26/03/2019/09:00CET
#Bitcoin has fallen through the first level of support in a worrying drop. What does this portend? lets take a look at the chart and see...
BTCUSD Bitstamp daily
- At press time we are trading at 3905usd. A drop of about 100usd from the prevailing price range of late, or about 2.5% down
- We have breached our ascending trend line that seemed to be verified quite strongly by recent price action.
- Interesting we seemed to have weakness in trading as soon as the 21dema crossed and diverged to the downside from the ascending trend line.
- We seem to have caught ourselves on the 21dema though. price action seems to be holding for now.
##BTCUSD Bitstamp daily zoomed out for context
- A long way down to meet the bears that still talk about a retest of lows, about 19% in fact.
- If the 21dema does not hold, the next support may be found at the 3750 level where the 50 and 100 sma's have converged.
- It seems that the 4000 level is a hard nut to crack.
Zooming out a bit more to see the trend of volumes
- Chart data is always clearer in hind sight. Here we can see the comatose volumes in the market had settled in when we held the 6k levels.
- This was bound to break at some point now looking back at it.
- I think it is imperative to look over the long term if you are swing trading or investing.
- In this context, the 200dma is quite an important indicator of bull/bear sentiment.
- We need to get up on top of this indicator and stay there to say we have bottomed out.
- Today this indicator sits at 4693usd.
My analysis
- I still think we are on a knife edge with the bear/bull prognosis
- I have been taking long positions in the last weeks and keep a tight stop loss under them.
- We need to convincingly break the 4000 level to see the odds of the bull overpowering the bear improve.
An interesting analysis of macro conditions and their effect on the crypto world came across my desk recently.
Knowing what I know, the argument was compelling: in it the prognosis of recession in the US and then infecting the rest of the industrialised world is strengthening. All the geopolitical strife around is not helping. The analysis concluded that if a recession hits the US and spreads to Europe, this would be bearish for cryptos. The justification is that most people will pull back into cash to stay liquid.
I think this scenario is predicated on the fact that cryptos are still seen as a investment asset class and not as a utile means of exchange and store of value. This is despite the fact that #bitcoin was intended to be this!.
If we see an inflationary spike along with recession - stagflation, the above prognosis may not be off target.
We need to remember the main motivation of Satoshi in creating Bitcoin: it was a reaction to central bank manipulation in the currency markets and banking in general.
Relevance
The banks will desperately cling to relevance by controlling the narrative of the "how" and "why" of the next downturn. They must remain the saviour of humanity, or they will lose all credibility.
Have any of you ever gotten your car bogged in sand? The speedo is showing 80 but you are moving slower than a snail. This is just seconds before you stop all together, or the motor overheats and blows.
So the next downturn for the global economy is not an if, but a when. When do we reach the tipping point in capitalism? When will the keynesian monetary system lose all momentum and be totally bogged down in its sandpit of debt? Europe is stalling, Italy and Greece are there, Others in the periphery are fast approaching. and I think Japan is already well bogged. And the supercharged V8 of the US economy, while looking like it is going strong, is overheating fast as they pour bucket loads of debt on their debt problem.
Debt
If we are to respect that debt is always an asset on the other side of the ledger, then we may well be reaching the end of this economic cul-de-sac. How many assets and balance sheets will fizzle and disintegrate when they have to be marked to market valuations. A debt that is delinquent cannot be valued at face value anymore, but the lies persist while they can.
There is a powerful concept being played out again in our society: The very people we all look to, to keep the economy running as well as possible MUST NEVER doubt it. This means they are the very worst of all predict or discuss any downturn. For if they even give a whisper of voice to such a narrative, the house of cards comes crashing down.
This is why time and again, it is only the economic fringes that are capable of warning of the onset of a downturn. NEVER the center, never the mainstream media. They must keep painting the most upbeat and optimistic of prognoses till the very last proverbial troglodyte in a cave is aware of the economic collapse.
Economics is a structure based on confidence. The main role of those in charge is to maintain confidence.
In a way, crypto was intended to give humanity a way out of the current debt monetary system. A pressure valve of sorts.
If this metaphor is correct, then sufficient pressure must build up first for it to pop.
As always guys, leave comments, have fun and trade safe.