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Boom. Three years in the making. Bitcoin finally hit a new all-time yesterday, first time since 2017, and it doesn’t look like stopping anytime soon. As of writing this the price is at $22,130 and climbing.
Tyler Winklevoss didn’t waste any time dunking on legendary goldbug Peter Schiff…
After weeks of battling dips and resistance in the high teens Bitcoin finally broke through and is taking off into uncharted territory. This is exciting and certainly cause for celebration but it is also new and that means caution. As such it’s important to take a minute to step back look at the market and breathe. Look around and ask a few questions, do a gut check.
That’s exactly what today’s edition will be, a quick State of the Crypto Union and a forward look through the end of the year.
The star of the show. Bitcoin’s performance this year has been phenomenal, the recent run up included. Looking at the daily chart I see significant momentum upward. It’s still on trend but may be getting a bit hot in the near term. I would expect Bitcoin to run a bit more in the coming days, mid 20s feels like a fair estimate, but a turnaround is likely coming.
You can start to see what I mean in the monthly chart. Bitcoin broke a strong level of resistance at $20k but it’s looking overextended. The 2020 run-up is looking a lot like the 2017 run-up in terms of blowing off steam.
On-chain data starts to show confirmation of this pullback. NVT Signal broke it’s uptrend around 12/7 which suggests an incoming dip in price. NVTS is forward looking which would explain the time delay.
Bitcoin is hot and getting hotter. I expect it run into the mid $20,000s but after that I do expect some kind of pullback, likely in the 30-50% range. Look for BTC to find support at $16k and down to $12.5k if it runs that far.
Altcoins have been quietly setting up a great opportunity all year and some have delivered spectacular returns along the way. As Bitcoin has received most of the attention this year via institutional money, altcoins have largely lagged. There are lots of great deals lurking with the majority of coins 2x-10x away from previous all-time highs.
Alts are largely affected by Bitcoin’s dominance in the crypto market. At the height of the 2017 mania, Bitcoin dominance was at 32%. Currently Bitcoin dominance is at 61%. The door is wide open for alts to begin regaining ground against the market leader.
One of my favorite alts, Ethereum remains massively undervalued for the capability the network can deliver. In the near term, it’s slowly creeping back towards ATH but still has plenty of room to go…
Cardano is portfolio favorite as well. On the macro side it has the ability to compete and win against Ethereum (see the bull case here), and on the micro side it’s been dormant since 2018 but has been slowly regaining ground this year. Cardano is about a 10x away from it’s previous ATH and as a top 5 coin by market cap it is sure to get attention from new investors as well.
Another portfolio favorite. On the macro side Chainlink is a great project with a fantastic team and endless use-cases. On the micro side it has been the only quality project that has performed since 2018. It’s currently right on trend and I expect it to be a big player in 2021.
2020 has been a crazy year for a ton of reasons, crypto included. Currently Bitcoin is moving through its last blitz into the holiday season. To wrap up the year I expect Bitcoin to climb to the mid $20,000s where it should sharply pullback 30-50%. Alts will likely follow up and then down. This phase of consolidation will likely be the last buying chance under $20k BTC for awhile and also a great time to secure positions in altcoins. 2021 will be the year that many of the macro forces that were put in motion by 2020 come to fruition and really start adding gas to the fire.
That’s all for this week, have a great weekend and I’ll talk to everyone on Tuesday.
Bitcoin Whale Emerges With $1 Billion, Alan Howard’s Backing – A hedge fund specializing in volatility bets has emerged as one of the largest investors in Bitcoin after quietly buying more than $600 million in cryptocurrencies and joining forces with Alan Howard, the co-founder of Brevan Howard Asset Management.
CME Announces Ether Futures Contracts – The Chicago Mercantile Exchange (CME) announced Wednesday it will launch a futures contract on ether, the world’s second-largest cryptocurrency by market value, in February 2021.
The Portfolio Rundown
Big movement in Bitcoin this week, however altcoins followed closely behind resulting in little change to the relative allocation of the portfolio. As things heat up in Bitcoin I’ll be looking at taking some money off the table via increasing the cash allocation through the end of the year. This will position the portfolio well to take advantage of a consolidation period I believe is coming before we see continued upward momentum.
Nothing in this email is intended to serve as financial advice. Do your own research.
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