The bitcoin mania continues. Wheeee! Whoopie! Everything is a circus these days. People are losing confidence in governments and institutions so the interest in digital currencies increases. The day will come, however, when the Federal Reserve and other central bankers announce their own coin, and that will be the coin of the land more than likely. For now, the Wild, Wild West continues and bitcoin rules.
The bitcoin daily chart is topped out with negative divergence (red lines). All the chart indicators are neggie d so the top is in for the daily time frame and a few days of downside will follow. Of course, a positive news bite would extend the top. A negative news bite would act as a catalyst to pound bitcoin quickly lower.
The daily chart is overbot on the RSI and stochastics, and the MACD line is in the stratosphere all agreeable to a pullback. Price has violated the upper standard deviation band (purple) so the middle band at 37,332 and lower band at 26,342 are on the table. You can see that price always comes back to the middle band at the least, which is also the 20-day MA, so 37,332 is a downside target. The line is moving higher, however, so it may come up to meet the falling price at 40K-ish to pull a number out of the air.
Bitcoin price is above the moving averages and needs a mean reversion lower. The ADX shows lower lows and lower highs which is bearish. The pink box shows a strong trend higher in bitcoin during November, December and most of January, but that petered out and the move higher is no longer considered a strong trend higher in the daily time frame. Look for an Aroon negative cross to gauge the downside once it begins.
So the daily chart says down now. But the story is far more interesting than that. The bitcoin weekly chart is also in neggie d (red lines) except for the MACD (green line) that is long and strong. Therefore, the neggie d on the weekly would be expected to conspire with the neggie d on the daily and create several days of downside if not a week or so. However, bitcoin will then recover and come back up to the current highs again, and a bit higher, due to the long and strong MACD line. When that occurs, watch the orange line and arrow. When price makes the new high, say 2 to 3 weeks out, after the dipsy-doodle, if the MACD line is sloping down as the orange line shows, neggie d, because price makes a new high, the top is in for bitcoin on the weekly basis, so that should occur, say, as March begins in 2 weeks and through the month of March. Bitcoin will be slapped by the Ides of March. "Et tu, Brute?" as Bitcoin slumps to the Temple floor, rolling over in a blood-stained toga.
The RSI and stochastics are overbot on the weekly agreeable to a pullback. Price has tagged the upper band so the middle band at 23,461, and rising sharply, is on the table. Bitcoin price is extended above the moving averages requiring a mean reversion lower. The ADX shows that the trend higher in bitcoin in early 2019 and late last year into this year were/are strong trends. That ADX would be expected to roll over lower as bitcoin tops out on the weekly basis over the next 1 to 3 weeks. Look for the negative Aroon cross which would signal extended trouble.
The bitcoin enthusiasts are foaming at the mouth for more highs. The most often heard statement the last few days is "Bitcoin to 50K." The surfing dude was asked about bitcoin and he opined, "Righteous, dude, crypto, yeah, bitcoin, take it to the man, righteous." No one knew what that actually meant but smart and pretty Emily, now promoted to the front trading desk, says, "Bitcoin $50,000!" Everyone has got the bitcoin fever. Frankie ups the ante and proclaims, "Bitcoin $100,000!" Keystone thinks the hype is out of control but this type of thing can extend for a while. Here we go. Some other jackass is calling for "Bitcoin $200K!" Keystone stops at the screen printer's shop to see how the "SPX 4000" hats are coming along and lo and behold, Sarah is finishing a batch of "Bitcoin 50K" hats. Keystone now realizes the bitcoin euphoria is completely out of hand. Sarah says she has a big order for "Bitcoin 60K" hats that she has to deliver by mid-week.
In December, Guggenheim's Scott Minerd proclaims, "Bitcoin $400,000!!!" Woo-hoo. We have a winner in the prediction game; now we will see if it ever happens, or anything even close to it.
Institutional investors such as MA, PYPL, MS and GS are saying positive things about bitcoin and are ready to become involved so everybody and his bro are buying bitcoin. The banks are not going to buy any bitcoin at elevated prices. Everyone is jumping into bitcoin on the positive news, but the banks are not yet ready to be buying regularly, and they are starting to look around at each other wondering what is next.
Keystone's 80/20 Rule says 8's lead to 2's so a breach of the 48,000 level and a couple-few closes above 48K opens the door to 52K. Bitcoin price punches up through 49K now at 48,829. Folks are chasing the digital currency.
What does all this mumbo jumbo mean and all that spaghetti in those charts? Bitcoin will sell off now on the daily basis, so a few days of downside is ahead. The negativity in the weekly chart will help create the near-term pullback. After a few days or week or so of downside, probably in tandem with the stock market, bitcoin will recover back to the current highs because of the fuel provided by the MACD on the weekly chart. When bitcoin comes back up for that high, say 1 to 3 weeks out, the MACD on the weekly will likely go neggie d which signals the beginning of a long multi-week down move in bitcoin.
Bitcoin moves in sync with the US stock market. As bitcoin tops out on the weekly basis and begins a multi-week decline (orange arrow), what does that tell you about the US stock market?
Watch that MACD on the weekly since a sly trick may occur. It is unclear how Stockcharts incorporates the weekly bitcoin data into the chart but when bitcoin begins dropping, that MACD line will drop, and if that next candlestick, when it prints, shows the matching price high and the MACD tops out in that tiny incremental sideways move, that would mean bitcoin is not only dropping in the daily time frame but the top is in for the weekly also and it will not come up to that orange arrow again. It will be down and down for multiple weeks from here forward. So choose your poison. If you made a bunch in bitcoin, exit stage right now. Otherwise, after it drops for a few days, you will be hoping it comes back up like the orange arrow shows.
Bitcoin shorts, through derivatives, can be played now for nimble traders but you will need to be focused and not get too greedy. A safer trade is waiting for bitcoin to set up with the universal neggie d on the weekly, then play the multi-week down move. It appears that the path ahead for several weeks, probably the month of March, will likely be stocks down, bonds up (yield down), dollar up, gold and silver down, bitcoin down.
Keystone does not hold bitcoin and has never owned it. There are several tickers that are always in focus as the bitcoin game is played; GBTC, RIOT, LFIN, BLOK, BTSC, KODK and OSTK. Keystone has played all these tickers over the years but none of them over the last year. GBTC is the same charts as above so it is a short now, it will get spanked down in the week ahead on the daily, but it should recover as described above. Bitcoin and GBTC are topping-out now on the weekly basis, it is close, so do not get too cute on the long side or you will be trapped; be happy with the dough you made.
RIOT is psycho and has lots of momo, it will likely be last to roll over but generally same-o as bitcoin and GBTC. LFIN is craziness and a no-touch. BLOK has momo and will roll over on the weekly basis a week or so behind bitcoin and GBTC topping-out. BTSC will follow the bitcoin path but it is a penny stock and no-touch. KODK is staggering sideways like a drunk in Times Square on Saturday night. OSTK it topping-out on the daily but not yet; the MACD line remains long and strong. OSTK will be a short in about a week's time but after a few days of weakness it should recover higher again on the weekly chart.
The play is likely GBTC short now, then in about a week, flip it long, then about 1 to 3 weeks out, flip it short and hold it short for a few weeks. If you are not as nimble at trading, simply watch the GBTC weekly set-up with neggie d as described above. A GBTC short position can be brought on in three increments entering short next week, then adding to the shorts the week after, then the final add to the short position the week after that, then hold it for several weeks. Of course, nowadays going short is playing with fire since a wild upside move may occur in any ticker so tight mental stops are required and you have to be watching the trade.
Keystone may jump in with a GBTC short this week, if it would top-out and price drops for a few days, take the money and run, and then simply wait a few days after that, watching the MACD line then set up on the GBTC weekly chart, and then go short again for the multi-week down move in bitcoin and GBTC. It is a dangerous speculative trade.
For now, the bitcoin mania party is in full swing. Traders are drunk as skunks off Fed wine using stimulus checks to buy bitcoin, the digital money. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added Monday Morning, Presidents Day, 2/15/21, at 8:16 AM EST: US markets are closed for Presidents Day. Bitcoin drops to 46,061 but recovers to 48,150. The bitcoin mania remains at fevers pitch with traders and investors willing to buy any pull back in the cryto fave. The weakness is due to the neggie d and price would be expected to at least come back to the 20-day MA at 37,332 and rising. The moving average will form a confluence with horizontal price support at the 37K-40K level so the expectation would be for bitcoin to visit there. Then, remember, the weekly chart has the long and strong MACD so bitcoin would then probably receive another rally for a few days or week or so then likely top-out on a multi-week basis. Comically, Bitcoin Magazine calls out $50K as the next victim. Do any of you young folks dashing into cybercurrencies know anything about the history of magazine covers in markets?
Note Added Monday Evening, 2/15/21, at 6:53 PM EST: Bitcoin 47,928.
Note Added Tuesday Morning, 2/16/21, at 7:14 AM EST: Bitcoin 49,518. The enthusiasm increases daily. No one cares about Bitcoin 50K anymore because that is guaranteed so says the crowd, the cybercurrency enthusiasts also decree that six figures are on the way at any time!! (Bitcoin $100,000).
Note Added Tuesday Morning, 2/16/21, at 7:31 AM EST: Bitcoin tags 50K jumping to 50,487! Wheeee! Whoopie! Have another drink! Wheee. Woo-hoo. The 52K is on the table due to Keystone's 80/20 Rule but the analysis remains in play. There is money everywhere nowadays and it is pumping and pumping.
Note Added Tuesday Morning, 2/16/21, at 8:47 AM EST: Bitcoin 49,059. Bitcoin's erratic range today is from 48.5K to 50.5K. Thus, it is trading about 4% of its price over a few hours time. That is volatile.
Note Added Tuesday Morning, 2/16/21, at 8:51 AM EST: Bitcoin 48,889. Whoopsies, daisies. What happened to 50+? The wildness will likely continue.
Note Added Wednesday Morning, 2/17/21, at 2:51 AM EST: Bitcoin 50,815. Wheeee! Whoopie! Bitcoin regains 50K. This will probably go on for a while the give and take. The NYXBT daily chart remains in neggie d but the MACD is trying to now push higher to provide a bit more fuel. There is a flood of money running into bitcoin these days. This would only create a couple day jog move, down-up, and the top on the daily basis. The 52K-53K is on the table over the next day or so and that may do it on the daily.
Note Added Wednesday Morning, 2/17/21, at 8:22 AM EST: Bitcoin 50,882. Bitcoin prints a high at 51,670. The wine is flowing like water. Bitcoin Betty tears off her blouse and twirls it in the air as if she just scored a winning soccer goal. Everyone is completely convinced that bitcoin will move higher forever since it is a store of value. Nouriel Roubini is a naysayer that has factored in the big picture with bitcoin and other digital currencies, including electricity cost concerns, and believes over time the crypto currency will go to zero. It is an amazing debate in economic and market circles. Two camps; one that believes bitcoin goes to the moon well into 6 digits while the other camp says it goes to zero over time and it is simply a pump and dump Ponzi scheme that looks for the bigger fool. As usual, Keystone is in his own camp. Bitcoin will make a low on the weekly chart in March or April at the 25K-40K area, then rally again due to the monthly chart. Bitcoin will likely top-out for the year, and it may be a long-term top, in the June-September time frame. It may blow higher to 80K in the early summer but that would be the multi-month, perhaps multi-year, top. Price will jog in the near term as explained above but expect a multi-week down move for say 2 months. Then up again to 50K-80K in a month or two rally, then that's all folks.
Note Added Wednesday Morning, 2/17/21, at 3:12 PM EST: Bitcoin 52,128. Bitcoin snags the 52K level so the 80/20 rule is satisfied. US dollar index moves above 91 to 91.033.
Note Added Thursday Morning, 2/18/21, at 4:18 AM EST: Bitcoin 51,531.
Note Added Friday, 2/19/21, at 7:00 AM EST: Bitcoin 52,614. Treasury Secretary Yellen is cheerleading more fiscal stimulus.
Note Added Friday, 2/19/21, at 9:40 AM EST: Bitcoin 52,850. Tesla CEO Musk, that invested $1.5 billion in bitcoin, continues to tweet and tout the digital currency along with dogecoin. Musk says bitcoin is better than cash and the cyber darling jumps higher.
Note Added Friday, 2/19/21, at 9:53 AM EST: Bitcoin overtakes 53K. The promises of easy money forever and cheerleading of bitcoin by Musk keep the party going. The market value of bitcoin hits $1 trillion as per Coindesk.
Note Added Friday, 2/19/21, at 11:15 AM EST: Bitcoin 54,250. Bitcoin is melting-up. Traders are in frenzy tripping over each other to buy, buy, buy. They believe in Musk.
Note Added Friday, 2/19/21, at 11:39 AM EST: Bitcoin 54,688.
Note Added Friday, 2/19/21, at 2:25 PM EST: Bitcoin 55,128. Ethereum 1960+. XRP 0.56. Litecoin 237. Bitcoin Cash 718+. Musk has sent Dogecoin from 0.008 to 0.055 in 3 weeks; a big +788% gain. The SEC may want to pay Musk a visit for pumping and, perhaps dumping. Musk can tout bitcoin and cash-out, rinse and repeat. Elon must be getting a bit worried as he backtracks on some of his comments. You are an executive at a major company dude, you cannot be telling people to go out and buy bitcoin and dogecoin and other crypto's; it will get Tesla twisted up in a mess.
Note Added Sunday, 2/21/21, at 5:00 AM EST: Bitcoin is a hoot up to 57,253. The Musk pump is working. It is comical. Musk is pumping, perhaps dumping?, his bitcoin profits after tweeting every day for folks to buy, buy, buy! That is hilarious. Now Musk is saying 'heaven's to Betsy, I do declare that the bitcoin price may be somewhat extended'. It is great entertainment. Musk says the bitcoin price "seems high" and it pops another few hundred. The idiot calls money "just data" pooh-poohing hard physical assets like cash in your hand or gold in your safe. That takes the cake. He can have his digital numbers; only a fool would choose something digital instead of the cash or gold in your hand. Maybe Elon is spending too much time in the Tesla paint department with the inadequate ventilation. TSLA dumped -4.3% last week he should be focused on Tesla rather than bitcoin. Ethereum is at record highs. Musk has cheerleaded and pumped dogecoin higher as well. The party is in full swing, everyone is laughing and having a good time, but when the drop occurs they are going to ask where their money is at. With the hype job last week and big rush of dough into bitcoin, the charts likely need a couple days to price it in. Despite the big move higher in bitcoin, the daily chart remains in neggie d except for the MACD so a top would be expected in this time frame in a few days. On the weekly, the stochastics remain cooked, ditto RSI. The MACD line feels love and the histo. Look for a 2-week jog move to top it out. Down for a few days or week, then back up again to the current highs at 55K-60K, and that would be the top on the weekly chart. Bitcoin will then drop for multiple weeks ahead. The party continues so the choppy wild swings may get out of hand.
Note Added Sunday, 2/21/21, at 2:50 PM EST: Bitcoin crosses above 58K to 58073. Pump it, Musk! Pump it! Ethereum 1971. XRP 0.55. Litecoin 231.37. Bitcoin Cash 719.14. Dogecoin is 0.054795 with a $7.03 billion market cap. A single person owns 28% of dogecoin now a billionaire. It would be funny if it was one of Musk's friends. It's all fun and games, lots of laughs, and it's a blast to play around with sticks poking and prodding and pretending they are swords. It's all fun and games, until someone gets an eye poked out. Then it isn't fun anymore.
Note Added Monday Morning, 2/22/21, at 3:30 AM EST: Bitcoin 56,051. Musk bot bitcoin last month so he likely made a cool billion with the pump. He is likely selling like mad now collecting the dough. Pump and dump, baby, pump and dump. Comically, Tesla is on pace to make more profits in bitcoin than building cars. These are epic times in markets happening in real-time. Enjoy the ride.
Note Added Monday Morning, 2/22/21, at 4:28 AM EST: Bitcoin 55,628. Price is likely dropping as Elon stuffs wads of cash in his pockets. Pump and dump is the oldest scheme in the book. It's comical to watch.
Note Added Monday Morning, 2/22/21, at 5:21 AM EST: Bitcoin 54,317.
Note Added Monday Morning, 2/22/21, at 7:21 AM EST: Bitcoin 52,611.
Note Added Monday Morning, 2/22/21, at 7:25 AM EST: Bitcoin 53,574.
Note Added Monday Morning, 2/22/21, at 8:33 AM EST: Bitcoin 52,685. Testing the lows.
Note Added Monday Morning, 2/22/21, at 8:55 AM EST: Bitcoin 52,085. Broke through the lows. Failed support. BTC is trying like mad to defend 52K. Keystone's 80/20 Rule is 8's lead to 2's and 2's lead to 8's. A breach of 52K and close below for a day or two will open the door to 47K-48K.
Note Added Monday Morning, 2/22/21, at 9:15 AM EST: Bitcoin 47,700 and a bounce. Quickie bottom.
Note Added Monday Afternoon, 2/22/21, at 1:03 PM EST: Bitcoin 51,653. Sub 52K. Treasury Secretary Yellen says bitcoin is "extremely inefficient." You will hear politicians and central bankers say the digital currencies consume too much electrical power to justify the transactions.
Note Added Monday Afternoon, 2/22/21, at 1:28 PM EST: Bitcoin 52,780.
Note Added Monday Afternoon, 2/22/21, at 3:44 PM EST: Bitcoin 54,171. Etherum 1782. Guy on Bloomberg is talking about the energy consumption of bitcoin. You can see how the powers to be are going to use the 'electricity usage angle' as their cudgel. Detractors of bitcoin will likely be waving the 'energy per transaction' banner painting BTC with a dirty brush. Central bankers also likely have the knives out for bitcoin because they will probably introduce their own digital currency in the months ahead. The wild bitcoin ride continues. Elon Musk sure is quiet these days. Did he do all that selling that sunk bitcoin from 58K+ to 47K? If so, it was a great pump and dump. Bitcoin recovers to 54K. The roller coaster ride continues. Bill Gates steps up to the plate and bats around bitcoin saying anyone that does not have Musk's money (which is everyone) should not invest in bitcoin. Gates touts the 'money-laundering' problem with bitcoin attaching a negative connotation to the digital darling. Gates says the 'energy per transaction' is a concern. The global elite align their message.
Note Added Tuesday Morning, 2/23/21, at 4:11 AM EST: Bitcoin 45,297. Flash crash from 48.0K to 45.3K; a -6% drop in only 20 minutes.
Note Added Tuesday Morning, 2/23/21, at 4:38 AM EST: Bitcoin 47,973. The bitcoin enthusiasts are looking around asking what happened? Where's Mr Musk? He was pumping bitcoin saying digital money is better than dollar bills or gold. The drop below 52K sends price to 47K-48K. Bitcoin enthusiasts are blaming Musk's tweet on the weekend when he tweeted that Bitcoin and Ethereum are priced too high with an LOL so it was funny and all a joke to him. Bitcoin retreats as TSLA stock drives lower.
Note Added Tuesday Morning, 2/23/21, at 4:49 AM EST: Bitcoin 47,650.
Note Added Tuesday Morning, 2/23/21, at 6:45 AM EST: Bitcoin 45,100. 58K+ to 45K is a -23% crash. Elon? Where's Musk? Bueller? Elon? Bueller?
Note Added Tuesday Morning, 2/23/21, at 8:12 AM EST: Bitcoin 48,833.
Note Added Friday Morning, 2/26/21, at 6:35 AM EST: The US stock market retreats on Thursday, 2/25/21. The S&P 500 drops 96 points, -2.5%, to 3829, and was down well over 100 points intraday. The Dow loses 560 points. The Nazzy Comp dumps 479 points a bloody -3.5% loss. The Nazzy 100 plummets -3.6% as tech stocks are thrown overboard. The Russell 2000 collapses -3.7%. Bitcoin is all over the map now trading at 46,156.
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