This is the first post to the T&C 20 Blog. It is my hope that this blog will provide trading and investing insights for both day traders and position traders. The frequency of my written blog posts will likely be on a weekly or biweekly schedule. In the interim between my written blog posts, I will provide a stream of relevant articles on important cryptocurrency developments.
Now, let us jump right into it.
Bitcoin. Over the past 2 years, journalists, Wall Street bankers and tech enthusiasts repeatedly tout that the "blockchain" is the future. The blockchain can be used for data storage, smart contracts and social media. The blockchain can revolutionize trading on Wall Street. Yada yada yada. When bitcoin is mentioned, it is merely to introduce the origin of the blockchain technology, and then is quickly dismissed. Despite this steady stream of negative press, bitcoin price continues to rise. It has risen over 90% in the past year, from $457 to its current price of $791. Furthermore, it has been steadily climbing for the past 3 months, now up 30%. The number of transactions per day continues to grow. Many arguments can be made for this sustained growth. "Bitcoin is its own asset class." "It has the most powerful and secure network." "It has first mover advantage." "It has enough liquidity for real world use." Or in relation to the global economy, "the price increase is due to financial controls in China or India," or "it is due to the declining value of the Yuan." While it is difficult to identify the exact causal factor, what we do know is that there is a steadily greater demand for bitcoin. Importantly, this does not seem to be due to any hype as most attention from the media is guarded or negative. What I mean is this does not seem to be a product of pure speculation as was the case in the meteoric price rise in November 2013, where bitcoin price increased from $200 to $1200 in less than a month. I believe that bitcoin is growing and will continue to increase in value over the next few months until it experiences a new wave of investors who succumb to crazed speculation. When this occurs, an exit strategy can then be employed prior to a dramatic correction. We will be here when that time comes.
So bitcoin will increase in value over the next months, but is it a good time to buy now at $790? In my experience, I have found it difficult to predict the price movements of bitcoin on a day to day basis, and will often refrain from making day trading predictions. Nevertheless, I am leaning toward the likelihood of a continued price rise for the following reason. The price of $780 seems to mark a point of resistance as this was the previous high just prior to the bitcoin halving in June 2016. From June until just last week, this point of resistance was not met—despite the bitcoin price steadily growing closer. This critical point of resistance was just surpassed last week, marking a new price high in over 34 months. From here, the likelihood of continued price rise seems greater than the downside risk, especially when considering the proposition of a dramatic price increase over the next months. In summary, if you are already holding bitcoin from earlier prices, then you have been doing great and will likely see more good things. If not, then now might be a good time to buy.
Finally, it is important to keep an eye on the T&C Alt 20 Index. Utilizing this index, I was able to accurately predict that the altcoins were in a bear market months ago. It was at that time that I took profits from the altcoins and moved back into bitcoin, hence avoiding the massive losses some altcoins experienced while at the same time profiting in the bitcoin bull market. Over the next weeks, we will keep an eye in the T&C Alt 20 for a solid trend reversal. When we see a trend reversal whereby both bitcoin and the T&C Alt 20 are rising together, this is a good indicator that new money is moving into cryptocurrency. Moreover, altcoins tend to have dramatic price gains shortly after a bitcoin pump as new money diffuses from bitcoin into the illiquid altcoin markets. For now though, I would take caution in investing in altcoins, with the exception of Waves...to be discussed in the next post.