I think Bitcoin has hit its market cycle bottom — Why I’m Bullish
As Bitcoin dumps again and is trading slightly below $3500 at the time of writing, I think Bitcoin may have hit bottom. This is very much the contrarian point of view right now. Everyone from Crypto Twitter, YouTube, and the mainstream media is anticipating lower lows and it’s almost a given that Bitcoin will reach sub-3k prices. I’m taking the contrarian point of view for a variety of reasons. The 200 weekly simple moving average is a major support level and Bitcoin marked its current cycle low by bouncing strongly off of it. I’m not a professional analyst and so this is where my TA ends. For a more comprehensive technical argument, Renato Shirakashi wrote a great article that argues from a technical perspective why Bitcoin has likely bottomed.
Additionally when you look at the global economic climate, things are not looking healthy. The Trump-proclaimed strong growth in the economy over the past two years is in fact completely debt-based. As Wall Street’s respected “bond king” and billionaire Jeffrey Gundlach said,
“I’m not looking [at] a terrible economy, but an artificially strong one, due to stimulus spending. We have floated incremental debt when we should be doing the opposite if the economy is so strong.”
I could go on and on about the danger signs in the US and global economies. The stock market is shaky at best and the major stock indeces are entering a great point of resistance (kinda like Bitcoin’s 6k break point). This upcoming week should tell us how stocks will react to this point of resistance, but the warning signs are telling me it likely won’t be good.
Many are of the mindset that larger funds and institutional investors are largely not invested in the cryptoasset market as of yet. But OTC sales in 2018 were sizable and I believe that to be institutions starting to get in. But why would they get in now when risky assets are supposed to be dumped? Well, this risky market of cryptocurrencies is in fact the most risk averse because it, along with precious metals, are the only two investments that are uncorrelated to our current system of stocks, bonds, credit, debt. The only other way to hedge against these markets is to do so directly by entering into positions of inverse ETFs like SQQQ & SDS, for example. I also see mining stocks (both metals and crypto related) doing very well, and if this trend comes sooner rather than later, perhaps Bitmain will be spared from bankruptcy.
This US system appears to me to be a walking zombie, receiving defibrillator shocks to keep it alive with low interest rates as it stumbles along further, and as QE continues to increase its weight. I believe we’re getting to the point that the zombie falls down, never to get up again. If funds, institutions and governments see this collapse as a possibility, the smartest thing they can do is to diversify into uncorrelated assets like Bitcoin. I could easily imagine a large run up in prices in the near term as institutional FOMO ensues with time potentially short to opt out of the zombie system.
All of the aforementioned make me believe we’ve found our Bitcoin cycle bottom. I also think that because our next recession will likely be an inflationary one, large players will transfer wealth into cryptocurrencies such as BTC, XRP, LTC, ETH, and XLM as we move towards the blockchain economy.
Fingers crossed this ages well.
Accumulate, HODL, and think outside the blox!
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