Complete fundamental and technical of Bitcoin and Shitcoins
Aggiornato
Will try and do my best fundamental and technical analysis. Will separate the two, introduce my bullish/bearish points/opinion and then paint the big picture with a a brief analysis and charts.
Bullish:
1. War on cash - People will get more accustomed to digital currencies and get over the idea that 'oh Bitcoin is only digital'. They will also need it to do things the government doesn't approve.
2. CBDC / Libra - Central banks are rushing to create their own digital currencies in order to control the economy even more. China is leading the world and other CBs are following their way. This 99% won't be a blockchain, but it is all about a form of digital cash and having an account directly with the Central Bank. Maybe it is Libra that gets there first and we see it cooperate with the IMF to create an SDR. Like the point above, it just shows why Bitcoin is needed and how more people will focus on the 'digital money space'. The acceleration of everything digital (AI, VR, DA, WFH) is also going to benefit us, as most things related to tech have shown to be more resilient in this down trend and will definitely benefit from people staying home (i.e Nasdaq stocks, Amazon etc).
3. Bank failures - Due to the whole situation with Covid, I expect many failures of banks with many collapsing no matter how much every state tries. Because governments are already struggling and saving banks will be an even harder task. What I see is many will be nationalized, something that would have to come anyways due to CBDCs. Banks will significantly change, as they were already changing dramatically before and there will be some consolidation. Many people ask me: how will people buy Bitcoin if banks don't have the money? Well a. not all will collapse together, b. nobody will sell if banks are failing, c. we've seen it with Cyprus & Greece. Now it will be much much bigger. Like Gold, Bitcoin isn't just an inflation hedge, it is an uncertainty hedge at times where there are defaults (no debasement, no way to lose your deposit).
4. QE / UBI / NIRP - Quantitative easing the way they are doing it now, plus universal basic income coming along with ultra low rates and some buying stocks, definitely sets the stage for Bitcoin. QE and NIRP have deflationary effects on the economy, but there is still more money in the system. With UBI and other policies we could really see inflation picking up at some point and maybe getting out of control. In my opinion more and more people are realising the damage and unfairness of these policies, as well as their effect on asset prices in the long run. The more Central banks pump money and try to bring the dollar down, the more Bitcoin will benefit. The fact that people are hoarding money, doesn't mean there isn't more money in the system that can be invested.
5. Halvings - Several shitcoins and Bitcoin have had or will have their halvings soon. BCH, BSV and ETC have already had theirs, BTC will in a few days, ZEC and ETH in a few months (ETH will move into PoS with much lower inflation). Now compare that to what is happening with CBs and fiat currencies. A potential larger Bitcoin rally in Q1 2020 was postponed due to Covid and instead of a large rally we saw a massive capitulation. Now the price has recovered and looks pretty strong into the halving. Normally a few weeks before the halving the price should have had topped, dump into the halving and after the halving. Once the sell pressure is reduced and speculators get wash out, the price rallies.
6. Capitulation - What we saw in my opinion was a massive capitulation and it will be very hard to get back to those levels. The whole situation looked like late 2015 with the mega Bitfinex margin call where there were many longs that were washed out due to an exchange malfunctioning, and from that point on the price rallied hard. At the same time many alts in USD terms really looked like Bitcoin in 2015, especially the total market cap. Whenever we have seen massive discounts on futures and massive liquidations, the bottom is in. Since then we haven't really seen funding/lending rates go up, premiums have stayed low and Longs/Shorts are not at elevated levels indicating this rally is much healthier.
7. Infrastructure progress - Over the last 3 years we have seen tremendous progress in the space. Exchanges are much better prepared, technology is much more stable and mature, there is a lot of content to help newcomers and this isn't going to stop now. In my opinion Covid only accelerates this trend. More developers will come in as they lose their jobs or gain time working from home. At the same time it is very hard to get bankruptcies in this space, most projects are well funded and can get more funding easily, no issues with people working from home, 'rewards' are still being paid as staking has nothing to do with a yield from revenue and so on. Most shitcoins are useless, but the developer talent isn't being lost and could move into doing something else more useful than developing for a broken shitcoin that wasted all its funding. Investors might get back to investing in things that matter and not speculative trash.
8. Stablecoins / fiat on ramps - the rise of stablecoins is definitely beneficial as more and more people can use cryptocurrencies even without the volatility aspect. Some of these might be from people who use them to transact / evade capital controls etc, but they are all certainly potential Bitcoin buyers as converting a stablecoin into Bitcoin is very easy. They help provide smoother liquidity across exchanges and all the new USDT/USD pairs for altcoins are definitely giving them a boost. We've seen multiple new ways for people to quickly and easily acquire Bitcoin and altcoins, with more ease and lower costs (less fees & slippage).
9. Staking / high rates / lending - As interest rates are going down or negative, shitcoins and lending platforms are offering interesting ways to people to get yield. They are both very risky and most of their models are broken, but as most people don't know how they work and what the risks are, they are attracted to them and happily invest long term. Now people can easily stake/lend on exchanges without having to do complicated things with their coins.
Bearish:
1. Global markets are very fragile and on the verge of collapse. Even though both Bitcoin and Gold are up the year vs the USD, while nearly everything else is down... If the dollar has a 10-20% spike which is possible, we could see them go much lower. It was and is clear that Bitcoin will keep recovering faster than other markets, but what if this was the first leg of the collapse, which might have another 2 or 3 major moves down (or huge chop once SPX hits 1600)? This coupled with a sell the news event on the halving, and we could get a really significant drop.
2. Tech has significantly improved, but we are still nowhere near being able to get 5-10x the number of users/holders we have now. Liquid can help ease a lot of pressures, but Lightning is something that needs at least another 2 years of work to be strong and stable. A prolonged bear market will definitely buy developers more time, but the larger the space becomes, the harder it will be to upgrade Bitcoin. Fortunately shitcoins can act as sidechains and can take a huge load off by allowing the flow of stablecoins and other digital assets on them. They will face major issues, but in a bull market non of these really matter as most newbies are clueless and there can be quick fixes as these systems are centralized. The Bitcoin scaling/privacy issues will definitely boost shitcoins.
3. Markets are still illiquid and inefficient. There are too many exchanges, too many pairs. Bitcoin is being used less as collateral for trading or for trading shitcoins directly. Ethereum pairs have decreased dramatically over the last year and have been mostly replaced by USDT.
4. Regulatory issues. Regulations are still not very clear on the space and there is constant fear that they will clamp down on it. It isn't unreasonable to expect them to take negative actions while their banking system or their currency is having huge problems. To be clear however I don't see a ban coming any time before Bitcoin makes new ATHs as it is tiny. Stablecoins and especially Tether could face issues from regulators as the G20 could clamp down on it.
5. Mining, staking and exchanges are making the ecosystem 'bleed'. Mining will cause less problems as more coins are moving into staking models and productions are being halved. However staking is also making the ecosystem bleed through staking fees and taxes. Exchanges do that through fees taken in crypto while traditional markets have moved to 'no commission trading', as are all the people doing the arbitrage. As right now nobody is really using 'shitcoins' or isn't going to and there are no revenues, we could be facing some issues as people are being forced to sell to cover other expenses. There isn't really a product that will generate revenue other that people buying and holding.
Overall the FA is quite bullish, but it is clear it is going to be a bumpy ride and not gonna be easy. Now let's see what the TA & QA, and how the FA fits into it.
Long/Shorts have gone up significantly since the bottom, but nothing extreme. They are elevated, but nothing compared to were they were 2-3 months ago. Funding rates are really low (borderline bearish near 0.01%), but lending rates overall remain well below 25% for USDT and USD. Futures premiums range between 0-1%, which is pretty healthy for an uptrend and an expiration in 1.5-4.5 months. Open interest in USD terms has gone up, but hasn't recovered since the huge drop. In BTC terms it is pretty low. USDT has a tiny premium despite all the massive inflows, which means there is still pretty heavy demand for it and the market has gone nuts dumping USDT for BTC.
CME has only a few minor gaps lower that opened while CME was going down for maintenance, while every other gap to the upside (except 11700) has been filled. The CME CoT report isn't very bullish, as all the 'wrong' people have been going long BTC again. This usually ends in tears, but it might be early. It's open interest has gone up significantly both in BTC and USD, which makes me think a strong move is coming in either direction, but as people who are usually wrong are long, it might be pointing to the downside.
On the upside other than 11200-11700 there isn't really any void gap. However to the downside 3600-4200, 5400, 6900-7300 and 7800-8200 there are some areas that the market would potentially test. The market has touched all main PoC on VP (3800 and 6400) which turned into support, but 2500 hasn't been tested and neither has the market stayed enough into the 4000-6000 area. Someone could say none of these will be seen again and that the capitulation candle is enough. Someone could also say that we have accumulated / capitulated enough as this was the second 80% correction from the ATH Bitcoin had, while shitcoins have been destroyed both in USD and BTC terms more than 90%. BTC tested its 300 WMA for the first time, filled the 4100 inefficiency, retested the Yearly S1 pivot, is above the Yearly P, all Willy Woo's models price bottom models were tested (3800-4400) and right now the price is just 3% above the S2F model and 10% above its 200DMA + 1 year VP PoC (both at 8k), it is above its 300 DMA and the halving has the potential to really 'force' it to start its new cycle as after a large hashrate capitulation, today hashrate hit new ATHs.
In my opinion right now Bitcoin is pretty fairly valued at 8-9k, despite total longs being somewhat elevated. I still believe than in the next 12 months we will see new ATHs. At the same time hitting 2.5k before 20k is possible. We have seen enough accumulation and price suppression, but in a time of crisis the market could get extremely irrational. In terms of quantitative and technical data bitcoin is fairly valued to slightly overvalued. Fundamentally it is undervalued. Once banks start failing and economies break, Bitcoin could easily pull a November-December 2013. Or Even September-December 2017. If it went from 3k to 20k in 3 months, why can't it do it again and even go higher this time around?
HTF momentum is really bullish. It looks ready to pull a massive U turn and explode upwards. On the Daily it is right below key resistance at 9-9.5 which in my opinion is the last resistance that truly matters. Above 9.6k I see nothing stopping it from going straight to 11.2-11.7k. I'd expect it to take a break at 12-14k and re-accumulate between that and 9.5k, but I am well aware it could just destroy everything and go straight to 20k.
The reasons I believe 2500 is possible is because near 3k there is a volume gap and the 2500 has been tested only once and very quickly. Now Bitcoin has been forming higher highs, but by zooming out these things look like a double - triple - quadruple bottom. These lows could be swept before going higher. Same holds for ETHUSD and LTCUSD, which could see 57$ and 17.5$ respectively as these areas haven't been tested. I can't see how these two will have their double bottoms intact. Also both of these two have insanely high Long/Short ratios on Bitfinex. Maybe we really see L/S ratios go back below 1:1 on BTC and several alts before going higher. I can't see how these would survive at those levels.
For now I am not long any alts as the Bitcoin Dominance looks ready to pop. Either we see BTC drop hard and alts follow or we see BTC pop hard and alts drop hard, so either way volatility could kill them short term. BTC.D is at resistance and just below the 200 & 300 DMA, but I am starting to think that we might get a scenario like Dec 2017 were BTC.D pops hard and then alts moon. That could mean 75-80% dominance for BTC (excluding stablecoins). After the halving the speculation on BTC will die and alts might see flows in them, as the next one will be ETH going to 2.0 which is 'massive'. High BTC prices will definitely draw in newbies which will start buying all that crap. This time around they are on many more exchanges and can be bought way more easily, so I expect big things from alts once things get going.
Before going long alts I'd like to see traditional markets go up and Bitcoin stabilize with BTC.D below the 200DMA. Otherwise see both BTC and alts go up together
Bullish:
1. War on cash - People will get more accustomed to digital currencies and get over the idea that 'oh Bitcoin is only digital'. They will also need it to do things the government doesn't approve.
2. CBDC / Libra - Central banks are rushing to create their own digital currencies in order to control the economy even more. China is leading the world and other CBs are following their way. This 99% won't be a blockchain, but it is all about a form of digital cash and having an account directly with the Central Bank. Maybe it is Libra that gets there first and we see it cooperate with the IMF to create an SDR. Like the point above, it just shows why Bitcoin is needed and how more people will focus on the 'digital money space'. The acceleration of everything digital (AI, VR, DA, WFH) is also going to benefit us, as most things related to tech have shown to be more resilient in this down trend and will definitely benefit from people staying home (i.e Nasdaq stocks, Amazon etc).
3. Bank failures - Due to the whole situation with Covid, I expect many failures of banks with many collapsing no matter how much every state tries. Because governments are already struggling and saving banks will be an even harder task. What I see is many will be nationalized, something that would have to come anyways due to CBDCs. Banks will significantly change, as they were already changing dramatically before and there will be some consolidation. Many people ask me: how will people buy Bitcoin if banks don't have the money? Well a. not all will collapse together, b. nobody will sell if banks are failing, c. we've seen it with Cyprus & Greece. Now it will be much much bigger. Like Gold, Bitcoin isn't just an inflation hedge, it is an uncertainty hedge at times where there are defaults (no debasement, no way to lose your deposit).
4. QE / UBI / NIRP - Quantitative easing the way they are doing it now, plus universal basic income coming along with ultra low rates and some buying stocks, definitely sets the stage for Bitcoin. QE and NIRP have deflationary effects on the economy, but there is still more money in the system. With UBI and other policies we could really see inflation picking up at some point and maybe getting out of control. In my opinion more and more people are realising the damage and unfairness of these policies, as well as their effect on asset prices in the long run. The more Central banks pump money and try to bring the dollar down, the more Bitcoin will benefit. The fact that people are hoarding money, doesn't mean there isn't more money in the system that can be invested.
5. Halvings - Several shitcoins and Bitcoin have had or will have their halvings soon. BCH, BSV and ETC have already had theirs, BTC will in a few days, ZEC and ETH in a few months (ETH will move into PoS with much lower inflation). Now compare that to what is happening with CBs and fiat currencies. A potential larger Bitcoin rally in Q1 2020 was postponed due to Covid and instead of a large rally we saw a massive capitulation. Now the price has recovered and looks pretty strong into the halving. Normally a few weeks before the halving the price should have had topped, dump into the halving and after the halving. Once the sell pressure is reduced and speculators get wash out, the price rallies.
6. Capitulation - What we saw in my opinion was a massive capitulation and it will be very hard to get back to those levels. The whole situation looked like late 2015 with the mega Bitfinex margin call where there were many longs that were washed out due to an exchange malfunctioning, and from that point on the price rallied hard. At the same time many alts in USD terms really looked like Bitcoin in 2015, especially the total market cap. Whenever we have seen massive discounts on futures and massive liquidations, the bottom is in. Since then we haven't really seen funding/lending rates go up, premiums have stayed low and Longs/Shorts are not at elevated levels indicating this rally is much healthier.
7. Infrastructure progress - Over the last 3 years we have seen tremendous progress in the space. Exchanges are much better prepared, technology is much more stable and mature, there is a lot of content to help newcomers and this isn't going to stop now. In my opinion Covid only accelerates this trend. More developers will come in as they lose their jobs or gain time working from home. At the same time it is very hard to get bankruptcies in this space, most projects are well funded and can get more funding easily, no issues with people working from home, 'rewards' are still being paid as staking has nothing to do with a yield from revenue and so on. Most shitcoins are useless, but the developer talent isn't being lost and could move into doing something else more useful than developing for a broken shitcoin that wasted all its funding. Investors might get back to investing in things that matter and not speculative trash.
8. Stablecoins / fiat on ramps - the rise of stablecoins is definitely beneficial as more and more people can use cryptocurrencies even without the volatility aspect. Some of these might be from people who use them to transact / evade capital controls etc, but they are all certainly potential Bitcoin buyers as converting a stablecoin into Bitcoin is very easy. They help provide smoother liquidity across exchanges and all the new USDT/USD pairs for altcoins are definitely giving them a boost. We've seen multiple new ways for people to quickly and easily acquire Bitcoin and altcoins, with more ease and lower costs (less fees & slippage).
9. Staking / high rates / lending - As interest rates are going down or negative, shitcoins and lending platforms are offering interesting ways to people to get yield. They are both very risky and most of their models are broken, but as most people don't know how they work and what the risks are, they are attracted to them and happily invest long term. Now people can easily stake/lend on exchanges without having to do complicated things with their coins.
Bearish:
1. Global markets are very fragile and on the verge of collapse. Even though both Bitcoin and Gold are up the year vs the USD, while nearly everything else is down... If the dollar has a 10-20% spike which is possible, we could see them go much lower. It was and is clear that Bitcoin will keep recovering faster than other markets, but what if this was the first leg of the collapse, which might have another 2 or 3 major moves down (or huge chop once SPX hits 1600)? This coupled with a sell the news event on the halving, and we could get a really significant drop.
2. Tech has significantly improved, but we are still nowhere near being able to get 5-10x the number of users/holders we have now. Liquid can help ease a lot of pressures, but Lightning is something that needs at least another 2 years of work to be strong and stable. A prolonged bear market will definitely buy developers more time, but the larger the space becomes, the harder it will be to upgrade Bitcoin. Fortunately shitcoins can act as sidechains and can take a huge load off by allowing the flow of stablecoins and other digital assets on them. They will face major issues, but in a bull market non of these really matter as most newbies are clueless and there can be quick fixes as these systems are centralized. The Bitcoin scaling/privacy issues will definitely boost shitcoins.
3. Markets are still illiquid and inefficient. There are too many exchanges, too many pairs. Bitcoin is being used less as collateral for trading or for trading shitcoins directly. Ethereum pairs have decreased dramatically over the last year and have been mostly replaced by USDT.
4. Regulatory issues. Regulations are still not very clear on the space and there is constant fear that they will clamp down on it. It isn't unreasonable to expect them to take negative actions while their banking system or their currency is having huge problems. To be clear however I don't see a ban coming any time before Bitcoin makes new ATHs as it is tiny. Stablecoins and especially Tether could face issues from regulators as the G20 could clamp down on it.
5. Mining, staking and exchanges are making the ecosystem 'bleed'. Mining will cause less problems as more coins are moving into staking models and productions are being halved. However staking is also making the ecosystem bleed through staking fees and taxes. Exchanges do that through fees taken in crypto while traditional markets have moved to 'no commission trading', as are all the people doing the arbitrage. As right now nobody is really using 'shitcoins' or isn't going to and there are no revenues, we could be facing some issues as people are being forced to sell to cover other expenses. There isn't really a product that will generate revenue other that people buying and holding.
Overall the FA is quite bullish, but it is clear it is going to be a bumpy ride and not gonna be easy. Now let's see what the TA & QA, and how the FA fits into it.
Long/Shorts have gone up significantly since the bottom, but nothing extreme. They are elevated, but nothing compared to were they were 2-3 months ago. Funding rates are really low (borderline bearish near 0.01%), but lending rates overall remain well below 25% for USDT and USD. Futures premiums range between 0-1%, which is pretty healthy for an uptrend and an expiration in 1.5-4.5 months. Open interest in USD terms has gone up, but hasn't recovered since the huge drop. In BTC terms it is pretty low. USDT has a tiny premium despite all the massive inflows, which means there is still pretty heavy demand for it and the market has gone nuts dumping USDT for BTC.
CME has only a few minor gaps lower that opened while CME was going down for maintenance, while every other gap to the upside (except 11700) has been filled. The CME CoT report isn't very bullish, as all the 'wrong' people have been going long BTC again. This usually ends in tears, but it might be early. It's open interest has gone up significantly both in BTC and USD, which makes me think a strong move is coming in either direction, but as people who are usually wrong are long, it might be pointing to the downside.
On the upside other than 11200-11700 there isn't really any void gap. However to the downside 3600-4200, 5400, 6900-7300 and 7800-8200 there are some areas that the market would potentially test. The market has touched all main PoC on VP (3800 and 6400) which turned into support, but 2500 hasn't been tested and neither has the market stayed enough into the 4000-6000 area. Someone could say none of these will be seen again and that the capitulation candle is enough. Someone could also say that we have accumulated / capitulated enough as this was the second 80% correction from the ATH Bitcoin had, while shitcoins have been destroyed both in USD and BTC terms more than 90%. BTC tested its 300 WMA for the first time, filled the 4100 inefficiency, retested the Yearly S1 pivot, is above the Yearly P, all Willy Woo's models price bottom models were tested (3800-4400) and right now the price is just 3% above the S2F model and 10% above its 200DMA + 1 year VP PoC (both at 8k), it is above its 300 DMA and the halving has the potential to really 'force' it to start its new cycle as after a large hashrate capitulation, today hashrate hit new ATHs.
In my opinion right now Bitcoin is pretty fairly valued at 8-9k, despite total longs being somewhat elevated. I still believe than in the next 12 months we will see new ATHs. At the same time hitting 2.5k before 20k is possible. We have seen enough accumulation and price suppression, but in a time of crisis the market could get extremely irrational. In terms of quantitative and technical data bitcoin is fairly valued to slightly overvalued. Fundamentally it is undervalued. Once banks start failing and economies break, Bitcoin could easily pull a November-December 2013. Or Even September-December 2017. If it went from 3k to 20k in 3 months, why can't it do it again and even go higher this time around?
HTF momentum is really bullish. It looks ready to pull a massive U turn and explode upwards. On the Daily it is right below key resistance at 9-9.5 which in my opinion is the last resistance that truly matters. Above 9.6k I see nothing stopping it from going straight to 11.2-11.7k. I'd expect it to take a break at 12-14k and re-accumulate between that and 9.5k, but I am well aware it could just destroy everything and go straight to 20k.
The reasons I believe 2500 is possible is because near 3k there is a volume gap and the 2500 has been tested only once and very quickly. Now Bitcoin has been forming higher highs, but by zooming out these things look like a double - triple - quadruple bottom. These lows could be swept before going higher. Same holds for ETHUSD and LTCUSD, which could see 57$ and 17.5$ respectively as these areas haven't been tested. I can't see how these two will have their double bottoms intact. Also both of these two have insanely high Long/Short ratios on Bitfinex. Maybe we really see L/S ratios go back below 1:1 on BTC and several alts before going higher. I can't see how these would survive at those levels.
For now I am not long any alts as the Bitcoin Dominance looks ready to pop. Either we see BTC drop hard and alts follow or we see BTC pop hard and alts drop hard, so either way volatility could kill them short term. BTC.D is at resistance and just below the 200 & 300 DMA, but I am starting to think that we might get a scenario like Dec 2017 were BTC.D pops hard and then alts moon. That could mean 75-80% dominance for BTC (excluding stablecoins). After the halving the speculation on BTC will die and alts might see flows in them, as the next one will be ETH going to 2.0 which is 'massive'. High BTC prices will definitely draw in newbies which will start buying all that crap. This time around they are on many more exchanges and can be bought way more easily, so I expect big things from alts once things get going.
Before going long alts I'd like to see traditional markets go up and Bitcoin stabilize with BTC.D below the 200DMA. Otherwise see both BTC and alts go up together
Nota
Some extra comments:Many people might be getting into stablecoins to escape negatives rates or their national currency, as these tokens are more like cash and less than bank deposits. The main one has been USDT and it will probably continue that way. Long term it will have multiple regulatory issues, but for now it works.
Now BTC had a gap on the CME up, first 'significant' one that got filled quickly and looks like an exhausion gap as the price is now 3-4% lower. We did get significantly overbought on the Daily. We can see it from the Bollinger bands I mentioned in the previous analysis where I don't use 2 standard deviations, but 4. This way I can know when a move is really extreme.
Right now the price is fighting with the weekly pivot and the 300 DMA, with most support lying in the 7800-8200 area. If that one is lost I mentioned above areas where I'd expect bounces. Ultimately we might see these lows swept. As you can see the BTCUSDT binance chart (which is pretty much like most USDT charts), they haven't had 3k broken, so this might come.
There is a lot of talk about the Stock-To-Flow model from plan B, that is calling for 55-100-288k in 2020-2024 and I think at least 100k is coming, but I also believe that short term the model could break if traditional market shit the bed.
On the open yesterday Bitcoin went up while stocks went down and the USD up, but then it fell 5%. Stocks really look like they are back to trending down, the USD going up and Bitcoin seems to be rolling over after a massive rally. At least LTFs are turning bearish.
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