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Tulips Anyone?
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Tulips Anyone?

by The MoleSeptember 15, 2017

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.

Tulips Anyone?

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.

2017-09-15_Dollar

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.

2017-09-15_USDGBP

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.

2017-09-15_USDCAD_update

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…

2017-09-15_EURUSD_update

… 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.

2017-09-15_CL_watch

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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About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • Ian Naugler

    Mole your usually dead on but they’re are several glaring falsehoods in this article about bitcoin, I’m on mobile right now but will come back to this later to correct.

  • http://evilspeculator.com Sir Mole III

    I don’t mind constructive criticism at all. You are more than welcome to offer your POV and if I got anything wrong I’m happy to correct it.

  • OJuice

    Thanks for the post Mole. Good reading for a Friday morning. Looking forward to Ian’s response below and hoping it will constructive.

  • http://evilspeculator.com Sir Mole III

    Slow here today. Has everyone already checked out for the weekend?

  • OJuice

    I’m bird dogging /CL to see if I can find a chance to add to my position with very minimal risk.

  • Brishort

    Would love to be at my desk but caught with external errands! Thanks for the post Mole, very good. To all the excellent crew hanging around, have a super week-end!

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    almost, getting a CAT scan in a few hours. possible appendicitis. see you on the other side.

  • Julie

    Looking at KEM for a long …. Must have a bullish close above it’s daily 5 ema approx. 20.24. Looking also to short F and needs a bearish close below 11.49 (today’s low) Everyone Have A Great Weekend
    JULIE

  • Julie

    Mole I am like Warren Buffett ……. If I do not understand it I don’t invest in it. I do not understand these crypto currencies so for me it is a no go ! Thanks Mole for the post
    JULIE

  • Julie

    Take care of yourself GG ! Keep us posted on how you are doing … Glad that Scott is doing better
    JULIE

  • OJuice

    First Scott, then Mole, now you. Been a rough season for general health.

  • Ronebadger

    Praying for the rodent right now…

  • Ronebadger

    Seeing as how the market and this board is dead today, I thought of this clip from my daughter’s alma mater, Michigan State…they play Notre Dame again next Saturday, the 23rd. Check them out on FOX, 8PM EST.
    https://www.youtube.com/watch?v=p5pQh12PzMs

  • Mark Shinnick

    Who has made out with the big bucks? Was wealth distributed into small hands, or the same usual suspects?

  • Ian Naugler

    I’m back! To your point of China being the biggest volume of Bitcoin trading, that was actually true until January of this year. The 3 biggest Chinese exchanges all had no fee trading and were then forced by the PBOC regulators to enact fees (probably so the government could see how much real trading was actually going on) After fees were installed volume plummeted in China to about 15% of actual worldwide Bitcoin trading today.

    To the point of actually banning Bitcoin, its unclear if this is even possible. If Government could ban Bitcoin most of my reasons for using it would vanish, they can however make it exceptionally difficult at the fiat to bitcoin on-ramps. Theres talk a few hours ago of China banning Bitcoin all together with the firewall but it doesn’t seem practical especially now with Blockstream (prominent bitcoin company) putting 4 satellites up earlier this year broadcasting the blockchain.

    To the drug dealers/ smugglers/ gangs and whatever else baddies there are USD is still far and away #1, and Bitcoin isn’t really good at anonymity yet. Other coins like Monero and ZCash are actually getting very close to 100% anonymity and hopefully bitcoin will be able to build upon their work.

    I agree with some of the personalities and followers of Bitcoin being a little cult like (depends on the person) I think that has to do with the Libertarian/ Anarchist/ Voluntaryist alignment of philosophies and economics behind Bitcoin. Its exciting…really, really exciting and the implications are mind boggling if it can follow through.

    Disclosure: Ive actually been around here since 2011, you and Scott were instrumental in my trading successes over the years. In about 2013 I started a Bitcoin mining company with my brother, since then Ive had 100% of my net worth in Bitcoin (I do not recommend this, I mean…I REALLY DO NOT RECOMMEND THIS!) Im a holder and I joke with friends that I will sell my first Bitcoin at 50,000 USD, my belief in Bitcoin is based on game theory, human incentives and economics ( a deflationary currency? back up the truck!) If you want I could do write-ups on the fundamentals of Bitcoin every few months for you guys if you want?

    Thanks for all the help over the years you guys!

  • Ian Naugler

    Its actually interesting because they’re so many scams in the space now with developers getting 30% of funds right off the bat. Bitcoin had no value for the 1st 9 months so it was more of a science project, over time as the value went up it got continually decentralized. People who bought at 1$ sold at 10$ People who bought at 25$ sold at 100$ and etc. There are still some big wallets hanging around, but they don’t wield nearly as much control as they had 2 years ago.

  • http://evilspeculator.com Sir Mole III

    Damn, just saw that now. How did it go?

  • http://evilspeculator.com Sir Mole III

    I was actually just thinking that would be a great idea. Write me at admin@ and I’ll set you up. You’ll be our resident BTC expert 😉