Technically Speaking, Bitcoin Ripe for Major Move: Which Way?

-edited

Bitcoin has been consolidating for months. Generally, and technically speaking, this suggests a big move is coming.

I have no position in Bitcoin and I doubt that changes although I do not rule out a token amount in certain circumstances.

That said, I do find the technology fascinating and I occasionally look at charts.

Here is another one.

Bitcoin Weekly Chart

One can find bullish or bearish interpretations of the charts.

Your guess is as good as mine as to what they mean, if indeed anything at all.

Maybe nothing happens for three more months, at which point an even bigger move will be implied.

Bitcoin Observation

Bingo

For all this "Bitcoin for the masses nonsense" mostly the wealthy will buy it or trade it.

I wish that was not true, but the concentration of "Bitcoin Whales" and volatility suggest otherwise.

"Bitcoin Thursday" Coming

Bitcoin is a free market construct so I do not root against it no matter how obnoxious many of the Bitcoin promoters are.

However, the moment Bitcoin threatens central banks it will be squashed in seconds just as the Hunt Brothers were squashed on "Silver Thursday" for cornering the silver market in 1980.

Nelson Bunker Hunt, Lamar Hunt, and William Herbert Hunt, the sons of Texas oil billionaire Haroldson Lafayette Hunt, Jr., had for some time been attempting to corner the market in silver. In 1979, the price for silver (based on the London Fix) jumped from $6.08 per troy ounce ($0.195/g) on January 1, 1979 to a record high of $49.45 per troy ounce ($1.590/g) on January 18, 1980, which represents an increase of 713%. The brothers were estimated to hold one third of the entire world supply of silver (other than that held by governments). The situation for other prospective purchasers of silver was so dire that on March 26, 1980 the jeweller Tiffany's took out a full page ad in The New York Times, condemning the Hunt Brothers and stating "We think it is unconscionable for anyone to hoard several billion, yes billion, dollars' worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver".

But on January 7, 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin. The Hunt brothers had borrowed heavily to finance their purchases, and, as the price began to fall again, dropping over 50% in just four days, they were unable to meet their obligations, causing panic in the markets.

The Hunt brothers had invested heavily in futures contracts through several brokers, including the brokerage firm Bache Halsey Stuart Shields, later Prudential-Bache Securities and Prudential Securities. When the price of silver dropped below their minimum margin requirement, they were issued a margin call for $100 million. The Hunts were unable to meet the margin call, and, with the brothers facing a potential $1.7 billion loss, the ensuing panic was felt in the financial markets in general, as well as commodities and futures. Many government officials feared that if the Hunts were unable to meet their debts, some large Wall Street brokerage firms and banks might collapse.

To save the situation, a consortium of US banks provided a $1.1 billion line of credit to the brothers which allowed them to pay Bache which, in turn, survived the ordeal. The U.S. Securities and Exchange Commission (SEC) later launched an investigation into the Hunt brothers, who had failed to disclose that they in fact held a 6.5% stake in Bache.

Corner Bitcoin?

I do not propose anyone will "corner" Bitcoin, but theoretically it can happen.

Instead, I do propose central banks will suddenly, without warning, change investment rules on Bitcoin if the price gets high enough for central bankers to be threatened.

That is what happened with silver.

What is that price?

I don't know, nor does anyone else. It will only be observable after the fact.

If you think Bitcoin is immune to central bank actions, you are only nuts.

Best Thing for Bitcoin

The best thing for Bitcoin would be if it consolidates in a reasonable range of say $4,000 to $12,000 for decades.

Only after a long, non-threatening period of stability will bitcoin be viable as a transaction mechanism as opposed to a speculation mechanism.

I do not expect Bitcoin to play out that way.

Too the Moon

To the Moon, Alice? You better hope you cash out in time!

Mike "Mish" Shedlock

Comments (18)
No. 1-8
Six000mileyear
Six000mileyear

Bitcoin is forming a classic triangle pattern. In currencies and commodities, the advance out of the triangle is the largest move of the larger trend (which began December 2018). Odds favor a price spike or very parabolic trajectory. Central banks won't need to do anything because the Bitcoin bubble will pop.

Herkie
Herkie

Crypto is a fraud and should be outlawed.

Casual_Observer
Casual_Observer

Seems to me bitcoin mirrors interest rate moves fairly well.

BitsellX
BitsellX

Bitcoin is for the most part digital gold equivalent, thus many die-hard aficionados see it as an investment vehicle, not medium of transfer. Unfortunately, this is due to its algorithmic nature that's not actually based on demand, how many'd like to think, fact which advantages whales in spite of the masses. That's why we, at BitsellX.com offer small players a browser extension that provides both cheap & fast trading from one crypto to another, but also automatic gauges that any rookie can understand and act fast when trends start to change.

MickLinux
MickLinux

Changing the rules midstream to squash a particular entity is a fraud and should be outlawed. Funny thing, it only happens by the guardians of the law.

BallisticBunny
BallisticBunny

While governments can do things like "ban Bitcoin" or screw with exchange rules on, e.g., KYC/AML, Bitcoin itself doesn't rely on bank-issued contracts on which the rules can be changed arbitrarily. Anyone can (and everyone should) take "physical" possession of what they purchase on exchanges by moving it to keys they personally control. This has been standard practice for years, and the phrase "not your keys, not your Bitcoin" is parroted constantly in the community.

It's not like silver or gold, where paper and derivatives make up the vast majority of volume, and where banks and governments have been manipulating the markets even before the Roman Empire came into existence. It's not like stocks where naked shorting is just a matter of finding a broker who will ignore the borrow rules. And there's no substituting plated tungsten for the real thing.

I don't doubt that governments can and will try to control the market, but they're not going to have a trivial "pass a new rule" way to do it.

JayTe
JayTe

LOL! Yes, changing the investment rules on bitcoin will definitely prevent people from using it as a means of exchange when the dollar and other fiat currencies start blowing up!?! Hmmm, I wonder what those rules could be that could prevent people from buying and selling it without the need of a third party!!! Mish, you do know that one of the properties of bitcoin is that you can exchange them irrespective of the authorities. And there are plenty of ways of anonymising the transactions. I especially like how you picked a tweet from an idiot who has not realised that one of the key attributes of money is its divisibility. I guess the retard has not heard of the relationship between satoshi and bitcoin. It is fascinating that those who purport to favour hard money understand so little about money! Amusing article to say the least...

OWitts
OWitts

Mike, that observation by "Charlsy" and your following comments show ignorance in bitcoin. You do not need to have 1 BTC in order to claim ownership or trade bitcoin. That is the beauty of it. TECHNICALLY SPEAKING Bitcoin is divisible by eight decimal points. 1 satoshi = 0.00000001 BTC. Do the math, at $100,000 per 1 btc you can still buy small amounts per exchanges like Coinbase.