Bitcoin: The Next Leg Up

This is the moment I’ve been writing about for all these months. The next leg up.

Here it is. We broke through the bearish range and have gone into the vertical boom/bubble mode so beloved by bitcoin denizens:

Let me unpack. The idea is the supply halves and hence the price doubles. It’s a gross simplification but it seems to work and has been a very profitable concept three times in a row, so why fight it?

The pattern is roughly the same as before, created by the same market dynamics. The hockey stick boom/bubble chart is a classic and can been seen hundreds of times in the history of assets and bitcoin is no exception. These vertical rallies tend to break up into halves and halves of halves and this is simply an effect of the way probability and the maths of signal to noise work. You can take it or leave it as a diagnostic, but it matches with the target of $100,000-$120,000 a coin peak, which is where the “halving” thesis says the top should be.

However, boom/bubble peaks are unpredictable because the high is normally momentary and nigh impossible to trade and only linked to the final death throes of the bubble’s pop, so absolutes can be higher with tops then normally showing big thrashing around volatility before the final drop. Knowing the rough level of the top is more important that catching it. Knowing when the bubble has run its course it the key, because it’s the call to leave the casino and you only get to keep what you leave with, not what your screen tells you have won while you are still playing.

So no one will be calling it the top if it goes above $100,000, they will be singing for $250,000, $1 million, $10 million. This is the lyric the proverbial “fat lady” will be singing when it’s actually all over. The bitcoin price will be a news item on the mainstream news or on the front page of the newspaper, all strong signals to be prepared for the end of this four-year cycle and the dump. So as I write in the dank corners of the crypto world, meme coins are going 10x, another signal we are in the last leg of this cycle.

This is what the levels that will be predicted when bitcoin goes over $100,000 look like on a chart. There are some already calling $250,000 and more, but in context they look very unlikely:

So let’s extend that to what more realistic optimists hope for:

It’s not impossible that this and more could happen, but I’ll be giving my crypto to those that want to play that scenario out at between $110,000 and wherever it lands in the days after it breaks $100,000.

In another no-brainer narrative prediction I feel the peak will be just before the Trump inauguration and that will be the “buy on rumor, sell on news” moment. But to those who see a new dawn for crypto with Trump and four years of mooning, I agree it could happen, so when my target is reached I’ll be chewing on how to exit while leaving possibilities for upside in place. However, experience shows it’s more sustainable to leave money on the table for the next man than to try and grasp every last penny from what has already been a very lucrative campaign.

Crypto will crash at some point and it will likely go back to the $40-$50,000 level. But it is going to bubble first and may stay elevated for a while. The next move is the completion of the final leg and once that has happened it will be time to look afresh for the direction of the next move, but first we need to get to $100-$120,000 before we try to be too clever.

Disclosure: I own bitcoin and other cryptocurrencies.