What Will be the Fate of the World's Most Divisive Asset?
This post is intended as a sort of bookmark in time to document what's going on right now, because this is the wildest divergences of opinions and expectations I've ever seen.
Attached in the charting pic here is a piece I wrote in mid 2021. In that post I was mostly referring to the meme stocks and to some extend the crypto markets. I said I'd never seen more people thinking we were on the cusp of something big in the markets. That was true at the time, but now what's going on with BTC overtaken it.
I've never spent so much time on debuking bull thesis' than I have on BTC. Which is ironic because I really don't care much about where price goes. On the upside, BTC has had diminishing returns for a long time and with the upside volatility risk it caps the risk you can take on shorts.
I think a spectacular move in BTC is likely but from a trader's perspective I don't think it's one of the more exciting opportunities of current times.
But it's fascinating from a market psychology perspective. The most interesting thing I've ever seen.
Here's a summary of the different opinions we have in BTC;
The Bitcoin Literalists
On the extreme end of the bull scale there are people who seem to have a sincere belief BTC will overthrow fiat currency. In my opinion, this is the most flawed opinion but it's the one with the most aggressive proppants.
If you want to speak to someone who knows the future, speak to a BTC literalist. They tend to have unwavering faith in their future forecasts.
I feel this idea would be rendered extremely unlikely to work given the realities of what a deflationary currency would mean. Read more about that below:
It's hard to get any sort of price target from BTC literalists. I've seen the phrase "BTC has no top" used a few times.
Absolutely no failure conditions are given by BTC literalists. They usually discontinue convos (Or name call) if you ask them what would prove the thesis wrong.
The Value Store
A larger selection of BTC bulls do not try to debate the viability of BTC as a currency (There are so many issues with this that few people are willing to overlook all of them) and argue instead BTC is a store of value. "Digital gold" is the recurring phrase when it comes to this. The theory is mostly based on increasing demand and dwindling supply.
These people believe it's irrelevant if BTC succeeds as a currency and the fact it has went up is enough to support the hypothesis it will continue to go up.
A confusing aspect of this case is the aggressive targeting people usually have. It'd seem logical if you were going to liken BTC to gold you'd have targets that directly track with inflation but usually forecasts of this seem to imply an average of 40% or so a year.
It's hard to pin people down on how the store of value thesis would fail.
The Momentum Speculators
There are various bullish views based on simple breakout/momentum strategies. The typical target range for this is 100K on the very low end to 250K or so. Any of the momentum thesis' worth paying attention to tend to use basic trend structure for the failure conditions. Bet on momentum until it fails.
I think the current area is very risky for momentum trading but bull thesis' based on following local trend structure I find non-objectionable. I personally think there may be better odds betting on a false breakout but I think this largely comes down to personal experience in markets and trading styles.
The Cyclers
The attempts at the most precise forecasts of BTC are based on observations of previous 4 year cycles and trading around the halving.
The cyclers often think they have a reliable read on the time and percentage gains that can be expected in this cycle. Price targets seem to range from 250 - 500K with a bull
run to 2028. Can be tricky to get exact failure conditions on this but one would have to assume if there's not a run away breakout this thesis has failed.
The Elliot Bears
This is the camp I find myself in at time of writing, although it has a small margin of error to work now.
The bear Elliot thesis would have it that 2022 was a break of the uptrend and we're in a big bull trap. For this to be valid we have to hold all big closes inside of the previous high. Purest rules would have it a new high should not be made, but we do find instances of intra candle trading above resistances (Wicks) in this setup.
I've spoke more about why I think this is viable risk here.
The Elliot thesis tends to forecast between 10 - 4K. My preference leaning towards a target of about 90% off where the high ends up being.
For the Elliot thesis to be valid we need to see wicks out of the attempted highs. This would likely be expressed with the high being in already although it is possible we double wick and there's a nominally higher high. I think the risk of this move is currently high but would annulled by a valid breakout.
This would be a really tough scenario for bulls. Many people believe it to be literally impossible. See comments in below post:
The Agnostics
The right opinion, IMO. Be agnostic and plan how you'd benefit from multiple different scenarios. The most rational stance to have, if you ask me.
I'd classify myself as an agnostic but it's a bit of a cop out, so I'll give my bias as currently towards the bear Elliot thesis. But my mind can be changed quickly.
The CIA Thesis
There are various examples of people citing some sort of hidden cabal behind BTC. Ranging from the CIA inventing BTC as a pysop to BTC having been mostly manipulated by a small cabal of wash trading from people with vested interests.
These thesis' tend to talk about how the CIA setup BTC as a honeytrap or a diversion to get people to put their money into non-tangible inflation hedges rather than own real inflation hedges, which they cite as the real wealth of the world. Or the market cabal ones talk of a major pump and dump setup.
Almost all variants of this forecast a horrific end for BTC bulls, but are often lacking in quantifiable failure conditions to create a testable hypothesis.
========================================
I think we're heading into a big wealth transfer event.
The question is have retailed caught the big boys with their pants down, or have they been efficiently baited to think they can't lose even while the noose closing around their neck.
It's the Brave New World or the same old trap.
Whatever it is, I doubt it will be boring.
Attached in the charting pic here is a piece I wrote in mid 2021. In that post I was mostly referring to the meme stocks and to some extend the crypto markets. I said I'd never seen more people thinking we were on the cusp of something big in the markets. That was true at the time, but now what's going on with BTC overtaken it.
I've never spent so much time on debuking bull thesis' than I have on BTC. Which is ironic because I really don't care much about where price goes. On the upside, BTC has had diminishing returns for a long time and with the upside volatility risk it caps the risk you can take on shorts.
I think a spectacular move in BTC is likely but from a trader's perspective I don't think it's one of the more exciting opportunities of current times.
But it's fascinating from a market psychology perspective. The most interesting thing I've ever seen.
Here's a summary of the different opinions we have in BTC;
The Bitcoin Literalists
On the extreme end of the bull scale there are people who seem to have a sincere belief BTC will overthrow fiat currency. In my opinion, this is the most flawed opinion but it's the one with the most aggressive proppants.
If you want to speak to someone who knows the future, speak to a BTC literalist. They tend to have unwavering faith in their future forecasts.
I feel this idea would be rendered extremely unlikely to work given the realities of what a deflationary currency would mean. Read more about that below:
It's hard to get any sort of price target from BTC literalists. I've seen the phrase "BTC has no top" used a few times.
Absolutely no failure conditions are given by BTC literalists. They usually discontinue convos (Or name call) if you ask them what would prove the thesis wrong.
The Value Store
A larger selection of BTC bulls do not try to debate the viability of BTC as a currency (There are so many issues with this that few people are willing to overlook all of them) and argue instead BTC is a store of value. "Digital gold" is the recurring phrase when it comes to this. The theory is mostly based on increasing demand and dwindling supply.
These people believe it's irrelevant if BTC succeeds as a currency and the fact it has went up is enough to support the hypothesis it will continue to go up.
A confusing aspect of this case is the aggressive targeting people usually have. It'd seem logical if you were going to liken BTC to gold you'd have targets that directly track with inflation but usually forecasts of this seem to imply an average of 40% or so a year.
It's hard to pin people down on how the store of value thesis would fail.
The Momentum Speculators
There are various bullish views based on simple breakout/momentum strategies. The typical target range for this is 100K on the very low end to 250K or so. Any of the momentum thesis' worth paying attention to tend to use basic trend structure for the failure conditions. Bet on momentum until it fails.
I think the current area is very risky for momentum trading but bull thesis' based on following local trend structure I find non-objectionable. I personally think there may be better odds betting on a false breakout but I think this largely comes down to personal experience in markets and trading styles.
The Cyclers
The attempts at the most precise forecasts of BTC are based on observations of previous 4 year cycles and trading around the halving.
The cyclers often think they have a reliable read on the time and percentage gains that can be expected in this cycle. Price targets seem to range from 250 - 500K with a bull
run to 2028. Can be tricky to get exact failure conditions on this but one would have to assume if there's not a run away breakout this thesis has failed.
The Elliot Bears
This is the camp I find myself in at time of writing, although it has a small margin of error to work now.
The bear Elliot thesis would have it that 2022 was a break of the uptrend and we're in a big bull trap. For this to be valid we have to hold all big closes inside of the previous high. Purest rules would have it a new high should not be made, but we do find instances of intra candle trading above resistances (Wicks) in this setup.
I've spoke more about why I think this is viable risk here.
The Elliot thesis tends to forecast between 10 - 4K. My preference leaning towards a target of about 90% off where the high ends up being.
For the Elliot thesis to be valid we need to see wicks out of the attempted highs. This would likely be expressed with the high being in already although it is possible we double wick and there's a nominally higher high. I think the risk of this move is currently high but would annulled by a valid breakout.
This would be a really tough scenario for bulls. Many people believe it to be literally impossible. See comments in below post:
The Agnostics
The right opinion, IMO. Be agnostic and plan how you'd benefit from multiple different scenarios. The most rational stance to have, if you ask me.
I'd classify myself as an agnostic but it's a bit of a cop out, so I'll give my bias as currently towards the bear Elliot thesis. But my mind can be changed quickly.
The CIA Thesis
There are various examples of people citing some sort of hidden cabal behind BTC. Ranging from the CIA inventing BTC as a pysop to BTC having been mostly manipulated by a small cabal of wash trading from people with vested interests.
These thesis' tend to talk about how the CIA setup BTC as a honeytrap or a diversion to get people to put their money into non-tangible inflation hedges rather than own real inflation hedges, which they cite as the real wealth of the world. Or the market cabal ones talk of a major pump and dump setup.
Almost all variants of this forecast a horrific end for BTC bulls, but are often lacking in quantifiable failure conditions to create a testable hypothesis.
========================================
I think we're heading into a big wealth transfer event.
The question is have retailed caught the big boys with their pants down, or have they been efficiently baited to think they can't lose even while the noose closing around their neck.
It's the Brave New World or the same old trap.
Whatever it is, I doubt it will be boring.
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