Bill’s Blog | July 13, 2023
Well, it has been a while since I have provided an update on Bitcoin and Crypto. I firmly believe in blockchain and its many innovations, but we are still years away from it being mainstream.
I do not have any capital in Crypto except in a non-trading silver-backed project called Lode. I have been in the project since 2018, and as with all start-up companies, there are many ups and downs. I hope they will be incredibly successful and be the leader in a 100% silver/gold-backed cryptocurrency. I also hope the Lode tokens will soon be tradable so I can at least get my initial capital back. Remember, all crypto projects are pure speculation and potentially can go to zero. As with any speculation, there is always lots of hype and misinformation, so be cautious. So, here is some sound guidance on what I perceive for this game-changing technology and high-risk asset for the near future:
- Trends & Regulation (or lack of).
- Bitcoin & Halving Cycle.
- Technical Analysis
- Finally, Action Steps and Conclusion.
Trends & Regulation:
- The SEC in the US has created a crisis by not doing their job correctly, which is to provide clear and precise Regulation for the industry. Sadly, they have done neither but focused on suing projects and exchanges. Finally, a congressman (Warren Davidson) has requested Gary Gensler, current SEC Chairman, be removed from office. Under Gary’s watch, many projects have blown up, and investors lost billions of dollars. He has failed to create the much-needed Regulation which crypto projects have been asking for years. Currently, 26,299 crypto projects are listed on coinmarketcap.com, and most likely, 90% will disappear.
- Regulation is still critical to stabilize the industry and remove the thousand of poor projects.
- Blackrock, Invesco, WisdomTree, and Fidelity have applied to the SEC to approve a Bitcoin-backed EFT. Until BIG money can safely invest in Crypto or mainly Bitcoin, there is little hope of a significant upside in price. Approval of these ETFs will be a massive catalyst for Bitcoin price appreciation. But there is also the risk of manipulation by the big fund companies using ETFs. So, there are pros and cons with this development if they are approved.
- Only Bitcoin is considered a non-security, so BIG-Money is currently focused on Bitcoin. All Altcoins (everything but Bitcoin) are currently considered securities (but not definitively by the SEC). If the SEC validates this ruling, heavy Regulation and massive costs will follow, and many projects will fail. Only the best Cryptos/Altcoins with utility and those with deep pockets with cash flow, and yes, there are a handful of very profitable projects. Or those who can raise capital quickly will survive.
Bitcoin & the Halving Cycle:
- Unless you do a lot of research, I recommend sticking mainly with Bitcoin, as it is still the leader with a 50% market share.
- Bitcoin, from its inception in January 2009, has followed a four-year cycle based on the halving event of how much compensation the miners receive in payment for validating all Bitcoin transactions. So where are we in the cycle?
- The last Bitcoin Halving event happened on May 11, 2020, and the price went from $9000 US to $69,000 within a year. The next Bitcoin Halving will occur on April 18, 2024. Expect a colossal price appreciation potentially following the halving event if history repeats. We may still be in the crypto winter a bit longer. Being patient to participate is wise, in my opinion, until we see what happens in the fall or early winter of 2023.
- I participated in the last two massive bull runs in Crypto in 2017 and exited in January 2018. I made sizable profits by swing trading 3.5 times. I stayed on the sideline until most of the crypto winter was over (about two years plus), and then I repurchased in 2020. Again, not much happened for the first six months, and then the crypto market exploded by fall, and Bitcoin rallied up to 68.7K US by November 10, 2021. Smart money exited into that massive rally. I, too, did very well swing trading again and sold my last position in February 2022.
- I follow several technical analysts regularly; one of my favourites is Gareth Soloway, founder of “In the Money Stocks” and an excellent trader. I give Gareth credit for the technical indicators for Bitcoin, as he has often been bang-on in his calls.
- Bitcoin has been struggling to maintain the $30,500 consistently. Bitcoin has hit 31,000 a couple of times in the last few months but quickly dropped to 30,000 or a slightly lower level. Why? $30,500 is the resistance level and needs to break through for a minimum of 5 trading days to confirm a move higher. If the confirmation happens, a possible next target would be $35,000. If we cannot maintain the $30500 level, the trend will fall to possibly $26,000. If we get a sizable correction in the fall, expect Bitcoin to retest its recent low of $15,800 in September 2022. If we had a massive crash, we would test 12,000, then 9000, and possibly hit 3500. Then, load up the truck if that were to happen!
- I tend to be more cautious because I follow many significant market trends and cycles, and we have the most massive debt bubble in human history. When this finally blows up, it will not be pretty for anyone!
However, I try to be open and listen to many people with varied viewpoints. Here is one I came across this morning: LONDON, July 10 (Reuters) – The value of top cryptocurrency bitcoin could reach $50,000 this year and $120,000 by the end of 2024, Standard Chartered (STAN.L) said on Monday, predicting the recent jump in its price could encourage bitcoin “miners” to hoard more of the supply.
- Standard Chartered published a $100,000 end-2024 forecast for bitcoin back in April on the view the so-called “crypto winter” was over, but one of the bank’s top FX analysts, Geoff Kendrick, said there was now a 20% “upside” to that call.
These projections are possible if we do not have any significant downdrafts in the fall.
Final Action Steps & Conclusion:
- If you were to venture into the Altcoin world, be very selective, like Ethereum and possibly a few that you have done a lot of research on. The top 10 to 20 market cap projects are an excellent place to start your research.
- Remember, the crypto-market is incredibly volatile, and if you are in profit in any of your assets, take profit until you get 100% of your capital back. This strategy is called “Smart Speculation.” You will never go broke taking profits.
- If you have never purchased cryptocurrency in the past or lost a lot of money, I recommend you study the market and take a couple of courses before you deploy any capital. You must also learn to trade Bitcoin and Altcoins (swing trade), not just HODL. That way, you ensure you lock in profits.
- Cryptocurrencies are 100% speculation; you can lose 100% of your capital. I am not against speculation, as I have done it for over 30 years. I had made tremendous gains (hundreds of % on a trade) but also lost money when I did not manage risk appropriately.
- If you are going to play this game (speculation), you need to understand the rules of the game. Stay away if you are unwilling to do the hard work of learning the rules or willing to pay for a trusted mentor. There is no glory if you lose all of your money. Educate yourself, stay humble, avoid greed, and manage risk; that is how pros make consistent profits.
- Risk management is critical in speculation. Rule number one: After doing tons of research, invest only a small amount of capital you are willing to lose. Spread your capital into a few well-researched projects. Please do not use mortgage/rent money or your monthly budget money. Only use a small amount from your savings you can afford to lose. If you have a spouse/partner, ensure you are both on the same page.
- In conclusion, I will stay on the sidelines until I get clear signals about what happens with the overall markets this fall. As a caveat, I am not a professional trader, just an experienced investor/speculator. There are still so many questions. Will we be in a recession later this year or in 2024? Will the Russia/Ukraine war expand, or a new war breaks out? What will happen with inflation and rising interest rates? Caution is warranted as there as so many risks in our current world. I will most likely take a position late in the fall or early 2024, but I have learned to be patient, which has generally paid off for me many times and in the last two crypto bull runs. Very fun, exhilarating and profitable!
All the best for the remaining 2024!
Bill Westmacott, Owner and financial educator & solution provider.