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Peter Brandt's Thoughts on Bitcoin, January 25th

01/25/2019 10:04

General comments

 

Boring! What are those old sayings about watching grass grow and paint dry?

I have been through extended sideways moves through the years. We can wish a market will trend but markets will do what they do.

It is saying something when I find a chart set-up in European Milling Wheat more exciting than anything I can find in cryptos. I am so fortunate that my primary markets are futures and forex. I cannot imagine what it would be like to need to trade cryptos in order to pay the bills. In fact, I cannot imagine what it would be like to find good trades in any market in order to pay the bills. I strongly believe that trading capital should represent risk assets and that traders should have at least one year’s worth of savings over and above trading capital to pursue trading full time. Hopefully this describes you. Trading has enough pressures – needing to find a trade to pay this month’s car payment should not be one.

 

There are some signs (very early) that BTC could lose value to other coins – the chart of $LTCBTC is forming a possible H&S bottom but it is way too early to make a call on this pattern. If the right shoulder equals the left shoulder in duration nothing is likely to happen until the middle to end of Feb. Should this pattern properly develop and breakout to the upside I would consider moving some of my long-term BTC position into LTC. But again, a lot can happen in the weeks ahead.

 

 

It is easy to become extremely short-term in the kind of crypto markets we have experienced since late Nov. Losing the forest from the trees is a trap to be avoided. I need to stay focused on a bigger picture and trust my trading model. If you want fast action in cryptos I am not your man. The good thing about BitcoinLive and the reason I give BCL my endorsement is that a number of excellent traders with different time horizons provide worthy content.

The bigger picture for me is that BTC has a 50%/50% chance (my guess of course) of going to $50,000 or becoming worthless. If it goes to $50,000 I want to catch at least a decent chunk of the move in my long-term program. If it goes to $0 I want to avoid be invested beyond 33% of the assets I have designed for scale down buying. This is the perspective I want to maintain.

Markets can take a long time to bottom – and keep in mind that the trend in BTC remains in a hard down profile. How long is “long” you might ask? Great question. I believe a great analog for BTC might be Gold for a number of reasons I will not discuss herein. What if BTC is at that point on the Gold chart highlighted with the black arrow? The arrow on the Gold chart marks Aug 2013. The Gold market has chopped sideways for more than five years. There is a strong chance that even the BTC maximalists will burn out their accounts if BTC chops for five years. Is this scenario even possible? Of course it is. The analog represents a possibility, not a probability. I do not deal in probabilities.

 

 

 

Bitcoin (GDAX and Bitfinex)

 

Three negative features of the BTC charts continue to exist:

  • The weekly trend is down
  • The market lacked the ability to complete a H&S bottom when it had the chance
  • The daily MA line has turned down (in slope) and a close below 3400 (lowered from last week’s number) will formally turn the Factor Daily Trend Model down

The BBands have started to contract – this is neither a negative nor positive for price. A small channel is forming – I will monitor this development.

 

 

 

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