We're going to discuss some very important key concepts in this post related to our Bitcoin & crptocurrency forecast for the remainder of the year & onwards. There will be changes due to recent developments. We will discuss our strategy on how we intend to best capitalize on that change while hedging risk on both the downside & upside. This post is very important to read in full: In order to thoroughly discern judgement it is advised you read the entire post so that holistic context is supplemented. Otherwise, it may be very easy to immediately look @ any one image or excerpt and immediately think..."oh this means to sell full stack" or "O, time to go all in." Far from the contrary...we are not amusing any of those reactions right here. We will discuss what our strategy is relative to the technical setup that cultivates. Bitcoin has not yet bottomed. We will discuss why and what it takes to see a bottom recovery take place all in this post. And then most importantly, what our actionable game plan will be based on how setup develops.
*First off as a preface, we will almost never sell full-stack here on our core positions. We will discuss how we intend to hedge using a mixture of asset rebalancing into stable coins in the last segment of this post.
*Secondly, I know we weren't the only ones who saw a near 70% recovery to our December 2017 portfolio highs on this latest bull cycle that just occurred. Many however did not see a recovery in their folio balances because they over reacted and sold near, if not at, the March 2018 lows of this correction. The vast majority of nascent crypto-knights sold the lows in fact. We saw several names recover 50% of their value if not 2x to 5x in value such as EOS, WANCHAIN, ONTOLOGY. Admittedly the bulk of the portfolio gains came from those 3 specifically, but several others recovered more than 50% off the March lows relative to the December highs. NEO for example, has doubled from the March lows. EOS went 5x from $3.70 to $23. Ontology from $1.20 to $12. Wanchain another strong winner from $2 to $9. All of those are now trading at discounts as of now.
→ BTC Status on 3 key time frames: near, intermediate, & primary trend trends
→ Status on Bitcoin's Parabolic Curve
→ Our 3 Forecast Scenarios
→ Deciphering Bitcoin's Direction
→ Hedging our Folio via Reducing Core Positions & Asset Rotation Into Stable Coins
TREND STATUS ON 3 KEY TIMES FRAMES:
Many have heard it before but we'll repeat our definition on what a confirmed-uptrend is and more importantly, how to distinguish what status that trend is on what specific time frame. First off, there are 3 KEY TIME FRAMES whenever you're evaluating the given trend of an asset class. Near-Term, Intermediate Term, & Primary Term Trend.
The very basic & most important rule to when distinguishing whether a trend is in a confirmed uptrend or confirmed downtrend is simply this =
SET OF HIGHER HIGHS & HIGHER LOWS = CONFIRMED UPTREND
SET OF LOWER HIGHERs & LOWER LOWS = CONFIRMED DOWNTREND
It's verbatim that simple. The trend is defined by the direction of how the stair-step is occurring. An important key word in the above formula is "SET." You need a set of higher highs and a set of higher lows before sufficiently distinguishing the direction of a trend.
ONE DAY DOES NOT MAKE A TREND
Now more importantly however is to distinguish your time frames within that trend. Just because there is one or even a few bearish days that occur on an asset class, doesn't mean that the trend in broken....an asset class can be bearish on the near term trend whilst simultaneously being a raging bull on the larger time frames such as the intermediate term & primary term trend..
NEAR TERM TREND: Hours to days of data & trend forecast.
It's what's happening within the trend on the micro trend. Within a larger bull trend...you will have near term sell-offs & pullback periods that are bearish only considered bearish exclusively on the near term, but they are not to be considered as bearish on the larger scale of the macro pattern if that macro (primary trend) pattern is in a confirmed uptrend. Inversely, when you have a macro downtrend, you will have multiple "near term" bullish cycles within the larger downtrend.
INTERMEDIATE TERM TREND: Days to weeks...even months of data, & the resulting trend that has occurred and likely to continue as a result of the larger pattern that has resulted.
PRIMARY TERM TREND: Weeks, months, years of data showcasing the overall big picture macro trend.
The takeaway from this is that all 3 time frames need to be considered within an investment/trade framework when evaluating buy/sell said position. Just because there is a bearish few days or weeks/months for that matter, doesn't damn the larger trend at play. It can, but more often than not, the marco trend is to be given the benefit of the doubt until proven otherwise.
With to regards on Bitcoin at the present time, here we are on those 3 Key Time Frames
So you can see from the above chart that bitcoin is currently:
BULLISH → on the Primary Term Trend
BEARISH → on the Intermediate Term Trend
BEARISH → on the Near Term Trend
Last week & month we were BULLISH on the Near Term Trend. Within the last 72 to 48hrs Bitcoin has now been in a confirmed downtrend on the Near Term Trend.
Let's take a look at those 3 time frames more closely:
Now with regards to the intemediate term trend that's shown in the above slide (click image above to view), the current intermediate term trend is still very bearish. We are in a confirmed downtrend. What does it take for the status to change to "confirmed uptrend"?
We need to get above the $12,000 line to create it's first set of HIGHER-HIGHS.... & then pull pack to cultivate it's first set of HIGHER-LOWS before we can distinguish that the intermediate term trend is BULLISH. Until that happens the trend is bearish no matter how you slice it. Very simple, the trend is guilty of a downtrend until it can cultivate a push of it’s first higher-high & then show us a set of higher-lows. Capiche? That’s called a set of “higher highs + coupled with a set of a “higher lows.” Until that happens, you can’t say we are in an uptrend on this intermediate term time frame.
PARABOLIC CURVE - MONTHLY CHART
Next let's discuss our forecast for Bitcoin from here onwards on all 3 time frames. But briefly before we get into that, let's all acknowledge where Bitcoin is on the larger scale of it's primary term trend. Bitcoin's price action & discovery of new highs consistently @ the rapid velocity that has occurred put this asset class into it's own BEAST CLUB of any other. Bitcoin travels within an uncontested parabolic curve.
Also take notice of where we are right now within that curve relative to the correction that has thus far ensued. We're on month 5 of this correction cycle.
Ok so next let's discuss the 3 most probable forecast outcomes for how Bitcoin is likely to recover & reverse the entire correction and make it's way back to all time highs. When will Bitcoin get above $20k...this year, next year ...what's the deal etc.
I'm going to give you the good & the ugly on this:
We're going to cover 3 likely scenarios based on technical forecasting methods that are tried & true. Now you'll hear loud rhetoric from the nascent crypto community bash technical analysis as a legitimate form of analysis. It's usually the ones who never got into stocks to begin with and their first if not only investment vehicle is & has been crypto. First off, that's just simply not true. All TA is, in a nut shell: TA is human behavior plotted on a graph. There are inferences to discern by virtue of how patterns of trading behavior cultivate that suggest with a high degree of probability a forecasted directional outcome. Those outcomes tend to resolve themselves more often than not in those anticipated directions. Certainly TA goes a little deeper than this:
THE GOOD: Bitcoin likely en route to $100K w/in the next 2 years.
Bitcoin's parabolic curve has massive upside momentum to see Bitcoin $100,000 some time around 2020 if not sooner. We will inevitably cross $20,000 in due time...and when we do, the mother of all chases will occur....we just may be waiting a while.
$20k is likely not happening anytime this year but likely mid to late next year in 2019. Bitcoin needs a stronger bottoming pattern to flesh out and build confidence in a solid consolidation range that it can spring off of before moving higher. The bounce that has mostly occurred off the last pivot low @ $7000 is constructive but incy wincy relatie to what is required to setup the energy to get back up to $20,000. We need to see Bitcoin above at least $12,000 no later than mid June at best. If Bitcoin is still under $12,000 by mid June, then that likely means that a larger bottoming phase is underway before Bitcoin can really garner the energy to build it's first set of HIGHER-HIGHS on the intermediate term trend.
THE UGLY/WEIRD exception: Bitcoin 50k by end of year to early 2019
There are some exceptions to this which we will showcase in the forecasted scenarios below where Bitcoin can very well close out the year near $50,000.
3 SCENARIOS / VERSIONS OF BITCOIN FORECASTING
SCENARIO 1 → THE FAKE OUT
The fake out is more common in down cycles than any other pattern ironically. And for good cause. The orchestrated goal in fakeouts is to trap long money on the long side at the highest possible price for concert liquidators. Concert liquidators will even buy low points to impression buy-pressure just to re-catalyze a bull-cycle on the near term time frame...all with the goal of selling their larger positions as high as possible. Nothing goes straight down, and when there's a down-cycle it's in large asset liquidator's best interest to sell as high as possible. That means that they'll tie up a portion of their resources to impregnate small & medium sized bull-cycles along a larger downtrend to do so. A fake out would look like something similar to what is presently occurring which consists of a retest of the 10k to 12k area that falls short...doesn't quite get above that area and than continues the downtrend which is likely to produce another deeper low....at best it sets up a double or triple bottom consolidation of some kind before attempting another retest of the highs.
VERSION 2 → HIGHER HIGHS & HIGHER LOWS
A Constructive Bottoming Pattern - Tightening consolidation near the lows followed by a slow melt -up back to the top. Heaviest interest occurs once we clear $20,000
VERSION 3 → "V" RECOVERY FORMATION
In this scenario, we're likely to see Bitcoin close the year closer to $50,000 than being under $20,000. However this pattern is very very rare.
If Bitcoin goes the route of doing a "V" recovery off the lows...then we'd have to be in it right here and now. If bitcoin can't get up to $12k by mid June at the very latest, then you can forget about this scenario - this setup would be off the table. It needs to happen within the current momentum stride that has pushed BTC up to the 10k range. The recent pullback that has occurred within the last 48 hours needs to see a strong reversal for us to have shot at the "V" recovery setup.
Doing a full “V” recovery is the rarest pattern formation that occurs especially after elongated downtrends. The downtrends tires long money out. Up-cycles that get slight spooks like Bitcoin down $1500 in less than 24hrs are vulnerable to panic sellers throwing in the towel in fear of riding their account values back to traumatic levels. Full “V” recoveries are rarely sustainable b/c selling pressure is still too frenetic. Eager during up-cycles... but any whiff of strong plunges to the downside easily scare the recovery.
However there are successful "V" recoveries that occur but they are usually catalyzed by marginally significant improvement in fundamentals of some kind that cause a rush of buyers to chase up the asset class & correct the mistake of selling. Over reactions snap back to the upside to correct a misconstrue that occurred. Emboldened by a strong fundamental improvement, buyers are largely ruled by confidence that no matter where they buy doesn't matter relative to the overall future direction.
HEDGING THE PORTFOLIO VIA ASSET REBALANCING INTO STABLE COINS & SELECT OTHER OUTPERFORM COINS.
So with everything that was said above, how do we intend to both hedge and/or capitalize off the variant setups that are possible from the 3 scenarios pictured above. I may not be posting every day on crypto but I am watching it nearly hour by hour on the day, day in & out. Forming BotTrigger's directional thesis requires us to examine several time frames and reconcile the price action & setups relative to the fundamental advances and/or degradations of the landscape at large.
I'm still evaluating the setup. No fatness has sung just yet. We're still in the potential recovery stage. But that song is running it's course. If bitcoin doesn't muster the energy to get above $12k by mid June @ the latest, then we'll be initiating a new rabalancing to the folio.
CODE NAME: MOON BUNKER MODE
If initiated, in this mode we would be reducing all our positions across the board by 50% into both stable coins & a few other select crypto currencies that have demonstrated out-performance relative to the others during this bear market period. Our reasoning for the below names is not set in stone but is derived from a logical framework based on outperformance & being diversified in a very select names & stable coins. We may change a few of the chosen names, but as of now these are BotTrigger's favorite picks to ride out the bear storm. Again, the goal here is to position the portfolio for both stability and outperformance.
We will be going into 10% tranches in each of the following 10 positions:
MKR - stable coin pegged to the dollar & backed by Ethereum
NON STABLE COINS BUT WILL BE USED TO ACCUMULATE POSITIONS ON:
*NOTE* To get a sense of which cryptos have "outperformed" relative to the rest you could track the entire list of cryptocurrencies and filter them from what % they are below their ATH (all time highs) here → https://athcoinindex.com/
As you can see, Tether is ranked #1. Also note that the very order of which coins are most nearer to their ATH isn't necessarily the only criteria we're using for our chosen list of names. Like ICON for example isn't even at the eye-line level on that page & DGD isn't even on this first page for that matter.
Keep in mind that we may initiate this strategy much sooner than June in fact.
WHAT ARE STABLE COINS?
A stablecoin is a cryptocurrency that has price stable characteristics, usually pegged to another stable asset, like gold or the U.S. dollar. Their goal is to mimic stability like the US dollar.
Typically, most stablecoins are pegged against the USD, but some implementations intend to move over to a basket of currencies or an index such as the CPI(consumer price index) in time
The most common stable coin we see at almost every exchange and is a crypto-household brand name is Tether - ticker USDT. We've used tether before back during the July 2017 correction. Of all the stable coins, Tether is the most widely used with daily volume on average of around $4 billion transacted daily.
USDT - Tether
According to Tether's website, Tether is 100% backed by fiat currency assets in a reserve account. The conversion rate is 1 tether USDT equals $1 USD. The Tether Platform is considered to be fully backed if all tethers in circulation is less than or equal to all fiat that is held in the bank account.
Advantages: Comes close to a like-for-like swap from fiat to crypto, well integrated and established within most of the crypto exchanges. On Binance so very easily accessible. Of all the stable coins, Tether is so far the most consistent with regards to having the least volatility of them all.
Disadvantages: Centralized, not trustless, audit refusals. *Also note, there is a lot of controversy on the legitimacy of Tether largely due to their refusal to showcase a public audit.
We have used Tether before and it worked perfectly when we did. Anywhere from $3 billion to $5 billion of Tether is used daily. We're not overly concerned with the cons. But we're not going to rotate the entirety of that 50% rebalancing into just Tether. We'll be splitting
MKR & DAI coin - MakerDao
Maker is a decentralized autonomous organization that is pegged against the U.S. dollar, but is completely backed by ETH. Their stable coin is Dai and each one is worth $1 USD. Stability is maintained through an autonomous system of smart contracts. To receive Dai, you send your tokens to the Maker platform to lock those tokens up.
Advantages: One of the first in the space (First Mover Advantage), backed by ETH (which is on the blockchain and therefore transparent, unlike Tether)
Disadvantages: can't buy MKR on Binance or Bittrex. Suggested exchange we'll use to buy MKR and or DAI is Bibox or Radar Relay.
PIED PAPER LAUNCHES THEIR ICO
Pay attention to the writers over at Silicon Valley. They're taking the script straight to an ICO near you (figuratively)
Take notice of Gilfoy's revelation on the very reality that companies / users are willing to bid up the value of compute power resources. If you were still struggling to grasp what's all the hoopla about ... is compute credits something that is really transactable & have value: ABSOLUTELY.
Chase Membership Reward Points
Ritz / Marriott points
Amex Reward Points
Server Storage Units
Advertising Slot Space Credits
Starbucks Cash Credits
Google Storage Space
The list infinitely goes on commensurate with nearly every economic unit of transaction.
If the video doesn't show up (may be the case for mobile) you can click on the URL directly
→ https://streamable.com/t51nh Gilfoy's 3 Things to Defend w/ True Passion: CRYPTO
→ https://streamable.com/f2jp8 Richard & Gilfoy - Pied Piper Coin ICO