Bitcoin, getting stronger

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When prices traded near $ 65,000 three weeks ago, we advised in our free Telegram channel a substantial reduction in BTC exposure and a hedging strategy for the rest when short counter signals are appeared on the horizon. Since then, bitcoin has fallen to around US $ 42,000. Just this recent dramatic drop equates to a 32% drop. In total, Bitcoin is down 39% in just four weeks from new all-time highs. It would be called a massive crash, a six sigma event, difficult to recover in any other market. Not in the bitcoin market however. When these show up for this trade object, the typical steep retracements show up, bitcoin traders salivating for the next low risk entry opportunity. Bitcoin, getting stronger and stronger.

Like a whale diving deep to gorge on krill only to emerge even more powerful soon after. When you capture these cycles correctly, bitcoin is always rewarding.

BTC in US dollars, monthly chart, growing:

Bitcoin in US dollars, monthly chart as of December 7, 2021.

Typically, fortunes are slowly gained and quickly destroyed, which is not the case with bitcoin. Bitcoin’s rises can be as dramatic as their lows. Additionally, bitcoin appears to be fundamental attack proof. With China’s ban on mining, its share of the global hash rate has fallen from 75% held in September 2019 to zero so far.

Miners migrated to the United States and saw their 4% hash rate in 2019 jump to 35%. It is essential to remember such facts, when emotions overwhelm doubt and confidence weakens in the face of these sharp declines in bitcoin. At times when the opportunity arises and self-confidence is essential for accurate execution of trades.

The monthly chart above shows roller coaster movements which can make even the stern trader questionable, but bitcoin has moved closer to the sun after every cloud.

We believe six-digit bitcoin prices are likely over the next few months, as shown in the green up arrow on the far right of the chart.

Gold in Bitcoin, daily chart, measuring true value:

Gold in Bitcoin, daily chart as of December 7, 2021.

Where we see bitcoin strengthening as well, is the relatively rare occurrence of fiat currencies threatened by inflation at the level we are currently at. Fortunes can change hands quickly. Typically, procrastination is fueled by the belief that the cost of things is going up. In reality, money has less value.

As such, we encourage you not to measure everything in your country’s currency. We find steps towards a gold price or bitcoin price a more realistic view of price / value changes.

The chart above shows how the relationship between gold and the price of bitcoin has changed in the short term, with the recent sharp drop in bitcoin.

BTC in US Dollars, weekly chart, in the not too distant future:

Bitcoin in US dollars, weekly chart as of December 7, 2021.

A six sigma event risk in the overall market environment is still present. Such a stock market crash would temporarily push bitcoin to lower prices and should be reflected in your money handling.

Other than that, we see the prices here as a good starting point for the next push which is expected to break all-time highs in the not-so-distant future as seen in the chart above.

Bitcoin, increasingly strong:

No matter what we say to ourselves, when the prices go down we are afraid. It is always difficult to get into such selling pressure for a low risk entry point based on the action / reaction principle to be part of the next bull cycle.

Plus, practice and planning is required to be a part of these lifts and to ride the wave. Our quad strategy aims to reduce the initial risk quickly after an entry. Last Friday’s entries near the day’s lows allowed more than ten percent profit taking on half the position size, a target we call “funding”. Unheard of in any other liquid, low risk market.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.

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