Bitcoin is Less Risky at $30,000 Than at $65,000

Are you wondering about my thoughts on the fate of altcoins? I got a few emails about it.

I expect altcoins will continue to follow bitcoin, as they always have. Up after bitcoin goes up, down after bitcoin goes down.

Does that mean I will rebalance into altcoins because their trading charts look atrocious against bitcoin?

No. I don’t rebalance, I have a different portfolio strategy.

I often get accused often of analysis that says “could go up, could go down, we shall see” and presenting long-term, macro trends that don’t help you trade.

Guilty as charged.

Few people produce this type of content. Everybody else gives you one side or the other.

To some, my analysis seems backward, nonsensical, and risky. “Unconvincing,” as one person said.

Buy when everybody says the market will go lower? Sell only at the most extreme of extremes — hopefully, never? Sit on your hands for almost seven months while the market explodes?

Yes.

Deeper trends play out behind the scenes, sometimes well before they show up in rising or falling prices. Unless you’re a competent trader, the only way to build wealth in this market comes from identifying those bigger shifts in the momentum of the market and acting before they play out.

At any time, prices can go up or down, sometimes for longer than anybody could anticipate.

That gives us a chance to choose our viewpoints. We can buy into any story we want, any narrative that fits what we want to see. I’m guilty of that, too. Aren’t we all?

When it comes to making decisions in this market, I use analysis solely to build realistic expectations. It’s more about mindset than anything else. I make all of my decisions based on my plan for bitcoin’s bull market.

If you have followed my plan, you’re down as much as 30% or up as much as 600% depending on bitcoin’s exact price at the moment you bought it. Whether you’re bullish or bearish now, you’re ahead of the market.

Given the long-term growth trajectory of bitcoin and the massive opportunity it presents, that’s not a bad place to be.

You know those people who posted 3,000% gains earlier this year?

A few bought $180,000 worth of DOGE in January and fell into good luck.

Most of them bought a long time ago, probably in a situation just like this one, a downtrend within a larger bull market.

You may think it’s crazy to say we’re still in a bull market.

If this market already peaked, it was a peak unlike any other peak ever. We didn’t see any of the signals in the on-chain data and the only confirmation — Pi Cycle cross — has several permutations that did not cross.

While bitcoin’s price dropped 55% from April’s high to June’s low, that drop aligns with the .618 Fibonacci retracement level — the same level we see bitcoin’s price fall during bull market consolidations but never after the market cycle peaks.

Why does the Fibonacci retracement level matter?

Because it accounts for the size of each move up. Bigger move up, bigger move down.

With “Fib levels” we can see the size of the drop in relation to the rise that came before it. As a result, the Fibs allow you to more accurately compare one move to another.

Look at all the .618 Fib retracements during bull markets — drawn from “swing lows” to “swing highs” to the next “local bottom,” excluding moves that came during bear markets.

From April 2021 to today, this correction shares the same proportionality as bull market consolidations. After the cycle peaks of 2011, 2013, and 2017, bitcoin’s price fell to lower Fib levels.

Is that bullish or bearish? Should we expect bitcoin’s price to fall even lower, to match the drops of the previous peaks? Or assume that this drop is like the others of its kind — usually long, sometimes short, and back to previous the high within seven months?

We shall see. In bull markets, bitcoin’s price doesn’t always go up.

In fact, bitcoin’s price has gone down and sideways for 5–7 months at least twice in every bull market. Look at this chart, with those consolidations shaded.

(Note — while I consider the April 2013 top as a market cycle peak, most people consider it part of a bull market that ran from 2011 to December 2013. As such, I included it here.)

When prices go down for six months, I can understand why people would call that a bear market. Even two months seems sufficient for most people.

Does that mean we went into bear markets in 2012, 2013, 2015, and 2016, too?

Yes. They said the same thing in the second half of 2019, the year that ended with bitcoin’s price almost 2.5x higher than the beginning of the year.

They probably said the same thing in 2012, 2013, 2015, and 2016.

People say a lot of things.

At $65,000, people said we’d have $100,000 bitcoin by the end of this year. Now they’re pushing it out to sometime next year. If we don’t get it next year, they will push it out to sometime in the year after that.

Now, people say bitcoin’s price will drop to $20,000, maybe as low as $9,600, and put us in a bear market that will last at least one year. There’s a head-and-shoulders pattern that will send bitcoin’s price to -$5,000 if it plays out.

As an investor, it doesn’t matter. Opportunity and price are different things.

Even the clearest trading patterns have a 67% success rate, at best. Stock-to-Flow deviates as much as 70% below and 400% above its predicted price for months at a time. Four-year cycles can be left- or right-translated. Many advanced on-chain metrics show patterns that change quite often.

Opportunities don’t come after a 20% drop in the middle of a parabolic zoom, even if Twitter says “buy the dip.”

While it’s never a bad time to buy bitcoin — and you can certainly do well in parabolic zooms — the best opportunities come after the crashes.

Buy now and you won’t have to buy later. HODL on the way up, not the way down.

Bulls get fed. Bears get fed. Pigs get slaughtered.

Chinese miners sold like crazy this month. We saw spikes in outflows from Poolin, Antpool, and Binance mining pools to exchanges and OTC desks.

Look at all miners outflow, which aggregates the data from all mining pools.

Do you see those spikes in May and June, to the bottom right of the chart? They coincide with big movements of bitcoin from various mining pools.

Do you also see the huge spikes in January, February, March, and April, in the middle of the chart? That’s from miners unloading a ton of bitcoin on the market — far more than they are now.

The transaction count tells a similar story.

While it’s factually correct to say Chinese miners are selling a lot, it’s not significant in terms of overall trends across all miners or the market as a whole.

In fact, overall outflows are lower than just one year ago — when bitcoin was clawing its way out of the March 2020 wipeout. Transaction count has almost fallen back to levels we saw at end of 2020.

Look at the Miner’s Position Index, a metric that imputes a lot of data into a trend projection. You can dig into lots of data or just look at the MPI for a simple representation of miners’ selling trends in aggregate. Here it is.

Uncharacteristically low since March 2021.

To be fair, miner outflows do matter. Between miners selling to raise cash and newcomers selling to buy lower, this puts short-term pressure on bitcoin’s price.

Just keep perspective.

Then there’s El Salvador, which will soon force everybody to accept bitcoin as payment.

That sounds great, but what does it mean?

The government says it will let people convert bitcoins to dollars instantly. Assuming that works like everybody thinks it will, where will those bitcoins go? Will the government sell them? If not, how will they redeem those bitcoins for dollars? Where will the dollars come from? Will the government set a fixed redemption rate or redeem bitcoins at market value?

Will people even spend their bitcoins when they can spend dollars instead? If you think bitcoin’s “better” money than USD, you’re going to hoard or sell your bitcoin and use your dollars every chance you get. Especially now that there are no tax consequences.

Historically, when governments force people to use two types of money, they always use the less valuable currency and hoard or sell the more valuable currency. This phenomenon was first documented thousands of years ago and now goes by the term “Gresham’s Law.” Bad money chases good money out of circulation.

If that happens, El Salvador’s decision won’t matter. Its people will keep using US dollars. Although perhaps government officials will ask for their bribes in bitcoin now?

That is, if the law is even constitutional in the first place.

When bitcoin’s price went parabolic at the beginning of this year, the on-chain data looked really bad. Whales, OGs, miners, and institutions sold as retail money poured in. The market seemed destined to peak sooner and at a lower price than everybody expected.

At the end of February, I posted this video:

A few weeks later, I published my exit plan.

I also published several articles with the data and analysis about the direction of the market and the likely outcome if it continued its path (peak soon, bear market).

Fortunately, the market cooled off before it could get there. Whales, institutions, and OGs sold into strength and tamped down on prices. As long as bitcoin’s price stays above $29,000, it’s safe to conclude we did not reach the market cycle peak.

Maybe the rest of the year plays out as it did in 2012 or 2019, when bitcoin’s trading charts looked like shit and its price bled for months in the middle of a larger bull market?

Regardless, we need some time for the market to recover. Ideally, months.

Nobody could deny the opportunity to make fast money in this market from January to April. Not only did the opportunity exist, we saw it play out.

Some shitcoins went up 70x or more. Some of my dead altcoins — relics from bad decisions I made over time — pumped triple digits. A few of them went higher than the price I bought them for.

The crypto casino was raging.

Now, the casino is closed. Prices have fallen. They seem to keep going down without end, only brief occasional rallies.

The exact opposite of earlier this year, when they seemed to keep going up without end, only brief, occasional pullbacks.

Nobody can deny the risks of buying now. On-chain metrics haven’t yet shifted back to positive. Any breakdown below $29,000 will almost certainly send the entire market back to its fall 2020 levels.

Also consider the opportunity.

While you’re not likely to get 300% gains from a massive altcoin pump any time soon, you can get those 10x, 20x, 30x returns you’re dreaming about — as long as you have the courage and fortitude to buy now.

Likewise, bitcoin may or may not double in price next month, but you can guarantee it will do far better than that over the next few years. It’s still realistic to expect its price will double by the end of this year.

Can you say that about any other investment you can make at this moment?

This market can drop 80% from any price at any time. The same altcoin that booms 20x over a few months can drop 95% a few months later. China can ban crypto at any time. Any country can ban crypto at any time.

Crypto savings platforms can fail at any time. DeFi protocols can get exploited at any time.

When prices go up, nobody cares. Twitter and YouTube algorithms only serve you that content when the market’s down and people are depressed.

But when you wait for prices to go up, you pay more for less upside and the same amount of risk.

Today, your potential upside is at least 2x higher than it was in April. Some altcoins will easily surpass their previous all-time highs. A $100,000 bitcoin brings back 3x gains compared to 67% gains when bitcoin’s price was $60,000. Altcoins will do far better once we get our next altseason.

All you have to do is buy now and wait.

Better yet, low gas fees make staking and DEX transactions less expensive than at any time since the beginning of this year. Prices are the lowest they’ve been since January. History suggests the market is in a long consolidation before another leg up. On-chain data shows long-term bearish trends have turned neutral, not yet bullish, with clear accumulation by long-term HODLers and large entities.

I need to see more signs of strength before I get too excited. In the coming months, let’s hope we see the market rebuild the foundation it lost from November 2020 to April 2021.

If we see that, you can bet you won’t have to wait until the end of the year to see bitcoin’s price get back to $65,000.

And if it takes another bear market to get there, would you be so upset with *only* doubling the value of your investment in 18 months?

Source: https://www.inbitcoinwetrust.net/bitcoin-is-less-risky-at-30-000-than-at-65-000-25270e010e87?source=rss——-8—————–cryptocurrency