👀Has Bitcoin Reached a Top?👀

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To Operators,

Exciting day yesterday, Bitcoin reached a new all time high marking the first time since December of 2017. Congratulations to those who have held since (or before!) and welcome to those that came in after, we’re glad to have you.

Bitcoin’s price has been dancing around in the high teens for quite some time after a rocket-fuel-fed run up from the $10k range which has lead a lot of people to ask is Bitcoin out of gas? To answer that question let’s look at the data.

I always like to start at the price action and work outwards to more macro focused indicators, so taking a look at the daily BTC/USD chart:

We can see that Bitcoin’s price is right on trend. The Thanksgiving dip was significant but appears to have offered some support. Should the price break this trend line we’ll test $17k then $16k then $13k. This chart is bullish.

Moving outwards to the weekly chart:

We’re still on trend but it looks like Bitcoin may be overheated in the near term. This chart indicates there may be another dip in our future but relative magnitude will be inline with the daily chart. Key support level here is $10.5k. This chart is neither bullish nor bearish.

Now let’s look at some of my favorite macro indicators. Google trends is always a great tool to use to gauge general interest in Bitcoin over time.

Recently we can see a bit of a rise in interest but overall not even close to the levels seen in the ‘17/’18 mania phase. Overall this tells me we haven’t hit a meaningful news cycle yet with Bitcoin and in general retail traders have yet to pile on. This is bullish.

Now let’s look at one of my all-time favorite indicators NVT Signal. There’s a great write up here on the details of NVTS but in general it serves as a P/E ratio for Bitcoin.

This chart gets interesting. The Thanksgiving dip broke the original trend line but the rebound is promising. Typically the shallower the trend line the more accurate it will be so resetting at a lower level was likely a positive here. This chart is very bullish.

Given the results so far I don’t think I need to drill deeper into analysis. I don’t see any glaring evidence of a top in price action, interest trends, or on-chain data. Bitcoin is still north of bullish and I believe we have a lot of room left to run. Things to watch out for in the near term will be a media cycle followed by retail entry and institutional buying (see below).

Thanks for reading, have a great week and I’ll talk to everyone on Thursday.

Upward.

– M


Situational Awareness

  • Libra rebrands to Diem, hoping to shake off associations – Per a Tuesday press release, the Libra Association is changing its name to the Diem Association.

    The shift is likely in the hopes of turning the page on Libra's PR. Facebook initially announced its planned global stablecoin Libra in June of last year to immediate regulatory uproar that has swamped the project since. Facebook's involvement has proved especially controversial. (via Coin Telegraph)

  • Bitcoin hits all-time high of $19,857, extends year-to-date return to 177% – Bitcoin reached an all-time high on Monday, breaking its intraday record set in December 2017.

    The world's most popular cryptocurrency surged as much as 8.7%, to $19,857.03, bringing its year-to-date gain to 177%. Last week the cryptocurrency crashed by $3,000 through Thanksgiving after large-volume profit-taking dragged on prices. (via Business Insider)

  • Investment Giant AllianceBernstein Now Says Bitcoin Has Role in Investors’ Portfolios – The research arm of New York-based AllianceBernstein, a global investment manager with $631 billion in assets under management, has had a change of heart when it comes to bitcoin as an investment asset. (via CoinDesk)


The Portfolio Rundown

Not a lot of movement in the portfolio this week, notable change is the removal of the entire precious metals segment in favor of cash (see last Thursday’s letter on the why of this move). It’s time to get aggressive targeting digital assets, will aim to keep the cash allocation ~5% going forward. This is mainly to combat volatility in the portfolio and keep the Sharpe Ratio up.


Nothing in this email is intended to serve as financial advice. Do your own research.


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