Crypto rollercoaster ride into 2021 | 8 Jan
BTC Bitcoin Price, Weekly Bitcoin Price Risk Analysis Forecast
(Previous week in brackets)
|Trend||↑ (↑)||↑ (↑)||↓ (↑)|
|97 (98)||92 (94)||94 (95)|
|Allocation Limit(0%)||Invested||0% (0%)|
8 January 2021: Bitcoin lead the way from the week before Christmas into last blasting a paper return of some 92% at the peak before shading 5% to close at 40k.The high risk situation remains although we stay on full paricipation with our BEST position. The events in Washington appeared to have little bearing on markets generally. The risk for small retail investors, read speculators, is very high because they tend come in late at much elevated prices. We've read about the recent trend of larger investors moving out of slow appreciating assets like general index equities and precious metals (ETF's) into the top crypto currencies, BTC, ETH and Litecoin plus TESLA. And for one reason only; 'sky is the limit'. In order to participate in this type of market there needs to be some kind of fundamental cushion. There isn't in any of the crypto currencies except Monero perhaps. Crypto tokens that are backed by hard assets or other real financial benefits or rewards are in a different and more acceptable risk space. We saw Max Keiser being interviewed on Jan 8, who calls for BTC at $220,000 towards year end 2021. Well, draw a Bitcoin log chart and play with a few channels between lows and highs and one finds upper channel objectives of between 60,000 and 300,000. It only needs a stronger correction for that objective to become 'just a dream again'. This is why good risk management principles must be applied when getting in at elevated high risk levels, meaning only to invest funds one can afford to loose. The crypto super millionaires and billionaires did just that 5,6,7 and 8 years ago, or they still have a 1000% return even if the price drops 80%. Crypto currencies will however remain an exciting market to follow, although Bitcoin, which is slow and expensive to maintain, cannot really be used for anything other than speculation. We would expect these markets to eventually settle down with lower volatility due to increasing institutional participation. Right now the technical models cannot forecast a price or time of an intermediate peak until we get one that generates enough fear of losing. That peak may well be imminent. No Change.
31 December: Bitcoin has been 'all systems go' for most of the past three months. As of writing on Jan 3, 2021, BTC had another 3 day lift off to a n intermediate high of $34,700 adding another massive 20% since Dec 31 making this a one year 375% advance and creating a market cap close to $750 Billion. What is this telling us?
All crypto currencies and many related tokens have advanced to a similar extend, including our favoured rewards backed BEST token which added 250% the past year. Ethereum added over 500%, Cardano 400%, Litecoin 225%, The Bitcoin Cash airdrop increased 60%.
Why are these markets so hot? One reason only, price is going up rapidly. Very few people understand why this happens whilst the hard push narratives from rather wealthy early adopters have brought along new Wales and institutional funds and have now also reached small retail. Small investors, $500-$20,000, that are coming in as massive crowds seeking a free lunch in a 24/7 market. If a million people invest $1,000, for argument sake, the $1 Billion investment will have a huge effect on price discovery. The problem is that most small investors almost always loose. They enter late and exit late, which means buying high and selling low. Markets do that to people and especially runaway markets like the top 10 crypto currencies that are all benefitting. If these crypto currencies win the day, and they might, this would be an exceptional economic stimulans and extremely inflationary.
We have to admit that the pshychology of these new digital markets linked to fiat currency has become very interesting. They are probably telling the story of a monetary system that has failed to correct itself.
If anything we would favor Ethereum for the simple reason that it can technically be used as money. Bitcoin cannot as it is too costly and too slow. Technically Bitcoin still looks very high risk and this shows that once markets start to move up perpetually cannot be traded short term without the risk of loosing massive opportunity or loosing most of the invested capital.
Let us just remind again what happened with Tulip bulbs in the Netherlands in 1637. These flower bulbs originated from Asia were actually imported from Asia and these tulips florished on Dutch soil with prices for the bulbs starting to rise slowly due to strong international in the early 1600's. In the mid 1620'2 one tulip bulb would sell for 1000 florins. Average annual salary then was 150 florins. It got worse and for many years contracts on future bulb deliveries changed hands on exchanges and in café's and same contracts often traded 3 or 4 times a day at ever increasing prices. The tulip market was controlled by professional speculators even though this type of open market trading was forbidden. The 1635 Pest pandemic fueled further price increases again and certain bulbs were traded at between 2500 and 6000 florins. A current equivalent of about €1,500,000. Over 5,000 people, about 1% of the working population, were involved in trading the bulbs until 1637. The rest of the population turned against the speculators as it was seen as 'sin', greed and blasphemy. Public opinion was strong enough that on Febr 3 1637 there were only sellers left. Total chaos arrived and most traders were left with contract that could never be met. The market price quickly dropped and well below a goverment agreed legal settlement of 3.5 cents to the dollar or 3,5% of the contract value. More market hypes have surfaced during the ages and one can sense that we are witnessing a similar hype right now. Bitcoin is trading at $33,700 at close of writing. Wow, but no Change.
Bitpanda Pro - BEST Token Price Risk Analysis
(Previous week in brackets)
|Bitpanda - BEST/EUR||LT-M||MT-W||ST-D|
|Trend||↓ (↑)||↓ (↑)||↓ (↑)|
|83 (84)||85 (91)||78 (89)|
|Allocation Limit(10%)||Invested||100% (100%)|
Bitpanda BEST token
8 January 2021: At the 8 Jan close BEST has recorded its strongest week since the token broke its base target value of €0,0850. That was at the end of October and the BEST token followed Bitcoin and other crypto currencies with similar speed to finally explode towards a high of €0,3750 on 7 January, 350% above the level from 3 months earlier before closing its 24/7 trading session at €0,2650 on 8 Jan. A very strong performance by any standard with a first 2021 weekly advance of 53%, therewith being one of the strongest tokens in the crypto space coming into 2021. BEST offers some real tangible benefits that other tokens don't as we explained in previous updates. This makes BEST, in our opinion, a preferred and lower risk asset over BTC and other crypto currencies. We could do some simple math. BEST will eventually have a maximum 500 million tokens outstanding or 23.8 times the number of Bitcoins. BEST tokens of course do not benefit from a worldwide usage potential yet and that would bring its value down by a certain factor. Arguably, the potential must be at least 1/10 of that of Bitcoin. If BTC were to drop to €2000 ($2450) then BEST could be 2,000/10/23.8 = €8,40 or 3,170 times! its current value of €0,2650 and still offer substantially better benefits than BTC. We could do unlimited what if's with different parameters. What if BTC is $200,000 or more? The answer is impossible to predict due to the many fast moving parameters in international trading. And that is not why we are in BEST. It is because it is trust in the rapidly growing crypto powerhouse Bitpanda, becoming the leading regulated crypto exchange in Europe that is on the road to develop and deliver a range of products that create that technical quantum leap in years to come. And because we strongly believe that crypto and blockchain will by our future bread and butter of banking, investing and eventually everything else where data is being managed. Never to be reversed. No Change.
31 December 2020: BEST traded 14% higher for the week at year-end close at €0,1733 and has since seen a market top this first Jan weekend of €0,21 or 20% up since Dec 27. Full year open to close advance is 250%. The recent activity is of course largely fuelled by the crazyness of the crypto currency market. The big difference being that this is a regulated exchange (BITPANDA) controlled token which offers BEST investors premium rewards for trading on the Bitpanda exchange. New developments like the Pantos project and the Austrian RaiffeisenBank coin development may also give this exchange a serious boost in the race to more crypto efficiency. Bitpanda is the leading crypto exchange in Europe and open to European investors. Dec 2020: Latest Bitpanda Techhub investment.. Possibly seeking to increase our 2019 initiated position again on any price drop leading to bullish divergence between short and longer term time scales. No Change.
27 December: Bitpanda’s Ecosystem Token rapidly increased some 60 percent the past 3 months and unlike Bitcoin has tangible characteristics offering commission discounts and rewards. This is our long term choice to participate in the developing token exchange industry as we believe that only fully regulated organisations will be the future for tokenised assets. Whether Bitcoin is going to play a major role in this developing industry, which it clearly does today, is not relevant. The Fintech market will be so much bigger than that and ultimately dominate all commonly adopted financial industry systems. Technically this market looks overbought Short and Medium term and may experience a pause. A correction of this small Market Cap token could create quite a bit of demand again With Bitpanda account holders in Europe as it did recently. As this asset is young we cannot yet do a proper Medium term and Long Term analysis. Beware, BEST is as volatile as most crypto’s. Best is a ‘Hold’.
S&P 500 Weekly Standard & Poor's 500 Price Risk Analysis Forecast
(Previous week in brackets)
|Standard & Poor 500||LT-M||MT-W||ST-D|
|Trend||↑ (↑)||↑ (↑)||↑ (↓)|
|95 (90)||98 (96)||92 (85)|
|Allocation Limit(30%)||Invested||0% (0%)|
8 January 2021: Equities continue their race to a new top every week, whilst the risk pattern hardly ever changes. Every little short term contraction is almost immediately being drawn back into line with the Long term overbought condition. It is better to be a risk averse spectator in this unprecedented financial theater. As Crypto is slowly eating into traditional asset classes, anything can happen whilst major market events typically hurt most retail investors and thus most institutional investors. No Change.
31 December 2020: S&P is up one percent during the final week of the year closing within 0.1% of the all time high earlier in the week. An extremely strong performance with a 2020 open to close advance of 16%. That of course dwarfs the crypto returns which is why several big industry influencers have moved some of assets under management into Bitcoin and other crypto currencies and tokens. As long as these equity markets continue to rise there is no technical tool that can predict timing. This is one reason why it isn't worth the risk. Losing opportunity isn't hurting of one can preserve some wealth via other asset classes. We have chosen for Precious metals, 55% and BEST, 10%. No change.
24 December: All shine is of course on Bitcoin this week, whilst S&P Daily is correcting down possibly building another bullish divergence. S&P proably will need to correct a bit more even though everything under MMT influence appears a high risk one way street. High risk technically means no investment. With weekly now turning down, risk of corection has again increased. No Change
Brent Crude oil Weekly Brent Crude Oil Price Risk Analysis Forecast
(Previous in brackets)
|Trend||↑ (↑)||↑ (↑)||↑ (↑)|
|60 (51)||96 (92)||90 (69)|
|Allocation Limit(10%)||Invested||0% (0%)|
8 January 2021: Brent up 10% in the first week of the year. A larger than expected increase based on...? From the March 2020 low Brent has risen no less than 250%. We expected this to happen and took a mangeable loss our small position at 45.00. The outlook for world economic activity, if anything, confirms the relative high risk position if our technical tools, although the Long term Monthly turned bullish in neutral territory. No Change.
31 December 2020: Brent ended the year on a positive note but still 9% below the opening in 2020. The world economy, mainly as a result of the Covid pandemic, is not in good shape and unlikely to return to normal for some time to come. Brent crude, being a mature asset class, will not keep pushing higher like crypto's if short and medium term technicals are at high(er) risk, like medium term Weekly risk weight is right now. The overall technical picture is still not that promising. Hence no Change.
24 December: Oil prices performed fairly strongly last week with Daily risk slowing the downtrend with some bullish divergence possible. Overall risk with Weekly at overbought level and Monthly looking to pause in neutral position remains unattractive to invest. No Change.