BTC Bull or Bear

There are many Technical Analysts calling for a big BTC rally.

Bullish case from popular TA guru masterluc:

I am not convinced we can apply the previous log trend to the future of BTC for several reasons:

  • BTC hit it’s scaling limit and experienced very high fees. Nothing has been done to address this matter.
  • Lightning Network is still vaporware.
  • Moving from $1,000 to $10,000 is a different scenario than moving from $10,000 to $100,000.
  • The blow off top from 11k to 20k happened in 15 days AKA a blow off top. Charts are damaged.

While the outlier scenarios of mooning to 100k and beyond may grab our attention the most likely scenario is a standard market chart of a blow off top and long road to recovery.

The dreaded and often mocked market cycle chart which BTC has mirrored very closely:

As Jesse Livermore has said:

There is nothing new on Wall Street or in stock speculation. What has happened in the past will happen again, and again, and again. This is because human nature does not change, and it is human emotion, solidly build into human nature, that always gets in the way of human intelligence. Of this I am sure.

Now my caveat. Without a doubt Cryptocurrency is the most exciting technology since the Internet and we are in the very early stages. However, the Internet does not look like it did in the early 90’s, early 2000’s or even 5 years ago. I expect Crypto to move even faster through it’s stages of evolution.

Much like the dinosaurs were hit by a mass extinction event I think a mass extinction is necessary in Crypto. There are hundreds of bad projects using scarce resources. Once we move out of the dinosaur period of Crypto we’ll have an explosion in usage, utility, adoption and price by the projects that survive. Unfortunately I don’t see that rebirth happening in 2018.

Below is a weekly BTC chart with my thoughts on certain price levels. You will see that BTC hit mania phase and for 15 days was a rocket ship. This ended predictably in an almost equal sized crash. (click chart for big)

BTC has name recognition but it no longer has the technology lead. The objective facts are that BTC has pinned it’s hopes on Lightning Network and so far this has been a poor bet. Much like during the early Internet AOL had a substantial lead and then used it’s first mover advantage to create a walled garden but eventually this advantage lost out to market forces. Sound familiar with BTC promoting Lightning Network? History looks ready to repeat.

Once the BTC issue is resolved, one way or another, the Crypto market will enter a new phase.

As Jesse Livermore said, “there is nothing new…because human nature does not change….and it is human emotion that gets in the way of human intelligence”.

 


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