BITCOIN
Market Musings November 2023 — Bitcoin
It’s been a while since I’ve been this bullish.
Bullish on life. Bullish on Bitcoin. Bullish on humanity. Bullish on peace. Bullish on sanity. Bullish on love. Bullish on the future. Well, at least one of these is true. However, I would much prefer it the other way around.
In the last couple of articles, I mentioned reasons that make me cautious with my bullishness despite the charts looking really good and the stars slowly aligning for Bitcoin, such as:
- April/May 2024 halving.
- Four-year cycle indicating that it’s time to rally into a bull phase.
- ETF is almost certainly going to be approved for many applicants in 2024, opening the floodgates for institutional money.
- We’ve had enormous real inflation, the one thing Bitcoin has been created to combat.
Bearish reasons such as:
- Real estate is about to pop.
- We’re overdue for a correction in the legacy markets.
- Hints of trouble on the employment front.
- Indications that more and more loans for cars and homes are not being covered.
- Companies admitting their income has dropped off a cliff.
- Banks telling us the interest for loans has dried up.
- Being in an environment of high-interest rates, with no easing in sight.
- Not one, but two hot wars, both threatening to end the era of peace and prosperity.
- There being technical recessions in some of the strongest economies, like the German economy and the European countries in general.
I am bullish.
Mega bullish, to be exact. I’m also long and have built my whole position. Still, I feel FOMO (fear of missing out) and want to add to my positions. I don’t because:
- I could be wrong.
- Risk management.
- I use leverage (third-party risk mitigation) and can’t handle large drawdowns.
There is always risk in trading, investing, and life.
We can’t avoid all risks and prosper. It doesn’t work that way. We must take many risks but in a manageable, safe-ish way. This is one of those times when taking a more significant risk seems to make sense. Could it all go horribly wrong? Of course! But the odds favor the bold right now.
I mean, just look at this chart and tell me how you can be anything but bullish.
No, really, zoom in and look again.
Still no? Okay, let’s go in the microverse.
Even the altcoins, the dinos, to be exact (older coins), are popping upward. Nothing stratospheric, but there are signs of the bellowed alt season
This is not something I want to see, to be honest. We are all familiar with the whole BTC>LARGE CAPS>MEDIUM CAPS>SMALL CAPS>ABSOLUTE TRASH meme, aren’t we?
When traders move from Bitcoin to these altcoins, the main rally often loses its steam. There is only so much money in circulation at the moment. Shifting it from daddy Bitcoin to the hideous offspring is usually a sign of caution.
War is good for business and apparently for the markets as well. The legacy markets have been bullish this year. A lot more so than Bitcoin. Which I don’t like, and it doesn’t make much sense.
So, is Bitcoin going to play catch-up, is it decoupled from the stocks, or is there something we’re missing? We’ll find out soon enough.
Here are a few charts of this year’s performance of the legacy markets. They did well and are near all-time highs. Not all, but still, investors were happy.
The old Wall Street chaps are winning again
Bitcoin and cryptocurrency-related stocks have vastly outperformed the currencies, chains, and tokens. Below is a comparison of COIN — the stock of Coimbase, MSTR — the stock of Microstrategy, and then Bitcoin and the Total Market cap of the cryptocurrency market.
This tells us two things:
- Institutional money already has exposure to Bitcoin and crypto through investing in companies.
- For some reason, they are more bullish than the general public and retail investors.
Many possible explanations exist for this discrepancy, but it doesn’t matter. We’ll get them in the end. Right? Right?
Where is Bitcoin’s price going next?
Here’s a short answer:
- A — I don’t know.
- B — I’m bullish.
- C — Up.
That is my working thesis at the moment. If we lose this bullish momentum, this thesis gets invalidated, and this whole breakout turns into a fakeout. Something like this, for example.
But until that happens, or there is at least some indication of weakness in the market, I have to keep my GREEN hat on and forget about the red button (shorting, selling).
I’m looking at this current market in two ways.
The price has left the old low range and is now exploring the next range. If this breakout is successful, with a retest of resistance turned support, or without it, I’m assuming we’ll be testing the upper limit of the range.
In my opinion, the 45,000 USD or thereabout resistance is a nonissue, as it never really mattered much on the way up. I expect a pullback, a retest, or a violent dump around the 40–50,000 USD area, but not the end of this bull move. Caution yes. Top no. It would be a great entry point if all goes well.
I like this logarithmic chart of Bitcoin more for the illustration. Here, we have only two ranges of this whole multi-year price action. This is also how I feel about the price in general. The only levels that I find important on the grand scale of things.
This, then, is my target for now.
I’m not wondering what to do if this rally fails. The answer is simple: sell my position and reevaluate. Take the loss on the nose and wait for another opportunity. No emotions. No fear. No biases I can’t shake. That’s the plan. I only hope I can stay this rational. I tend to be horribly underexposed in bull markets on account of my tendency to be overly cautious.
The questions I haven’t found an answer to yet are:
- Why sell at the resistance if this is indeed a new bull market cycle and the price is going higher — eventually?
- Where do I get back in if I close my positions on the way up?
- What are reasonable expectations for this bull run?
These questions will become relevant if and when we touch the 60–65,000 USD area, give or take. Until then, we’re long and strong until proven wrong. Should the rally fail, we run for the hills, seeking cover and licking our wounds for the foreseeable future.
Good luck out there, friends.
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