May 8, 2020

To be a hedge or a risk asset the Bitcoin

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Until there are clearer signs of the commodity (food) based inflation, I will stay with deflation across the board.  Bitcoin is a risk asset and leads the stock market direction. It is not a hedge.

While the supply of the coin is controlled everyone is a crypto coin miner, creating the new digital assets. So Bitcoin is a brand like Coke or Kleenex and a leader, but there are many many many more on the market and many on the way.

The sentiment is over the moon on BTC. calling for $50,000.

Yes, it’s truly one of my heroes, someone I have met is publically saying he is buying the coin. To be honest with you, I have hear all his calls going back to the 1980s, like the passive short on a head and shoulders on the Swiss franc, which was a disaster.  Like I have said before, I never take his public ideas seriously, only his methods, which I have studied.

The BTC was s dream come true turning pennies into thousands, and sure if it happened recently it can happen again. If it was just that easy.

The public seems to be an enthusiastic buyer so the “pool” of liquidity is set up will buy dips and TPJ will be a seller and a short seller.

Here is a chart crime on the Bitcoin, that makes no sense. Its a triangle like a form this guy sees buy it’s based on no known formation and is not anchored to any volatility model that would support that breakout. In fact, the I-T backdrop provides an event that says the uptrend is old, feeble, persistent but due for a change. Plus the S-T peek here has been on panic buying, the kind of emotional buyers that are easy to take advantage of.

The long term bullish case is to but BTC maybe in two or three years and that may be optimistic. From an EWT point of view, the highest price would be the beginning of a very long term bull market, like the peak in Gold back in the late 70’s early 80s’. If the market is tracking out a triangle its a large [B] wave. With the late 2018 low wave (A), the recover rally into the mid-2019 wave “A ” the break to the March 2020 low wave “B” and this S-T recovery wave “C.”  so an S-T decline from here is wave “D” and one last little advance inside the triangle wave “E” to finish the wave [B] before a collapse about the width of the triangle.

p.s. If its a triangle  Today, CT’s chart shows the market nearing a peak.

Just like the world equity markets, the Bitcoin market is a leader and always in gear with its bullish and bearish moves. The chart I feature here shows an overbought market in S-T resistance. A sell signal today or Monday by our OB-OS method, a slip by the market below the low end of S-T support – aka failure to breakout – with the Tidal Wave system flipping today or early next week from up to down, should set in motion a meaning full decline.

TradeStation Members

I am working on the short only BTC system, a version of FastEd (FE), and as promised all workspaces and code will be uploaded to your Dropbox folders shortly.   FE really likes short breakouts and working it for the long side at this point, will let you know. If you are using Eclipsed or %BB-DBR and you are showing it to run hot in the long side, email me. When I dust it off it looks fine and robust but no hot streaks – 18 winners in a row – as we saw 4 years ago.

Great and Many Thanks,

Jack F. Cahn, CMT
A Thinking Man’s Trader Since 1989,
Copyright 1989-2020

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