Talk to most investors who jumped aboard Bitcoin on the tail end of last years incredible rally, and they will look a bit distant – might even pretend not to hear you.
Bitcoin hasn’t really set the world alight over the past few months, and it has become a bit of an elephant in the savvy investor’s room. Yet is this justified? Is Bitcoin now done with us?
We don’t think so – most investments hit peaks and troughs far lower than the trajectory Bitcoin hit, and survive and prosper. The problem for Bitcoin is the expectation. Everyone with interest in crypto is willing it to climb back up to the heady days of $20,000 – on the basis of this expert, or that expert, saying it would go to $100,000 or higher – 6 months later they are disappointed that it hasn’t materialized.
One of the leading Bitcoin proponents, John McAfee, tweeted last week, that he predicted Bitcoin would breach $15,000 before June the 12th, then dip back in July. Those who are up with the current news will note that this was the date of the original summit that was going to take place between Donald Trump and Kim Jong-un of North Korea. We think a rally to this level highly unlikely.
Meanwhile, “Fakhan,” on the website Crypto Daily, is predicting a maximum $130,000 or a minimum of $32,00 by January, 2019, using technical analysis. We think this equally unlikely.
Sensible projections are needed now, as never before – and a lowering of anticipation to a more realistic outcome in the short-term is something we are talking to our clients about.
This is the daily chart for the year so far and you can see the drop down to 1) after the rally at 3). The drop again to 4) in February – and the recent slightly higher drop at 5).
We can attribute all kinds of reasons for these highs and lows, but Bitcoin has always been a volatile instrument. The overriding feature of the chart is the wedge formed by the highs and lows. Bitcoin seems to be moving within this range – and there is no sign of it breaking out any time soon.
The big question now, with the convergence of the EMAs (exponential moving averages), is whether Bitcoin will rally or fall further when it does break away.
In order to be certain of any rally, Bitcoin must hold the support between $6000 and $6500. If it falls, and closes, below this level, it may well go back to £5,943 or lower.
If it can hold this key level, and retests the lows of February and April, (shown at around 6) we may find it rallying back up towards the $11,000 level.
Long-term we think the outlook is still good for Bitcoin – and it may well surprise us with a snap move up (or down) – but for the moment we are stuck up that sleeve …
Noble Gold specializes in IRAs and 401(k) rollovers through precious metals and cryptocurrencies investments.