Bitcoin Price: $11,341 USD (13 August 2019 3:07pm AEST)
The current environment presents a great opportunity for our clients to review their strategies and set out an actionable plan.
Please note this opinion piece is general in nature; each investor’s circumstances are different and you will need to tailor your plan to your own situation. This is not to be taken as financial advice.
I am greatly bullish on Bitcoin (and only Bitcoin) in the next 12-24 months, anticipating a higher likelihood of reasonable returns, as opposed to a lower likelihood of volatile returns. In this article I will discuss what we are seeing emerge in the Bitcoin and the altcoin markets in detail.
- For those who have yet to fully allocate the bitcoin portion of their portfolio could consider looking for entry points between the current price and $9,000.
- For those who have a large portfolio allocation in altcoins, consider moving into BTC to benefit from the reduced risk per reward ratio.
- Note that those who have a cryptocurrency portfolio with no exposure to BTC will run the risk of seeing no returns in a rising crypto market if the price appreciation is fuelled by macroeconomic fear as opposed to high-risk VC bets.
Bitcoins Mid-Term trend seeking to breakout
Bitcoin in the greater economic environment (long term)
We have seen time and time again that when a nation experiences currency trouble, demand for bitcoin grows dramatically in those specific jurisdictions, often to the point of producing price premiums outpacing arbitrageurs. We are now heading into the first time in history when the following criteria have aligned.
- Two largest economies in the world have begun weakening their currency.
- US Dollar interest rate cut in July, and Wall Street anticipating more rate-cuts this year.
- China responds by lowering the CNY.
- Sufficient historical performance is available for asset managers to reference.
- Bitcoin is in Year 1 of its 4 year market cycle (recovery zone, heading into accumulation period).
While I anticipate a large flow of money into BTC, I think we’d be fooling ourselves to expect another 2017 Bubble. The previous bubble was fuelled by hope (or greed) and occurred in an environment of relatively great asset performance. I believe the next rally for bitcoin will be fuelled by a macroeconomic environment of fear.
If analysts project asset prices to perform poorly, the daring managers could allocate a portion into Bitcoin. Note that these will not be migrations into crypto but simply allocations of ~1% into BTC, used to chase back the projected corrections they are expecting in their main investments. This objective based investment means that once they achieve a certain return, they will sell to lock in the performance rather than hold Bitcoin long-term.
This nature of trading will encourage a more sustained appreciation in the price as opposed to the hugely volatile movements we saw in 2017.
Bitcoin’s short term trend
- Short term bottom set at $9000 USD.
- Regained bullish sentiment in both crypto-specific media and mainstream media.
- The slowing momentum has yet to set a new short-term high, above the previous $13,000 level.
- Possibility of an extended consolidation period between $12,000 and $9,000 if we don’t break out of the trending resistance.
Bitcoins Market Dominance – A Measure of Its % of total Market Cap
- Altcoins have performed terribly over the past 3 months.
- Bitcoin surge dominance from ~52% in April to 70% today (13 Aug 2019).
- Likely to continue with the main Binance platform closing doors to US customers on the 12th of September (Binance US will open, however certainly with far fewer listings and I expect volumes to be dramatically lower too).
- Particular coins that are likely to suffer will be those that are only listed on Binance.
- Most headlines centre around Bitcoin as a macroeconomic hedge, therefore altcoins (which are more geared toward Venture Capitalists) are continuing to lose the interest of investors.
- Looming recessions don’t treat start-ups well.
I hope that this analysis provides you with a greater understanding of the current market conditions and the events which happened last halving. Whilst we cannot predict the market, we hope that you have better information around the key levels were seeing to make better informed decisions.
Jackson has over five years experience in Cryptocurrency Trading and founded one of the first managed Cryptocurrency Investment Trusts in Australia, Bit By Bit Capital. Jackson currently acts as COO for Caleb and Brown, CIO for Bit By Bit Capital and has featured frequently on Sky News, The Herald Sun, The Australian and other major News outlets as a leading expert on cryptocurrency analysis.
Whether you are new to the market, or a seasoned trader, Caleb & Brown can help to realise your goals. Call us on +61 1800 849 149 or Contact Us to discuss further.