have it super cush here in America, but I assure you many learned this long ago however.

The existence of basically unseizable money outside of state control should be massively comforting to everyone. To Jews, the state is an unpredictable monster that flips out every century or so. Having the ability to leave without leaving everything behind was/is key.


In the future, all your assets & valuables will be tokenized on an immutable blockchain ledger that is hard coded to your private keys. There will be no such thing as escrow, pink sheets, land titles, stock certificates etc...every valuable asset you can think of will be tokenized.

And just remember, this downtrend...this drawdown...this battleground is nothing new. There were veterans here before you that lost limbs & faces during the Mt Gox hack, many survived & many unfortunately did not. What's important to distinguish is that the ones who did not survive were the ones who either sold at the bottom or entrusted all their coin on the exchanges. Don't be that guy. Don't sell at the bottom, and don't keep the bulk of your crypto assets on exchanges. I don't care how great Binance is. And yes, they are a phenomenal exchange and have rightfully earned their stripes & community trust. Each fire & hack attempts they have thus far handled with the utmost integrity and highest response time. No matter, if you're keeping your coin on any exchange...then you don't really own your coins and you run the liability of potentially destroying your wealth. Again, don't be that guy.

The way you feel right now, is likely how your bitcoin ancestors felt midway through the highlighted monthly candles in 2014 compared to now.


This entire post got a little long in the tooth. In a separate post we're going to address our hedging strategy that will incorporate a combination of rotating into stable coins + swing trading the volatility that will transpire during this protracted bearish period. We'll have no shortage of volatility during this interim and just like we've done recently in the stock market shorting AAPL, we'll find swing trade setups that maneuver here with Bitcoin. In that post we'll address our top rated stable coins of choice. Tether is not the only game in town when it comes to stable coins. What's more, Tether is not without it's own risk. We'll address all this in an upcoming post.

BONUS PERSPECTIVE

Pro Tip: You can now sell the car you ordered for more Bitcoin than you bought it for


How does an almost 150 year old bank stay a powerhouse? By rethinking the entire organization, applying AI, developing minimal viable products and participating in Blockchain integration from Dave McKay, CEO of Royal Bank of Canada at IBM.

The Royal Bank of Canada filed a patent application which depicts a blockchain platform that records credit records and uses historical and predictive data to compute credit ratings. This will only force other Banks to get in step.


https://www.coindesk.com/royal-bank-of-canada-credit-scores-blockchain-patent-application/

Interestingly, Morgan Stanley increased their stake by +56% on the Royal Bank of Canada by +56% & increased their position on AQR by +80% Capital



You worried the regulators are going to stop crypto in its tracks? The Chairman of the CFTC (@giancarloCFTC) has “#cryptodad” in his Twitter bio.


CAN/IS HASHGRAPH DETHRONING BITCOIN continued:

Yes there are already superior consensus models such as Hashgraph, but the integration of Bitcoin's lightning network is actually another beast on it's own that is paving the way for an entirely new concept of value delivery with the capability of ‘streaming money’. Think about it like this, instead of "getting paid your salary every 2 weeks, how about every minute?”@aantonop


In short, Hashgraph is more integrative then anything and quite categorically not a Bitcoin contender from the research I have uncovered thus far. Hashgraph will contend with the likes of NEO, Ethereum, EOS, ICON, Waves, etc. But Bitcoin however is categorically more in the digital gold arena. I encourage you all to learn more about Hashgraph here. Their token, Hedera, will be listed soon this incoming quarter:



Some of the greatest pearls shared by Jesse Livermore:

“Money is made by sitting, not trading.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

“Buy right, sit tight.”

“Nobody can catch all the fluctuations.”

“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

“It takes time to make money.”

“Don’t give me timing, give me time.”

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