Are we in a Crash ?
Everyone is in crypto these days and with high levels of money printing that is been going on I don't blame everyone to jumping into crypto. Humanity desperately needs something creative and effective than fiat currency ,don’t get me wrong I love my dollars but ,do my dollars love me ?
I’m fairly certain that many of you have thought about this or have heard certain analysts saying that money printing rate is getting sky high and dollar is devaluating as we speak. To make things clear I want you to carefully look at this chart and be the judge yourself.
Currency in Circulation
Source: Board of Governors of the Federal Reserve System (US) Release: H.4.1 Factors Affecting Reserve Balances (data…
Above chart indicates the currency circulation rate since 1920s and as you can see that the amount of money printing that has been done in the last century have increased dramatically . Nevertheless if you observe the chart you can see that since 2020 the money printing rate has gone parabolic . Even though it is necessary for the Feds to print money given that the growth rate of the economy has slowed down . According to the Demand and Supply paradox ,when there is more supply the demand goes down meaning that the asset devalues .
Did you know fact; It is a fact that the dollar has lost its value by 90% since its inception ,meaning if you had a $100 dollars back then right now that $100 dollar would only be worth $10 dollars.
Compared to the dollar there is only 21 million bitcoins avaialble and about 18.4 million out of the 21 million have been mined so far . Meaning that once that 21 million target is achieved there will be no more Bitcoin, and according to the supply and demand paradox , this is good news because when there is low supply and higher demand the price goes up .but Bitcoin will not climb at the rate you want it to climb, just like everything Bitcoin is cyclic ,and it is susceptible to the unforgiving conditions of the markets. Everybody wants bitcoin to hit $100,00 dollar by this year but according to the charts that might not be the case .
For some of you who are not familiar with technical analysis this might look like doodles on a children's book but the above pattern on this daily chart is a head and shoulders pattern ,in technical analysis a head and shoulders pattern indicates a bearish reversal .The recent crash in April proved the patterns validity . Now the neckline that I have drawn is a hypothetical line that connects the shoulders and it is a historically proven fact that once the security crashes it comes up back again and touches the neckline .It is also referred as coming back to the scene of the crime as you can see it came to that $52,000 dollar mark and started to reverse back.
Why $20,000 dollars
Now observe the bellow chart
You can see the previous bull market ,in 2018 Bitcoin topped out at $20,000 .Usually previous highs becomes later support .at this rate bitcoin will go up a bit and eventually come down to that 20k mark .
When will Bitcoin hit $20,000 mark is a hard question to answer. I wish I could tell you a correct answer but what I can do is a draw conclusions based on past performance . In the last bull run the market crashed for almost a year after hitting that 20k mark ,If we do the calculations we are still 6 months behind .so by the time this year finishes Bitcoin will reach the 20k mark. But it could be quicker or get late but either way we are going to hit that 20k mark
Why $20,000 ?
Well ,the first indicator is the lack of volume ,volume usually gives us an idea of the money supply towards a certain asset and in this case I’m seeing smaller volume ,meaning that only retail traders are currently trading in the Bitcoin market . For bitcoin to go to the $100,000 dollar mark we need institutions buying bitcoin ,long green bars are a good indicator that institutions are buying into bitcoin but short green and red bars says otherwise.
Did you know that if the top 100 companies in the S&P500 index allocate 1% of their money into Bitcoin ,Bitcoin price will surpass $1 million easily .
A good buying opportunity ?
If Bitcoin to reach that 20k mark it is not a bad thing and what I will be doing is filling up my bags with more Bitcoin. Out of all of my investments Bitcoin has given me the higher rate of return ,hence if bitcoin reaches that level I am buying more. I am bullish on Bitcoin longer term but short term I am bearish ,but bear markets present us with good buying opportunities . Save up some money ,pay off your debt and if bitcoin reaches that level ,put at least 10% of your net worth in Bitcoin. Because I believe we are seeing the beginning of the end of fiat currency.
Disclaimer: Not Financial Advice