Bitcoin Cycles Bottom as Price Reaches Multi-Year Trend Support. What Could Trigger 3 – 6 Month Advance?
Bitcoin Cycles Bottom as Price Reaches Multi-Year Trend Support. What Could Trigger 3 – 6 Month Advance?
12/14/18 The Bridge – Currency Wars & Cryptos: “The Currency Wars continue, though more subtle at present, with a three-way battle between paper, hard & digital. It is almost like the game of rock (metals or hard currency), paper (debt-based or fiat currency), scissors (digital or crypto-currency)… except there is no winner.
Paper covers rock (fiat covers metals), although that doesn’t really mean it defeats it… just covers it from view and tries to distract users from its debt-based reality.
Scissors cut paper (digital outdoes fiat), a currency option that finally outpaces the convenience and mobility of fiat currency.
And rock crushes scissors, at least in a battle of tangible (hard) alternatives. At the moment, that is the case – with Gold gaining as Bitcoin and cryptos collapse – but who knows where that will end up. As soon as one round is won, it is off to the next.
As this triumvirate governs the currency space, each individual one is constantly battling for domination as the other two struggle to find their way – sometimes battling each other to remain pertinent.
One way of viewing this was described earlier this year and attempted to illustrate how the strength or conviction of the leader is often divided between the other two. Since both Gold & Bitcoin are a type of anti-Dollar, they are the two factors that multiply to equal the product (the Dollar).
In a situation like the present, the Dollar remains strong and Gold is steadily gaining ground (since its mid-August low), leaving no room for cryptocurrency. As a result, they are in the weakest position and the sharpest declines – bringing them right back to where they belong – the ‘blast-off’ point for the late-2017 parabolic surge (and subsequent crash).
One intriguing aspect of Bitcoin’s movement is its relationship to the Dollar. In any market, there is a certain percentage of its value that is intrinsic or inherent to its governing fundamentals. In heavily speculated markets, like cryptocurrency, that percentage is often a small minority.
Then there is the remaining portion of that value that can be attributed to speculation and/or investment. In Bitcoin, et al, that percentage is a large majority (that often expands during a parabolic move as ‘Johnny-come-latelys’ rush to get in at any cost).
In late-2013 – Jan. 2017, Bitcoin remained in a trading range between roughly $200 – $1,100. For all intents and purposes, that was a fairly rational trading range and trend movement.
From a wave perspective, that was a textbook advance (into early-Dec. ‘13), pullback (into Jan. ’15), and start of a new and larger-magnitude advance.
Bitcoin was heading back to the upper end of that trading range in Jan. 2017, having experienced a steady increase in perceived value. It was advancing on its own merits, or perceived merits, even as the US Dollar was gaining in value. Then, it happened…
The Dollar entered a sharp correction – dropping about 15% from Jan. ’17 into Jan. ’18. It was its largest decline in over 7 years… opening the floodgates.
As the stability in the Dollar eroded, and with it – the faith of many investors and speculators, the appeal of cryptocurrency increased exponentially. A bubble was born. Bitcoin exploded and inversely moved in lockstep with the Dollar – surging to stratospheric levels as the Dollar dropped.
The speculative value of Bitcoin created a bubble that lasted until the Dollar’s descent was nearly complete. And then it happened again… in reverse…
The Dollar bottomed and stabilized and Bitcoin – and the entire cryptocurrency arena – plummeted. In a reinforcement to this principle, Bitcoin has now returned to the trendlines (an upward sloping trend channel) that constrained it from 2014 – early-2017.
In other words, the speculative portion of its value has almost completely evaporated – leaving it with just its perceived ’intrinsic’ value (for lack of a better term, since all of these currencies only hold value based on perception).”
Bitcoin reaches major, 6 – 12 month & 1 – 2 year downside target at ~3,200 (see July 13, 2018 The Bridge) – returning to long-term trend support and its overall equilibrium point. This is occurring as cycles bottom in late-Nov. – mid-Dec. 2018., with the greatest synergy (also including a recurring ~4-month cycle) in mid-Dec. ‘18.
Conversely, the Dollar is setting what should be a 3 – 6 month or 6 – 12 month peak (Nov./Dec. 2018) – ushering in a prime opportunity for Bitcoin to enter a 3 – 6 month (or longer) advance. At the same time, Gold remains positive and is projected to see an overall advance into late-Feb./early-March ’19 and potentially into June/July ’19. That is also hinting that the Dollar’s gains – on a 6 – 12 month basis – are mostly complete.
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