Bitcoin will trade at $30,000 before it ever trades at $100,000.
That’s an unpopular opinion. Just about everybody is bullish on bitcoin. Folks with a lot more money than me are calling for the “King of Cryptos” to hit $100,000 by the end of the year.
And, that may indeed happen. I just think it’s going to get whacked down to $30,000 first.
Let me explain…
Last month, we took a look at the chart of bitcoin and figured it was going to chop around for several more weeks before it was ready to make a big move in one direction or the other.
Well, here we are several weeks later, and bitcoin is trading at just about the exact same price it was back then.
Here’s an updated look at it…
Bitcoin has been chopping inside the trading range, between $50,000 and $60,000, for three months. All of the various moving averages are now coiled together… Meaning there’s plenty of energy to fuel another big move.
And, based on the recent action in the bitcoin stocks, I’ll bet that move is lower.
You see, just as oil stocks tend to lead the price of oil, and gold stocks lead the price of gold, it seems to me the bitcoin stocks are likely to lead the price of bitcoin. And, bitcoin stocks have been hammered.
For example, look at this chart of Riot Blockchain (RIOT)…
RIOT is a bitcoin mining company. The stock peaked above $75 in February… It’s fallen more than 50% since then.
How about this chart of MicroStrategy (MSTR) – the enterprise software company that raised money by issuing bonds, and then plowed all of that money into bitcoin…
And, here’s the chart of Tesla (TSLA) – the electric vehicle manufacturer that made more money in one quarter by owning bitcoin than it did in its entire lifetime by selling cars…
The price of bitcoin is a crucial component to the value of all of these companies. And, all of these companies’ share prices have fallen sharply over the past three months.
If the stock market is indeed a discounting mechanism – meaning the price of the stocks discount the future – then the immediate future looks bearish for bitcoin.
And, after trading in a tight range for the past three months, bitcoin is setting up for a big move.
I’ll bet that move is lower.
Best regards and good trading,
Editor, Market Minute