The Last Wave of Buyers: A Bullish Case for Bitcoin

27 lug

The latest turn of events have got me thinking about parallels to the Gold market back in 2010.
The Timemode chart pattern in the quarterly timeframe is indeed very similar, the last leg up of a multi-year trend happened back then, following a drastic change of stance for nation states and central banks who went from historically being net sellers of the precious metal, to accumulating Gold reserves since 2010 onwards.

Until 2020, tradfi entities were reluctant to get involved with crypto, but things changed thanks to Michael Saylor legitimizing Bitcoin with his bold strategy to adopt it as a balance sheet asset for his company, Microstrategy, which eventually led to a self-reinforced trend of other companies acquiring Bitcoin until COIN IPO'd and the market topped shortly after.

Since ETFs launched, new entrants from the tradfi world have been entering the market, gradually, but surely. Initially only self-directed retail money joined the fray, and now more and more funds, companies and even pension funds are buying the ETF.

Nation-states may be next: both RFK Jr. and Donald Trump might endorse this idea of acquiring Bitcoin reserves for the US of A. That is certainly reminiscent of 2010...With each new wave of buyers, the question arises: who's left to push prices even higher after everyone's done buying?

What's beyond Nation States? Clearly, by the time this pans out, we might face a period where price might stagnate or go down for a longer period than what crypto investors are accustomed to since the creation of cryptocurrencies in 2009.

The timing for this idea fits what Timemode projections indicate: a top will likely take place in a year from now. Until then, the trend remains bullish, and possibly spectacularly so.

Another thing worth considering is crypto's similarity to internet adoption, in which case, we are right in 1999, one year before the Dot Com bubble top...but the interesting part is that after a long grind, eventually mass adoption happened, and enormous gains were made by investors who held on to the likes of Google, Apple, Amazon, and so on.

Very interesting to see what lies ahead, but the period in between might be very slow and frustrating if we chose to remain invested after the market tops in a year.

In the mean time, we have some time to deal with the supply overhang from Mt Gox repayments and ETHE outflows, but things are shaping up nicely for a bullish move during August onwards, which fits the chart variables well, with the potential added bonus of FT repayments in USD hitting the market then too.

Enjoy your weekend and best of luck!

Cheers,

Ivan Labrie.

PS: zoom out to see the targets, Tradingview is bugged and the scale isn't working well.

27 lug

Nota

You can see the monthly developments clearer here: note that price has remained sideways and most of the time was spent trading in the 59-64k range.

This 'mode' constitutes 'fair value' where most of the accumulation took place in this consolidation, before the next leg up.

How can we tell when the consolidation ends and the trend resumes higher?
We need a 'range expansion' bar to break out from the range where price was trading at, or like in this case: a higher low than the 'mode' on close.

If this month's close is higher than 64k odds are high that we stay above 64k during all of August and then break away from the sideways pattern price was tracing since the end of February.

27 lug

Nota

Now look at monthly Gold from 2010 to 2011...

Notice the circled month, price formed the same pattern as now in Bitcoin, a monthly mode forming inside a quarterly trend, in the 4th quarter since the trend initially flashed.

The next month, a signal formed on close with a higher low and the trend resumed higher.

Then this pattern repeated one last time, culminating with a monthly trend hitting 3 times the projected target range at the top, and the time for the monthly signal expiring 1 bar after the high, at the open.

This happened after the time expiration of the trend signal in quarterly timeframe, as you know, Timemode signals predict both a price target and a time duration for the price swing towards said target.

Once price reaches the target or time expires, risk of a consolidation, correction or reversal increase. In this case you had two timeframes signaling high risk (also yearly timeframe trends active in Gold then, but that is a different topic).

27 lug

Nota

Other than technicals, the common thread is the late stage feel the current turn of events give me, considering the size of buying required to send prices higher, we now are recruiting the largest possible entities to buy at higher prices: pension funds and soon maybe even governments and central banks.

This is definitely reminiscent of Gold back in 2010, and is a cautionary tale for people who simply want to bag hold forever, it might be very frustrating for a long time if this prognosis is correct, after the market tops in a year from now.