I bought some bitcoin a few years ago at about $440.- and kind of had forgotten about it since as I only had been interested in digital currencies as a possible alternative payment method here at Evil Speculator. However after some research into the space I discarded the idea for two reasons: For one should BTC ever fail then switching recurring subs back to the old greenback would be problematic. And second the gyrations even back then made my head spin and I didn’t consider it ready for prime time.
Earlier this year BTC briefly approached the $3k mark and I couldn’t help but sell what was left. I had an inkling that it would probably push a bit higher but a 700% profit was good enough for me. Now my attitude about crypto currencies is the same as it is about gold or silver: Everyone should hold some for emergencies. The former may become very useful if the Dollar flushes down the toilet (which it actually may – more about that later) but the financial system as a whole remains relatively intact. The latter is a must-have in times when the entire financial system blows up in our faces and trust in government issued fiat currencies drops to near zero.
Don’t get me wrong, if the first scenario actually unfolds one fateful day then I expect BTC to get hit as well. But at least your BTC won’t be stuck in some financial institution that may be compromised. You can simply copy it onto a USB and fly it across the planet if you chose to do so. Far for me to recommend anything illegal of course, plus while I appreciate BTC as vehicle for emergency funds I would never ever use it to store the majority of my assets.
Nobody Saw This Coming?
It’s not just that BTC is favored among drug dealers, online criminal gangs, and money launderers all across the planet. The big damocles sword of a wide scale crack down had been dangling over Bitcoin for years now. Did nobody really expect that at some point the U.S., Europe, or perhaps China would step in and either tightly regulate BTC transactions or outright prohibit it? Which is exactly what happened yesterday in China, from all places I may add as China accounts for the vast majority of BTC trading volume world wide.
Okay, so you didn’t really use it as a financial vehicle to diversify your assets, you were just trading it. Fine, but then what were you thinking holding long when it ran up 40% in less than a month? At the end of July BTC had just breached the $3k mark and anyone in their right mind and a basic understanding of how financial manias unfold should have scaled out shortly after.
Look at the yellow mark I drew on the featured image above. This is where I warned everyone that things are going to get dicy soon and a day later it crashed the first time. Which is when everyone doubled back down and BTC managed to jump by another 40%, almost reaching the $5k mark only three weeks later. Don’t people every learn?
It’s A Crypto Currency – Not An Ideology
But of course they never do, it somehow always turns into sort of a religion or ideology. For sure this time it’s always different. Which is actually the third reason why I would never ever convert a significant portion of my assets into bitcoins. If you follow pertinent websites or the BTC stream on twitter the outright cult-like indoctrination you witness outright amazes me. And we should all know what happens to extreme ideologies in the end – just like the Third Reich, Mussolini’s Italy, Stalin’s Russia, Franco’s Spain, or Pinochet’s Chile, in the end they eventually crash and burn. Hat tip to the PC Brigade of today, but that’s a topic for another day.
Now if you’re a gambler who put all his assets into BTC when it was pushing > $3000 then you’re not just an idiot but you also missed out on all the hedonistic fun you could have enjoyed in places like Las Vegas or even better, Macau. At least there you have scantily dressed girls serve you drinks and distract you in pleasant ways while the house is gradually separating you from your savings.
Now today’s post was actually supposed to be about the Dollar and in some ways it’s related. I’m not exactly sure what type of deal the White House and the Democrats are eventually going to settle on and I frankly do not care as it’s nothing but more of the same we’ve been enduring since 1914. However if Congress is dumb enough to actually approve dispensing with a debt ceiling altogether then you we can kiss the greenback goodbye. If that happens then what we’ve seen in BTC over the past two days will be repeated by the Dollar at some point in the future.
The daily panel on the left continues to look pretty ominous as the current series of lower highs and lower lows has continued since early this year. The Rubicon was breached last week when the Dollar dropped through the 91 mark and 2017 is already the worst year for the greenback since 1986, which was followed by almost a decade of Dollar weakness.
And I don’t see any signs of recovery, as the most liquid USD pairs are all either in break out or rally mode. Shown above is cable which just switched to its 2nd stage rocket boosters.
Since we’re talking currencies let me quickly give you an update on two setups I proposed yesterday (to the subs) which were inversely correlated. The first is the USD/CAD which didn’t look particularly compelling but was one of the few USD related pairs I thought had a chance of producing a squeeze should the Dollar recover. Of course it wasn’t to be, which is why…
… I made sure to be long the EUR/USD as well. Which has already marked 1R in MFE and thus we get to put our stop to break/even. As you can imagine I would have preferred for the USD/CAD to be on the winning side but when it comes to the Euro lately I rarely get pleasantly surprised.
Okay, crude oil is on my watch list now but I’m not about to take it on a Friday after a run up. Let’s see if we get a little spike high followed by a retest of the 100-day first. That weekly panel is looking mighty juicy though, especially with those 100-week Bollingers squeezed to the max.
Two more goodies for my intrepid subs:
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