Technical Analysis is a tool, not a given. In downtrends, support levels break easily. In uptrends, resistance levels generally smash through to higher highs.
But if you understand the theory, TA can provide good entry and exit points while minimizing risk.
Resistance Levels
On a one year chart, there was a long battle just under the $8,000 level.
Why do resistance levels often work? Because all those buyers at that level that are still holding are now praying to get out out. At $8,000 many will do so.
The same applies at the $5750 level or so.
There were two bounces at roughly the $3,800 level. Both have failed. The downtrend resumed. Now, the $3,800 level is resistance. At least it’s weak resistance.
Unfortunately, the first chart shows that support (an area where buyers once entered) is a long ways off, approximately $1,975. That approximately a 50% haircut from here.
Bitcoin a Speculative Vehicle
Fundamentally speaking, there was no mass adoption of Bitcoin and it’s highly unlikely there will be. And if not, Bitcoin will remain little more than a speculative vehicle.
Don’t Confuse Bitcoin With Blockchain
It’s important not to confuse blockchain with cryptocurrencies that use blockchain. While Bitcoin cannot succeed without blockchain succeeding, the converse is not true.
Blockchain can gain widespread adoption while the coin itself heads to zero.
Here’s a March 2018 Flashback to ponder.
March 17 Flashback: Bitcoin Bandwagon Roundup: $91,000 by 2020
My comment: Kodak is branding a $3,400 bitcoin-mining machine that you would have to be ape-shit nuts to buy.https://t.co/lWmBccf1UH
— Mike “Mish” Shedlock (@MishGEA) December 7, 2018
Mike “Mish” Shedlock
Don’t forget to bring this up with Max Keiser next time …. right ?
Bitcoins are a mechanism for remunerating miners for updating the blockchain. While an independent blockchain isn’t dependent on bitcoins per se, they are dependent on remunerating miners. The fact that none of the coins took off as a currency is disastrous for the blockchain technology.
Mining remains profitable, as the hashing difficulty has declined rapidly. The PoW network is perfectly fine. In the ten years of BTC’s existence, I believe this is the 6th bear market of comparable size – the only difference to previous ones is that this one gets more press. Technically and otherwise, there is no difference to previous major bear markets in the currency – it always looks like “it’s finished now”, but it never is.
It won’t be finished until it’s either superseded and replaced by something meaningfully better, or is “cracked”, iow a fundamental flaw is exposed.
So far, the latter hasn’t come to bear. Which after a decade, with several years now of all manners of even rather slapdash currency implementations in the limelight, is pretty comforting.
The jury’s still out on the former. The big selling point originally, was the anonymity story. Once that started getting murky, lots of the excitement faded. There are plenty of proposed solutions, but as far as I’m aware, none so far, possibly for fundamental reasons, simultaneously offer provable anonymity, provable detection of debasement attempts, and complete lack of dependence on any trusted party.
There is no shortage of hard to untangle ledgers, but “hard” isn’t necessarily all that comforting when ledgers are stored for eternity, while both cryptography and the processors to run it, is evolving quickly.
What a shitshow.
Bitcoin’s value is ZERO as a currency.
Bitcoin’s value as a speculative vehicle depends on whether there are new speculators coming to speculate and whether the old speculators still continue to speculate.
It is even worse than that.
Break even “costs” to mine a Bitcoin (to pay for the electricity and cost of the equipment) is about $8,000 (in the west).
“”Bitcoin currently trades essentially at the break-even cost of mining a bitcoin, currently at $8,038 based on a mining model developed by our data science team,” Fundstrat’s Thomas Lee said in a report Thursday.”
In China with the least expensive mining operations –
“The price at which most miners would really start shutting down their operations is around $3,000 to $4,000 per bitcoin, said Fundstrat’s Doctor. He pointed out that bitcoin also traded at the breakeven cost of mining in January 2015, when the cryptocurrency traded near $200.”
Additionally,
You need new miners on a constant basis to track the public record of the blockchain of ownership. Without new miners, it all falls aparts. Miners have to confirm transactions as part of their “mining.”
How much mining is being done by viruses? Those have a cost of near $0 for the “miner”, i.e. the person that puts it on your computer, and makes you mine for him.
Increased rarity seems like good news for holders.
The cost is much lower now, as hashing difficulty has nosedived by 50% or so. Current cost is about $3K per coin.
Technically speaking, exponential spikes (bubbles) deflate below the point where they started. Based on that observation, Bitcoin should bottom below the lows made in the year 2015.