Bitcoin’s Futures – Walter Morawa
(September 15th, 2019) Ok, I was a little too early on the bitcoin price catalyst with my ECB call. Sure, we got open ended 20 billion euros per month QE when many thought there wouldn’t be any, but it wasn’t 30 or 40. Nice 3% BTC bounce confirming higher lows, but not what I’m waiting for.
Bitcoin’s massive 5 month symmetric triangle is coming to a conclusion. By most accounts, this should happen when September ends. At a time when the crypto market is looking to break up or down big, the ultimate question is whether this bull market is just getting started or if we are about to enter another winter.
I argue that with all the negative things going on with the world, the halving super cycle, and the fact that all bull markets to date have breached prior highs, this symmetric triangle has as asymmetric upward bias. Also, the Fed is meeting this week. If future cuts are not ensured, the market tanks, and bitcoin could be seen as a safe haven. If future cuts look particularly dovish, bitcoin should definitely jump along with deflationary assets like bonds and gold. The asymmetry continues.
Not to mention that these things become self fulfilling. Think of how many people you hear predicting bitcoin will hit $20k, $30k, $100k. That’s why I’ve put ~80% of my portfolio ($14k) in BTC, ETH, and LTC. For the punchline, I’m looking to exit when bitcoin hits $15k-$17k.
Furthermore, bitcoin is continuing to gain legitimacy. Especially after Bakkt acquired a New York state trust charter and starts futures trading on September 24th. Many are predicting Bakkt could be the catalyst that breaks the triangle’s back. So if this is the reflex point that we are all waiting for, what are the possible outcomes?
Nothing Happens
Per the laws of technical analysis, this is impossible. Not quantum impossible, but extremely unlikely. Are we really so naive to think bitcoin, the most speculative and unregulated market the world has ever seen, is just going to finish in equilibrium forever?
Buy the Rumor, Sell the News
I give this a 50 50 probability. It is quite likely that BTC will start jumping from some smaller catalyst (like moderate Dow drop from Fed hawkishness), go into a bit of a pre Bakkt launch frenzy, and sell off if it gains too much steam. I will only sell some or most of my crypto if we are in the BTC > $15k territory. This will likely only happen if there is a small catalyst. If the Dow drops 5%, buckle up.
Buy, then Hodl
Another possibility is Bitcoin stays in the $9k-$12k range for the next 10 days. The Fed draws Goldilocks. Trump stays quiet. Joe Biden doesn’t have a stroke. If we get lower lows, I don’t care. Higher highs would be nice though.
Once Bakkt launches, I would expect a big jump as shorts are squeezed and speculators take control. Maybe bitcoin will finally breach new highs. My God I hope it does, but I’m not waiting to find out. In honor of the 50% this could boost my account, I will forever hodl .1 bitcoins.
Exogenously Endogenous Price Shock
At this point, I’m not really looking for an exogenous price shock. While economists don’t really have a clear cut definition of the difference between exogenous and endogenous factors, let’s just say I’m not banking on Hong Kong revolting from China, the US military attacking Iran or Venezuela, or Trump to tweet us into a recession in the next 10 days. (That’ll happen in October when he realizes China ain’t gonna sign a deal.) These would be exogenous factors.
Endogenous factors would already be included in everyone’s model. This would be the Fed cutting interest rates this week, and Bakkt launching futures next week. Like I said, both of these have asymmetric upward biases. The Bakkt launch is just another sign bitcoin is maturing and ready for institutional investors to hedge a little risk. You need a crypto condom to protect you from some Trump STD tweets.
Winter is Coming
The lowest probability event in my mind is a downwards break of the triangle. Bitcoin gets hacked in the next 10 days. Blockchain technology is abandoned. Satoshi Nakamoto reveals that he’s not a libertarian. Investors stop being irrational. The below chart stops working. I put this probability about equal to the probability Game of Thrones’ ending would satisfy 95% of the audience. ~10%
Disclaimer: This article is not intended as investment advice.
Published at Sun, 15 Sep 2019 05:45:37 +0000
Bitcoin Pic Of The Moment
✅ This image from Marco Verch (trendingtopics) is available under Creative Commons 2.0. Please link to the original photo and the license. 📝 License for use outside of the Creative Commons is available by request.
By trendingtopics on 2019-03-15 16:06:06
