Bitcoin is the original and by far the largest cryptocurrency. Since its introduction in 2009 it has grown exponentially and spawned many competing cryptocurrencies. Opinion is mixed as to its true worth, but speculation and huge interest has created a volatile - and potentially very rewarding - trading environment.

Updated: 15/10/2018 0820BST
0320EST

NEXT 48 HOURS

INDEX 48H

V= 3 C =4             Conditions:  downtrend
F=1  I=2 T= 3 S= 4  Strategy:  short spikes higher

The Last Stand

Bitcoin is in a contracting range since early September which is in a larger contracting range since the June lows. We have therefore labelled a triangle, and this should be the last leg of the triangle - wave E.  This is likely to test the trendline now at 6950 and may actually break it to stop out some shorts before turning lower. We have been warning of a last ramp to 7000 and "something slightly bullish" before the next decline and this is now it. We do not expect a break over 7425, although if this did happen, it would only prolong the triangle and we would still look for a sideways range below 8500.

We are still looking for a last leg into around 3800 beofre a long-term bottom as our updated gold fractal shows (see evidence). 

EVIDENCE

Gold 1980s comparison
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NEXT 10 DAYS

INDEX 10D

V=4 C = 3              Conditions:  downtrend
F=2  I=1 T=3  S=4   Strategy:  two way trading

Bitcoin has very likely topped just shy of $20k at the top of the extended channel. This first stage of the decline has likely already completed near $6k and Bitcoin is now in the second leg - a slow wedge working lower before the final capitulation to our target in the 3000s later this year.

Bitcoin has recovered from a post bubble crash before and it could do so again. Both the 2013-2014 and the NDX comparisons (actually pointed out by Morgan Stanley)  suggest one final leg (see evidence).

EVIDENCE

NDX comparison
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EVIDENCE

Gold 1980s comparison
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EVIDENCE

Rodrigue
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NEXT 3 MONTHS

INDEX 3M

V=4 C =2               Conditions:  DEFLATING BUBBLE
F=2  I=2 T=4  S=5  Strategy: SHORT

2017 was undoubtedly the year of the crypto-currency, led by the largest of the all, Bitcoin. While considered by many to be a currency, we follow the SEC’s classification and analyze Bitcoin as a commodity.

Bitcoin fundamentals are hard to gauge, and although the blockchain technology has huge potential, Bitcoin itself has little value; it’s too volatile to use as a currency or a store of value and the Bitcoin ecosystem is massively costly and consumes huge amounts of electricity. Indeed, the technology has been copied, and improved by countless of other crypto-currencies on and Bitcoin is little more than a speculative play. One narrative throughout 2017 was the increasing opposition by regulators and governments around the world who criticize crytocurrencies as a way of laundering money and avoiding taxes. China was one of the first countries to clamp down, banning ICOs (Initial Coin Offerings), and closing exchanges. South Korea and India are following suit, and although crypto trading easily migrates to other, more welcoming countries (Japan has officially recognized some exchanges and made Bitcoin legal tender) Bitcoin prices are reliant on public interest and participation which is clearly dwindlinge (see evidence).

In terms of price action, Bitcoin is now post bubble and will continue to deflate, first stabilizing in the 3000s, and as long as it holds the 2013 high of 1135 it may make an improbable last rally.

The eventual path depends on how cryptos develop - if Bitcoin becomes an alternate to gold and a store of value for a new generation, it may hold 1135 and turn higher to form a trend sequence above 20k, probably driven by a collapse in fiat currency. However, it is just as likely to be replaced with superior cryptos and continue to drift lower. 

 

EVIDENCE

Public Interest
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