DOLLAR IN CONTROL: Bitcoin Struggles – BRACE FOR VOLATILITY
It was only a couple of weeks ago that the technology sector – the same stocks that single-handedly carried the major market indices to all-time highs over and over – took a severe beating as trade tensions reached record panic. Market bears were fully in charge; tech stocks came down 5%-10% in a single trading day and kept heading lower.
Just as quickly those same stocks were swept back up; panic buying is the theme, since Trump lied about getting Chinese calls in the middle of the night to resume talks.
This is not just about the trade war – other factors are at play here, including thin summer trading volumes, which allow for outsized moves and manipulation, along with global macro hedge funds’ refusal to unwind their risk-on positions:
Courtesy: Bloomberg, Nomura, ZeroHedge
While this risk-on mentality is gaining control again, the U.S. dollar remains stubbornly high against other world currencies, with the trade-weighted U.S. dollar testing all-time highs.
The dollar’s rally is playing out just as I predicted would happen. Not only that, but I was one of the only analysts to predict that both gold and silver would be rocketing higher in spite of the USD’s strength. When the dollar does catch fatigue, metals will get a second wind: gold could hit $1,600, silver can brush up against $20.
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Gold and silver won’t be the only beneficiaries of the dollar eventually petering out, of course; Bitcoin will continue to prove its worth as a value-added fiat currency alternative. I sent out alerts on Bitcoin ($550), Litecoin ($26), Ethereum ($21), and DASH ($33) years ago. These positions are LEGENDARY!
When we put Bitcoin’s struggle at the $10,000 level into perspective, it’s evident that these are just temporary bumps in the road. It might flatten or chop around for a while, but no one can discount the years of massive gains as Bitcoin’s 7,420% increase since April of 2013 has dwarfed even the most ambitious IPO’s:
It’s been one amazing journey from $0.003 per Bitcoin in March of 2010 to today’s price at nearly $10,000 – and by all indications, today’s $10,000 feels a lot like early 2017’s $1,000 for Bitcoin. I clearly recall Bitcoin’s three-month struggle as it tested the $1,000, followed by a price explosion that took BTC to $20,000 within the span of a year.
What we’re seeing now is a replay of what happened in December of 2018: the fear/greed index for Bitcoin has reached an extremely low level, signaling that a bottoming process is likely underway. At one point in August, the fear/greed index went as low as 11 out of 100 for Bitcoin – a level we saw before as retail investors panicked at exactly the wrong time last year.
They won’t make the same mistake again, but it’s almost inevitable that the majority of retail traders will panic at the worst possible time, thereby missing out on all the upside that’s coming. You won’t become a victim of hype, panic, or any other emotional trapdoor – you’re on the right side of the trade, and you’ll be vindicated soon enough.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.