To The Moon

I still remembered a day back in May 2021 when Bitcoin had been hovering around 50,000 USD to 48,000 USD after it dramatically came down from 60,000 USD. I made the call that if Bitcoin could not hold onto 48,000 USD level, there is a chance for it to break down to 40,000 USD rapidly and it was when I was proven so right and within a day on the coming Monday (just after I posted that article during the weekend), Bitcoin came crashing down to 40,000 USD. What surprised me then was how rapid the move on Monday, which saw Bitcoin bursting downwards to 31,000 USD and there were those people who were highly leveraged with longs in Bitcoin to experience margin call and then had their accounts forced closed. 

Bitcoin USD price chart

After that dramatic fall, various parties came in the buying camp, which include groups that begun buying all the way from 40,000 USD price level once to see the Bitcoin price tanking rapidly to 31,000 USD. Fortunately, the parties who bought from 31,000 USD onwards quickly saw a jump in price that brings Bitcoin back to 38,000 USD and then around 41,000 USD. However, Bitcoin continued to get caught within the boring fluctuation within the range of 38,000 and 34,000 USD for some time before showing lower range bound movement to 31,000 to 34,000 USD, which led me to make another call that it may fall to around 28,000 USD, which if it cannot hold onto the 28,000 USD level for it to fall to around 17,000 USD or even lower.

What had happened since then? I recalled making the highlight to my readers that Elon Musk and Jack Dorsey were having a chat in July 2021 and readers were asking me if there would stabilise the price of Bitcoin then. During the period then, I was reluctant to make the call that this marks the bottom as my attention was elsewhere in the equities markets. On hindsight, Elon Musk and Jack Dorsey and other institutional forces seemed to be happily supporting Bitcoin back after Elon Musk reversed his decision on not allowing Bitcoin as payment for Tesla cars as long as it proves that Bitcoin mining uses 50% of renewable energy for mining. Elon Musk contributed the intial fall of Bitcoin when he made an initial call to stop Bitcoin payments for Tesla cars as a result of the energy intensity of Bitcoin mining way back in May or June 2021.

That was then I took some time to research into a few other coins like Nano coins which were enquired by one of my readers. On hindsight, the firecamp chat by Elon Musk and Jack Dorsey, who I viewed as leading forces influencing Bitcoin prices did singlehandedly as a group supported Bitcoin price and prevented Bitcoin price from falling below 28,000 USD. Right now back at its crossroad, Bitcoin would have to cross 48,000 USD strongly if it is to make a mark back to its all time peak at around 60,000 USD. Will this happen? With US equities at all time high now like Nasdaq 100 and S&P500, there is a possibility as I give it a 50% chance that it may break up and push towards 60,000 USD. This though may not be as an easy route as in the past when Bitcoin dramatically surged past 17,000 USD all the way back to around 64,000 USD since late part of last year to around April 2021. I expect lots of volatility in the area of Bitcoin and if one does not have longs at low prices of Bitcoin, an entry at this point may be a nerve wrecking experience for the inexperienced holder of such cryptocurrency.

In summary, this is a much challenging time to chase such cryptocurrency though there is the possibility of another leg up. However, the risk is even greater now and one has to be able to stomach the volatility or know when to cut the loss. The truth is Bitcoin % movement is so big that any stoploss limit may not be applied skilfully or meaningfully for the inexperienced trader. Question to ask oneself is whether should Bitcoin remain as one of the key asset classes in one's portfolio and if so, what percentage of one's portfolio should one keep in Bitcoin? Considering the volatility, I will not put more than 3% of my entire portfolio in cyptocurrencies. Nevertheless, readers should know that I have zero exposure to Bitcoin or any other cryptocurrencies at this price point.

As always, the above should not be construed as any investment or trading advice.