Bitcoin - where from, where now, where to

Hi!
I think it is exciting too! Something very different and potentially revolutionary in financial markets. Although there are still a lot of expert opinions calling it a Ponsi scheme or a bubble that is soon to burst.

But I think the degree of regulatory considerations and plans amongst major governments and central banks, in addition to the digitisation of their own currencies, suggests a much firmer base than just a bubble!! :grin:

My main concern is whether regulation at the crypto/fiat currency exchange interface will undermine the decentralised character of Crypto as a benefit. Although that “benefit” often appears to be of greater appeal to the not-so-legal transactions than normal trade and investment.

I was just reading today that Crypto is the chosen medium for transactions on the dark web for the very reason that they are anonymous…

But, yes, it is a bit more exciting than, say, Eurusd! :rofl: - but more profitable? Well, that is a good question! Let’s see! :upside_down_face:

Make that two quick ones on the upside. Slow but looking more positive. At least the daily chart is beginning to move from neutral to neutral-positive if we don’t fade before EOD.

But maybe this is only New Year positive vibes after a good 2024 and it is EOW Friday tomorrow. Although BTC is open also over the w/e, I’d rather wait until next week before getting too directional, one way or the other…

But good 1st day start to the new year :slight_smile:

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We have so far spent all of today above last week’s midpoint, i.e. in positive territory, and continually seems to be trying to push higher - but immediately running out of steam in thin volumes.

I was long with the intention of holding into the close tonight (Fri) but I am a bit bored/unnerved by the lack of energy in the price movement and closed out for yet another small gain. Will see later if it was wise or premature!!!

But at this stage, where capital building this small account is the key objective, a series of small gains is soon significant - especially ahead of a weekend.

How it looks now on a 1-hour chart:

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I was reading an article about Bitcoin - and it made me sit back and think for a bit.

With all the hype nowadays about Bitcoin, asset classes, Crytpo in general, etc, it is easy to overlook the question: “What exactly is a Bitcoin?”

It was quite a sobering thought to suddenly realise that Bitcoin is indeed simply nothing more than a lot of lines of coding inside a string of computers. Apparently more than 77,000 lines of code in C++. That is it!

But is it?

Humans always struggle with the invisible. We always need to find ways to make the invisible not only visible but also to convey a message defining the essence of that invisible entity. Mostly, we can call this symbolism. A good symbol can speak a thousand words and can embody a concept that becomes familiar to all who see it.

Typical examples of the power of symbolism are found in religions, politics, the military, commerce, etc.

In the same way, it is interesting to see how Bitcoin, an invisible collection of computer coding, is presented in a symbolic form, and what kind of image that symbolism attempts to impress on our minds whenever we see it. For example:

Bitcoin picture

Substance, value, wealth, prosperity, greed, a must-have? :coin: but a computer coding? :grimacing:

Did you know that two countries include Bitcoin as an official currency?

El Salvador and Central African Republic.

Interesting. But with what motive?

For example, Bitcoin requires the internet and yet in the Central African Republic only 10.6 percent of the total population had access to the internet at the start of 2024. So what was the rush? :thinking:

I guess it was both wise and premature! It is always wise to take a profit if it seems threatened as there is always another day - but it was premature since the price continued its rise…

But I did take another long, as shown here, so it was another double gain day. I could have left the original trade, as was planned, until the close but anyway 100% win rate so far this year! :innocent:

As my old schoolteacher used to always say in my school reports: “Could do better:rofl:

It is beginning to look like we are heading back up to those 100,000+ levels

2025-01-03 1H-2

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I don’t think BTC generally moves much over the weekends but I thought to try it out today, anyway.
A long wait for a small gain! At lease I wasn’t sitting watching it all day!! :grin:

2025-01-04 1h

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Another small gain on a long position before we saw a light drift off down through the 1H band into the 4H band - nothing significant in terms of price movement though.

Weekend trading certainly is very light and thin volumes. It even took a while for the trade to go through…

2025-01-05 1H-4H

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As I mentioned earlier, the account I am using in this thread is a throw-back to those, long ago, early days of trying to build a small account.

Yesterday was a very good example of one of the most challenging and complex decision-making scenarios that one constantly faces in the early days with a small account - holding positions overnight when they are slightly in profit.

Most trading conversation centres around the profit issues, e.g. win rates, targets, S/R, R:R, and so on.

But in the early days of building a small account, IMO, the emphasis needs to be more focused on capital preservation and building a buffer from safer gains rather than going for big profits. The parable of the “hare and the tortoise”.

But it can lead to frustrations and missed opportunities that can result in rash, expensive decisions.

In Bitcoin, this weekend was typically quiet. I took another small long position later on Sunday but was then faced with precisely this decision whether to leave it overnight or close it and take the money. The price action was relatively positive, and I am generally bullish on BTC in the longer term, but the early hours in the Far East on a Monday morning are notoriously difficult to predict.

So I decided to take the “capital protection/slow build” route and closed it.

Ok, so the account is a little bit bigger…but… as shown on this chart my target level above the market had been dotted line at 99500 and that has been my ultimate target all weekend. But price inaction meant it was profitable to take small profits from quick in/out moves.

If I had left the last Sunday position open it would have hit my target overnight!..But if it had dropped to my SL then it would have wiped out the entire weekend’s profits!

So which scenario is better? To have missed a target or lost a weekends work? The difference is surely a question of account size and the relative impact of loss damage. But there is also another angle which is the same for all accounts: by the end of next week a missed trade is already forgotten history, but a loss is still a loss… protect your equity, it is the fertile soil in which your profits grow strong and tall.

In my case, my own investment account is still in a long term mode and has been for a long time now. But my decision with this new small account project was to close it and take the money that was on the table.

OK, so that is fine, but… the resultant problem with such a situation is “where to now?” We are on the Resistance level. Do I buy it here? or sell it? If I don’t buy and it bursts through the resistance level then I have missed even more of the move…these are the types of situations that small accountholders regularly face.

I am going to adopt a “wait and see” approach here. I still have all my profits intact and I am not going to feed them back to the market - there is always a new scenario down the road - wait for it to arrive!

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I have to confess that sometimes I get to feeling I’m far too old for this Crypto stuff. I mean, there was a time that I would read articles about central bank policies, inflation prospects, and so on.

Now I am being pumped with info such as this:

" Bitcoin’s hashrate, the computational energy needed to mine a block in a proof-of-work blockchain, is on track to reach 1 zettahash per second before the next halving event in about 3.5 years, putting miners under pressure to secure cheap power deals and more efficient equipment.

The average hashrate could reach that level, equivalent to 1,000 exahash per second (EH/s), by 2027 even if it rises at the rather sedate pace of 20% a year. It’s grown an average of 65% a year since 2020 and is currently around 787 EH/s on a seven-day moving average basis, according to Glassnode data.

The hashrate is an important component of bitcoin miners’ profitability. The higher the hashrate, the higher the energy costs, which is why it’s so important for miners to optimize their business operations. It also plays into network security, which has appreciated 56% in the past year."

I guess fundamentals are fundamentals whatever they are dealing with! :crazy_face:

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When it comes to general comments about BTC, it seems there is currently a huge focus - and hugely positive expectations - based on president-elect Trump’s inauguration in a few weeks.

I am seeing all kinds of talk about heading back above USD100,000 and that the favourite option strike price is USD120,000. Whilst other New Year forecasts are predicting USD225,000. But no talk about a downside…

There was a time that whenever the general comment was all in the same direction, it was time to turn around and go the other way…

…But with BTC? I’m inclined to stick with the crowd still as I don’t see any reason why any big holder would want to sell out and miss the party!

It surely is a fascinating instrument, this piece of computer coding… :nerd_face:

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We are back above 100K,

I have been holding since 2017 and have no plans to sell,

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Hi Dennis, and thanks for the post here! :smiley:

And, if I have understood your other thread correctly, you have been regularly adding to your holdings?

Crypto is such a strange environment for me, a basic Crypto amateur, to understand. All normal fiat currencies at least have some kind of intrinsic value based on their economies and central bank policies, and commodities have some kind of intrinsic value based in their usefulness and desirability.

But BTC has absolutely none of these attributes whatsoever!!! It is literally non-existent in any form other than as a piece of computer script (which, in theory, can always be recoded if everyone in its environment agreed to any changes) …

But it seems there are only two attributes underwriting the value of BTC: 1) its limited issue size at 21mill tokens, and 2) its attractiveness as a payment medium for illegal transactions.

The first of these is quite strange in itself since the ceiling on the number of “coins” in circulation does not limit how much can be invested in them. It starts to work like a inverse inflationary process.

When a currency weakens against, say, the USD, then see more and more zeros added to the right hand side of the units, e.g. we start with 1 “juju” = 1USD, then the juju weakens and we end up with 10,000 jujus = 1 USD.

But with BTC, it is working the other way as it strengthens and we start adding zeros to the left hand side. e.g. 0,000001BTC = 1 USD.

So we could say that the ceiling is irrelevant here since we just keep dissecting each token into ever increasingly smaller particles…

In addition to that, there are more and more “look-alike” and “not-so-look-alike” Crypto being launched all the time.

The second issue of the “grey area” usage of BTC is (hopefully) going to be progressively curtailed as all the regulatory authorities applied tighter rules at the crypto/fiat interfaces. But will this, in turn, cause a lot of BTC to be liquidated in front of these changes?

Without the decentralised/unregulated aspect of BTC, together with the unlimited availability of various crypto, and with the increasing use of crypto in normal trade/business transactions, will BTC lose its uniqueness and identity? If so, where will its value be? Anywhere between zero and the heavens above! :smile:

But in the meantime, make hay while the sun shines! :heart_eyes:

I did manage to catch a (small) couple of trades on the way up to and above USD100,000. I had to close out for a while as our last guests from the holiday season left for the airport. Now life is back to normal again for the coming year… well, at least until Easter! :upside_down_face:

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I have made a change to my “small account” project that I am doing here.

I noticed that one prop firm is offering a $10,000 challenge at a special seasonal price and that price is approx how much profit is currently on this small account so far.

So I have used the profit to buy the challenge as a “free” account.

Although the nominal account size is USD10,000, the maximum drawdown is USD1,000 so it is, in a practical sense, still a small account and still requires a small account mentality and management. But now we have the potential to reach a funded level without needing any own capital.

And so the experiment continues…

While I am at it, there is one other aspect of BTC that raises my curiosity.

One big safety feature of BTC is holding it in personal wallets with a unique encrypted password - very safe, but if you lose your password…well!..as I understand it, your BTC is lost forever! :grimacing:

So I just wonder how many BTC, especially from its early days, are actually permanently tied up in locked accounts, never to be released again?!?!

For example:
“While it’s impossible to know just how many addresses Nakamoto owns, several have been traced back to Nakamoto, including the first-ever address, which received an award of 50 Bitcoin by mining the first-ever block. It is referred to as the “genesis block.” Estimates suggest that Nakamoto owns 600,000 to 1.1 million Bitcoin tokens.”

Whilst it hard to imagine that the founder of BTC would have lost a password, there are surely many others that bought BTC in those early times that didn’t take very good care of their passwords, or their laptops/PCs crashed or died of the “blue screen of death” taking their passwords with it…

Interesting comment:

"MicroStrategy (MSTR) has increased its bitcoin (BTC) holdings for the ninth consecutive week.

MicroStrategy holds more bitcoin than any other publicly traded company. In the week ending Jan. 5, MicroStrategy purchased a further 1,020 BTC for $101 million, bringing its total bitcoin holdings to 447,470 BTC" (Source: Coinbase)

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No trade today (so far!), but a very good example of Technical Analysis in action :slightly_smiling_face:

I am currently only looking for long trades while my 4H chart is positive. But the 1H and 15 min never gave a buy signal all day and so never got caught in a fake buy.

This chart is a combo of 1H and 15min covering the same period. Since early morning the market has been slow and locked inside the yellow S/R zone (red rectangle). It would have needed an hourly close above this zone to trigger a buy.

The 15min chart on the RHS shows a steady weakening market with the two Bias Bands congesting together within that same zone (red rectangle).

But then the short term Bias Band on the 15min chart crossed over and sank below the zone (blue rectange) indicating a sell-off as more likely - and it did!

The market is now stalled between the high of last week’s range (green line) and the low of this week so far (thin red line).

So no trade so far today and now waiting for a break out of the current “box”.

But with such a steep (albeit brief) drop in price, there is no rush to buy immediately. We have completely undone the recent optimistic rise and dropped back into the same range as at the start of the week - we could hang around here for a while yet…unless!.. :smile:

With BTC one simply does not know what is coming next…until it starts to materialise.
This is why TA is so good with BTC. There is no benefit in trying to outsmart the market with one’s own opinions - just analyse what the price movement is telling you and go with the flow.

1H/15m chart (with slightly adjusted set-up for the prop account)

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OK, I couldn’t just sit here and not try for at least a few pips on the downside! :joy:

We broke down through the current week lows and so I sold it for a quick scalp (a very quick scalp actually! :sweat_smile:) You can just about see it if you look very carefully! :rofl: :rofl: (well, that’s another hamburger, no chips, anyway!)

it was not a “system” trade for me as such so the aim was just to gain a little from the move and satisfy my impatience!!! Job done!

It bounced back but looks now as though it may still go a little lower - but my appetite is satisfied and I am following my rules in the big picture.

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I want to add to the above that today’s drop in price is another typical example of the different attitude when trading a small account.

Even though one has a strategy and it provides a signal (such as the “sell” today), it isn’t always wise to just blindly jump in with a trade.

Again, there are the two opposing scenarios: 1) the opportunity to make a profit, 2) the risk of losing a chunk of capital out of the account.

With a small account, losing capital can be very critical, if not fatal, regarding the ability to continue with what capital is left. A large account can absorb losses and still continue with meaningful position sizes. But if the capital in a small account drops below, say, a few hundred dollars then it is very hard and very slow to recover without taking excessive risks.

Today’s drop in BTC was apparently due to some strong US data releases (JOLT job openings and ISM services PMI) and a lower expectation of further rate cuts in the near term.

Shows that BTC is not immune to impact from other alternative instruments and economic expectations.

Tomorrow sees the release of FOMC minutes which, therefore, could have a similar impact.

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