Bitcoin: 25% of the Way to Nowhere - The Tale of 2021 - and Beyond...

bitbrain (63)in #bitcoin • 3 years ago

Well I’ll be the first to admit that the year did not go the way I thought it would.

2021 in the world of crypto was another poignant remind that: “If you want to hear God laugh, tell him your plans”.

If I’ve been quiet about Bitcoin lately - and I have - it’s simply because I have nothing to say, at least, nothing concrete. Sure I can speak about it in general terms, as I will today, but predictions of any actionable value are a near-impossibility at this stage of the game.

I sit here today, warming myself by the fire (metaphorically speaking), drink in hand (*that part is true!) with the intention of discussing what we saw this year, where we are now, and what we MIGHT expect to see next year. Emphasis (in case you missed the capitalisation and italics) on “might”.

A few months ago I erased all the medium-term projections from my charts. Gone are the projected peaks, the timelines of the next year or two and the bull market curves. The image below is the last such projection that I published (From this post). All that remains now are the long-term trendlines; which I shall show you later (spoiler alert: those lines haven’t changed in years).

With the wisdom of hindsight, I now see that 2021 has been the year of stalled rallies; a year of a bull market which forgot to “bull”. It started with a bang as Bitcoin raced up to a new ATH in mid-April. Then along came May, and a reversal of fortunes was signalled. Initially resembling a brief correction, this contraction period continued well into July.

It seems that this down-trend period shook the new hands, and perhaps also the institutional investors - those so desperate to emulate the successes of people such as Michael Saylor. Big investor or small investor, the herd mentality and lifetime of fiat indoctrination runs DEEP within the minds of those who are new to crypto. Weak hands baulk at buying the dips, preferring instead to “ape in” when prices skyrocket. Yeah, it’s supremely retarded - but who ever said that humans are smart creatures?

Not helping this situation are the trader whales: those only in the market for what they can milk out of its volatility. Make no mistake: I have nothing against people trying to earn a living from trading crypto. What I’m talking about is that group of people who don’t believe in crypto at all - they’re not interested in what it stands for, toppling fiat, helping the unbanked or levelling the playing fields - they seek only to use it as a means to an end. You know the type, they're the kind of people who're happy to pay $500 for an Ethereum transaction, because they can afford to. That’s about as ethical as selling kids on the black market. yes, I said that - deal with it. If the pursuit of profit is your main driving force and if it trumps the crypto code of ethics, then you’re not worthy of the moniker “human”. Believe me when I tell you that such people exist: a few crypto companies and individual whales alike have blocked me on social media this year, specifically for calling them out on unethical practices. I wear those blocks as badges of pride: a sign that I am not like them. Incidentally, I may well pen an article about one such crypto company soon, whether I do so or not will depend on how they handle my final attempt to deal with their issues in a reasonable and non-inflationary manner...

I suppose that the old hands of BTC also play a role in this stalled rally. Personally I don’t believe in buying BTC at prices exceeding $40 000, at least not at this time. I also advise people (those who actively ask my advice on such things) not to buy at $50 000 or more. Of course humans remain human, so most of them bought at $60k in April - against my advice, then refused to buy at $30k in July, because they had seen their investment lose half its value. More recently, I have again seen them buy at $50k+ in October/November - and so the cycle of stupidity continues... (even when I attempt to intervene directly).

I suppose it’s reasonable to say that the people who can be described as being “early adopters” are already in Bitcoin, having bought in at far lower prices. The people buying now are definitely still “early”, but we’re no longer in “pioneer territory”. While my own BTC bags are modest, I don’t intend to add to them with fiat. I would love to DCA in regularly, but I simply don’t have the disposable income with which to do so. What I do instead is to funnel a portion of my crypto profits - from activities such as staking - into BTC. In the greater scheme of things, I think it’s fair to assume that most OG’s have already done the majority of their Bitcoin buying, and that they are thus no longer directly driving the price up.

The factors I have mentioned above seem to make sense (at least to me!), in that they explain the observed events of 2021. In a way this is disappointing: I fully expected to see a new major market peak in Q4 of this year (I predicted the end of October 2021 about a year ago) - obviously this has not come to pass. This begs the question: “where to now?”, or “what’s next?”, or “why am I even reading your blog Bit Brain?”.

Those are valid questions, and I will answer them thusly:
I firmly believe that anyone making short or medium-term market prediction at this stage is talking utter tripe. There is NOTHING concrete on the charts - at least not for that time-frame. Patterns have been broken, trends have reversed multiple times and sentiment is capricious. From a fundamental perspective; this makes sense: markets are horribly unstable thanks to the BBRRRRRRR!!!!!! of money printers, the international push towards socialism is stronger than ever before, there is greater tyranny within “democracies” than ever before, the threat of both economic and conventional warfare coming from Asia/Eastern Europe is terribly real, the realities of inflation (probably including stagflation and/or hyperinflation) taking root are being felt, etc. The markets are in a state of low-level panic - whether they realise it or not. This panic leads to volatility as speculation surges and wanes, driven by traders running from pillar to post. Unfollow those pushing medium/short-term crypto TA as dogma, because they’re either clueless or charlatans - neither of which is acceptable.

My advice is to apply the time-honoured principle of “when in doubt, zoom out”.

Zooming out, I am still very positive about crypto! No, I’m not just saying that, I REALLY am! In fact, I'm more positive about crypto now than ever before. I say that with absolute sincerity. The development and adoption of crypto that we have seen in 2021 is staggering! No, I don’t mean NFT art (of which is 99.9999% worthless trash).

This is where the subtitle of this post comes into play: “25% of The Way to Nowhere”.

Time to go to those zoomed-out charts...
I picked the figure of 25% because that’s roughly where BTC sits now: 25% of the way towards the top of a rally. Earlier this year that figure reached about 60%, but the retracements since then have shown that the 100% goal is no longer something which we should expect to see within the immediate future. By “immediate future”, I mean within the next quarter or so. For that to happen now, it would require a rally of unprecedented speed. Such a rally is unlikely, with the caveat that runaway inflation in the fiat markets could trigger truly enormous black-swan events at any time.

But this is why I’m so positive.

We’re 25% of the way up. Should we fall back down to 0%, the default absolutely-no-hype-in-the-market state, then the fall will not be so bad. Should such a “crash” occur today, then it would see Bitcoin prices return to a level equal to that of the previous market peak - about $20 000. As worst-case scenarios go, I’ll take that with glee!

Of course from there things will only get better: by the end of 2022, a 0% hype market will price Bitcoin at around $38 000, a year later it will be over $60 000. Again I say: these are my WORST CASE scenarios!

I would be incredibly surprised if we did not see considerable market hype, including a new market peak, before then. While I am cautiously optimistic about seeing such a thing in 2022, the realist in me knows that the events of 2021 will be acting as a dampener, so there is no way that I can make such a prediction with a clear conscience.

What I CAN tell you is that 2021 has been very healthy for crypto.

Some things to be positive about:

Let’s start with the obvious: the longer it takes before the market peaks again, the higher the peak will be. This is thanks to both the growing adoption and deflationary nature of BTC. In other words, the long-term trendlines are always positive. For example: when BTC started racing upwards in April, it looked like the market would have a maximum peak of around $250k. Then when it did the same thing in October, it looked like $350k was a realistic target. While we can never base future performance on past performance with any degree of certainty: if the trends of previous market peaks hold true, then a peak at the end of 2022 could reach $650k-$800k (depending on which chart you use and how you draw your trendlines).

Retracements are good. They clear out the weak hands, they reset the market hype, they pull even more BTC into that hands of those who will hold it long-term.

Indicators are favourable. Note that these are long-term indicators I’m talking about! Whether you prefer Stochs/RSIs, MACDs, Bollinger Bands, Market Top Indicator algorithms or whatever; they’re all singing the same tune: the market is NO LONGER OVERBOUGHT in any way and has considerable space for growth.

If you look at the Elliott Waves then you’ll see... nothing at all. Because Elliott Waves are simply Fibonacci levels mixed with baseless timeline guesses and superstition. Don’t follow the astrology of the TA world - New Year’s Resolution for 2022 guys and girls: ditch the Elliott Waves! No really - they’re absolutely stupid nonsense.

Whales stopped selling in Q2. The whales took their profits between early February and late May. Since then the largest BTC wallets (1000 BTC or more) have not dropped in number. The supply of BTC on exchanges has dropped and people are HODLing. It stands to reason that hodling and not selling causes price to rise.

DeFi is maturing well. Just this week I deliberately sold off some of my largest centralised exchange coins in favour of decentralised coins. While I believe there is place for both centralised and decentralised crypto (though NOT CBDCs!), the increasingly hostile and authoritarian regulatory environment is making decentralised crypto even more attractive than before. Because of this, the push towards DeFi has accelerated. Products are more plentiful and easier to use than ever before. DeFi platforms now not only rival centralised ones in terms of ease-of-use, but are also refreshingly free of all the stupid advertising, promotions, and authoritarian nonsense. DeFi has greatly improved in terms of wallet integration, cross-chain support, UI, stability, community growth etc.

The stronger Decentralised becomes, the weaker Centralised becomes. And the weaker centralised becomes, the less effect the regulatory environment has over crypto as a whole. On that topic, remember that you have an obligation to oppose any attempt by your government to regulate crypto! Unless, of course, you don’t value silly concepts such as “Freedom”. I see WAY too many “Crypto supporters” willingly bending over and accepting government intervention, taxation, regulation etc. That is unacceptable to me. Willing compliance with the enemy is as cowardly as it is destructive. To do so is to carry culpability. Memorise this phrase: “Unfortunately I lost all my Monero in an unsuccessful atomic swap incident”.

Conclusion

Vert good times are coming to crypto. I don’t know when and I don’t know how good, but I know that they are coming. Hopefully we will have an amazing 2022, and if not, just wait a little longer!

You don't have to trust my long-term trendlines, using straight lines may not even be the correct approach (for what it's worth, I've conducted many experiments in this regard, and I believe that straight lines on a base 10 Log chart are the most accurate). But even if you choose curved versions, it doesn't really make a difference, the results are similar. (P.S. such curved lines are just straight lines calculated on a different log base).

I wish you all a very happy New Year (unless you are in China or somewhere else that doesn’t use Western calendars), God bless you all and best wishes for 2022!

*cherry-infused brandy is FANTASTIC!