Bitcoin 4hr analysis 1-5-2021
Good morning again ladies and gentlemen and welcome back to another day of 2021 and another day above 30k. Every day we spend in 2021 above 20k is really a victory in my eyes. We have put up with years of bearish BS and finally we can enjoy the fruits of our labor. Now that the year is really getting started (People returning to work etc) I am watching the charts a bit closer. The rise during the holiday break was insane. I woke up the 24th and we were at 24k. Woke up the 25th we were at 25k. It worked like that for a few days at least which was a funny coincidence. It had to stop because there just arent 35 days in a month lol. Anyways lets take a look at the charts this morning.
We have seemed to gotten comfortable around the 31k level. We have deviated from 31k dipping to around 29800 last night. Support stopped the fall and we are recovering as I type. Nice work bulls. They just wont give an inch to the bears. Even after what looked like the dip to start the fall yesterday we recovered nicely. I suspect that dip was just to fill the gap that formed over the weekend. Those gaps are reliable ways to make a quick buck for me. Learn how to use the CME chart to your advantage. You can find CME BTC charts on most chart sites.
People were flooding my inbox with "Tim what is CME and how does it work?" Well I am going to explain it right here so pay attention. The CME stands for Chicago Mercantile Exchange. This exchange is not really special or anythings in terms of BTC pricing. But it is special because it closes Friday and reopens Monday. This means the price freezes til Monday. If there is price movement during the weekend it creates a "gap" This gap is made because the CME is closed. So here is an easy way to look at it. Friday evening CME closes at 20k (just to make it easy) and we explode over the weekend. Jump to 25k. That is a 5k increase for those that suck at math. This means when Monday a.m. rolls around we will have a 5k gap. This would be a bearish gap Since it is below us.
These gaps tend to fill rather quickly. But to be honest there are gaps that have been on the chart for over 2 years. So nothing is 100%. But I would say trading these gaps have been successful for me over 60% of the time. The gaps work the other way too. Say we start the weekend at 25k and end the weekend at 20k. That would leave a 5k gap above us and this would be bullish. I would say 95% of all gaps fill within a week of forming. The one we saw from this previous weekend filled in less than 12 hours. Something to consider. Trade with caution no matter what or how you trade. Not all gaps are created equal so make sure you employ a stop loss and you should be good.
Okay now the gaps are out of the way lets talk about the RSI on this chart. I noticed we seemed to hold around 47 RSI. Right before Xmas we spent some time at 24k and the RSI was at 47. Now we sit at 31700 and RSI is 47. I know RSI sort of refuels during consolidation but this still seems like a drastic difference to me. This is probably a bearish divergence. I never can call a divergence right. I always think the bullish ones are actually bearish for some reason. I guess Im still learning lol. But I do think this is a divergence. What do you guys and gals think? I do play divergences when I am confident but since I am still learning I am hesitant most of the time.
I see that the ascending trend we have been following since just before Xmas is still in play. We have been following the trend and even though there have been 2 instances at these levels of a drop it ultimately resulted in deep wicks and a strong recovery. Which to me indicates that the bulls are not ready to give up this ground. Probably just delaying the inevitable but still... Its great to see the bulls stand their ground. These deep wicks I mentioned looks like stop loss tripping devices. LOL. But seriously those big wicks can easily trip your stop loss and yes that can be frustrating. But as a trader I sat down and figured out that getting stopped out sucks. But not having a stop set and waking up to a 20% negative red candle is far worse.
To me a stop loss is like a back up parachute. If you are skydiving you certainly expect the 1st parachute to work dont you? But that isnt always the case. If you jump I know that everyone would prefer the piece of mind a back up parachute offers. This is the same as a stop loss. People complain about the stop loss not always tripping. That does happen and I wont deny it. But guess what? Back up parachutes dont always work either. But I sure as hell aint jumping without one. LOL. That is how I feel about stop losses. Dont jump off the plane without one!
Im still watching the 4hr 50 MA *orange line. The trend is ascending and the 4hr 50 MA seems to be following the trend beautifully. If we lose the 50 MA I think we can expect another visit to 28k or 24k. There seems to be plenty of support around these levels. Another thing I want to bring up is bollinger bands. They are squeezing as I am typing this. When they get tight any fool can see volatility is next on the menu. The thing is nobody can say for sure which way the break out will go. Hell with all the bullish pump we have seen over the past month or two I would not be surprised to see another run at 35k. But I dont want to sound greedy lol. I feel like expecting more pump is almost selfish. Bitcoin has treated us like Kings and Queens over the majority of 2020 and I just want to take this opportunity to thank Bitcoin and Satoshi, and Hal Finney, and Nick Szabo (among many others). The little experiment they started in 2008 has become one of the most successful monetary experiments in the history of mankind. Something we created with logic and with economics in mind turns out to be a very profitable endeavor. Satoshi himself or herself or themselves, even said that Bitcoin would either be a complete failure or a wildly successful investment. I guess we have our answer.
Bitcoin started with 21 million potential Bitcoins. We have lost 5 million in the last 12 years. I doubt people will continue to lose them at rates like this as people cant simply turn on a CPU and mine the way they used to. You need expensive mining equipment to make it these days. People were losing a lot of BTC when it was worthless. People would mine BTC with a cpu and then get a new CPU and just toss the 22 dollars worth of BTC they mined over the past year. 2010 - 2011 was much different. Bitcoin was almost worthless. Remember it took over 10k Bitcoins just to order 1 pizza. These days since BTC is more valuable people are more careful with how they approach it and how they send the coins. They are more careful so I dont see us really losing 5 million more. I may be wrong but when something is more valuable people tend to be more careful. People will continue to lose BTC and that is a boost to everyone else in the game. When you send your BTC into cyberspace and it disappears due to you making a mistake you lose that BTC. But that increases the value of everyone elses BTC. The mining rewards have drastically decreased since 2010 as well. You could mine like 25-50 BTC every ten mins. (Not really you but every block produced 25-50 BTC and a block is created once every ten mins on average) Each halving cuts this in half. That is why they call it the halving. It halves the reward miners receive and has always resulted in the price rising. New supply is lower and this creates a demand. When demand is created it usually increases the price of said asset. This is totally evident with Bitcoin. An economic experiment gone horribly right.
People will say inflation is healthy. That is great for the USD. Bitcoin will ultimately be deflationary. Bitcoin has a limit and this alone makes it more rare than the USD. The USD is infinite. This effects value. They just print more USD to solve their issues. But you cannot do that with BTC and this is why the US will never use BTC for anything except a taxable investment for them to take more of our money. The thing is Bitcoin is proving why inflation isnt the best thing that can happen to money. People truthfully argue with me saying the USD is better because of inflation? LOL. Ya I dont agree. They say it prevents people from hoarding money and encourages them to spend which in essence boosts the economy due to them spending and not saving. Sure I can see the logic in this line of thinking but I dont think this is so great. Inflation is a hidden tax. People dont see the tax on their pay check therefore they dont pay attention to it. But when you see that cup of coffee go up from 99 cents to $1.78 over a few years that isnt because coffee is becoming more rare. It is because of the inflation. The same thing that happened with that cup of coffee is happening with BTC. Just because we see BTC gaining value in terms of the USD that doesnt really mean its more valuable so to speak. It just means the USD is inflating and we are seeing the results. Btc is acting like a hedge. Very similar to gold.
100 years ago an oz of gold bought you a really nice suit. Today that same oz of gold can buy you a really nice suit. That is the basic explanation of a hedge. Bitcoin is acting the same though it is a bit more volatile. Keep in mind BTC is only 12 years old and it will take a number of years before it really resembles gold IMO. The thing is gold will eventually be mined in new ways. Asteroids. The ocean is supposedly filled with microscopic gold we will eventually be able to filter out. Its only a matter of time. I bring this up due to the fact gold is rare. So is BTC. But BTC is the one where we know there wont be more mined from any asteroid folks. There will only ever be 21 million. Period. Gold has always been rare because of the effort it took to mine and find it. But if we start mining asteroids that are supposedly "filled with gold" this will inevitably effect the price of gold and as a result could cause inflation just like increasing the supply of the USD does to the USD. So many factors. An the one thing we know for sure is the amount of BTC that will be created. This gives us an idea of what to expect. With the USD and gold we really dont know where the limit to the supply is. Gold is uncertain and the USD is definitely going to increase much more. But Bitcoin is limited and people are even losing it occasionally. This means ultimately BTC will be deflationary. Something that is incredible in terms of money. Imagine simply leaving 100 USD in your bank acct and when you pull it out 10 years later the purchase power increased vs decreased? This is Bitcoin. Im sorry I went on so long this a.m. I couldnt shut up. LOL. Sometimes when I get talking about BTC I get a bit crazy. But Im passionate about it and I want to share my thoughts. I hope you all have a great day. Make good choices folks! And always remember WTFDIK???
TLDR: Cmon!! You dont want to read all that? Bitcoin good, USD bad
We have seemed to gotten comfortable around the 31k level. We have deviated from 31k dipping to around 29800 last night. Support stopped the fall and we are recovering as I type. Nice work bulls. They just wont give an inch to the bears. Even after what looked like the dip to start the fall yesterday we recovered nicely. I suspect that dip was just to fill the gap that formed over the weekend. Those gaps are reliable ways to make a quick buck for me. Learn how to use the CME chart to your advantage. You can find CME BTC charts on most chart sites.
People were flooding my inbox with "Tim what is CME and how does it work?" Well I am going to explain it right here so pay attention. The CME stands for Chicago Mercantile Exchange. This exchange is not really special or anythings in terms of BTC pricing. But it is special because it closes Friday and reopens Monday. This means the price freezes til Monday. If there is price movement during the weekend it creates a "gap" This gap is made because the CME is closed. So here is an easy way to look at it. Friday evening CME closes at 20k (just to make it easy) and we explode over the weekend. Jump to 25k. That is a 5k increase for those that suck at math. This means when Monday a.m. rolls around we will have a 5k gap. This would be a bearish gap Since it is below us.
These gaps tend to fill rather quickly. But to be honest there are gaps that have been on the chart for over 2 years. So nothing is 100%. But I would say trading these gaps have been successful for me over 60% of the time. The gaps work the other way too. Say we start the weekend at 25k and end the weekend at 20k. That would leave a 5k gap above us and this would be bullish. I would say 95% of all gaps fill within a week of forming. The one we saw from this previous weekend filled in less than 12 hours. Something to consider. Trade with caution no matter what or how you trade. Not all gaps are created equal so make sure you employ a stop loss and you should be good.
Okay now the gaps are out of the way lets talk about the RSI on this chart. I noticed we seemed to hold around 47 RSI. Right before Xmas we spent some time at 24k and the RSI was at 47. Now we sit at 31700 and RSI is 47. I know RSI sort of refuels during consolidation but this still seems like a drastic difference to me. This is probably a bearish divergence. I never can call a divergence right. I always think the bullish ones are actually bearish for some reason. I guess Im still learning lol. But I do think this is a divergence. What do you guys and gals think? I do play divergences when I am confident but since I am still learning I am hesitant most of the time.
I see that the ascending trend we have been following since just before Xmas is still in play. We have been following the trend and even though there have been 2 instances at these levels of a drop it ultimately resulted in deep wicks and a strong recovery. Which to me indicates that the bulls are not ready to give up this ground. Probably just delaying the inevitable but still... Its great to see the bulls stand their ground. These deep wicks I mentioned looks like stop loss tripping devices. LOL. But seriously those big wicks can easily trip your stop loss and yes that can be frustrating. But as a trader I sat down and figured out that getting stopped out sucks. But not having a stop set and waking up to a 20% negative red candle is far worse.
To me a stop loss is like a back up parachute. If you are skydiving you certainly expect the 1st parachute to work dont you? But that isnt always the case. If you jump I know that everyone would prefer the piece of mind a back up parachute offers. This is the same as a stop loss. People complain about the stop loss not always tripping. That does happen and I wont deny it. But guess what? Back up parachutes dont always work either. But I sure as hell aint jumping without one. LOL. That is how I feel about stop losses. Dont jump off the plane without one!
Im still watching the 4hr 50 MA *orange line. The trend is ascending and the 4hr 50 MA seems to be following the trend beautifully. If we lose the 50 MA I think we can expect another visit to 28k or 24k. There seems to be plenty of support around these levels. Another thing I want to bring up is bollinger bands. They are squeezing as I am typing this. When they get tight any fool can see volatility is next on the menu. The thing is nobody can say for sure which way the break out will go. Hell with all the bullish pump we have seen over the past month or two I would not be surprised to see another run at 35k. But I dont want to sound greedy lol. I feel like expecting more pump is almost selfish. Bitcoin has treated us like Kings and Queens over the majority of 2020 and I just want to take this opportunity to thank Bitcoin and Satoshi, and Hal Finney, and Nick Szabo (among many others). The little experiment they started in 2008 has become one of the most successful monetary experiments in the history of mankind. Something we created with logic and with economics in mind turns out to be a very profitable endeavor. Satoshi himself or herself or themselves, even said that Bitcoin would either be a complete failure or a wildly successful investment. I guess we have our answer.
Bitcoin started with 21 million potential Bitcoins. We have lost 5 million in the last 12 years. I doubt people will continue to lose them at rates like this as people cant simply turn on a CPU and mine the way they used to. You need expensive mining equipment to make it these days. People were losing a lot of BTC when it was worthless. People would mine BTC with a cpu and then get a new CPU and just toss the 22 dollars worth of BTC they mined over the past year. 2010 - 2011 was much different. Bitcoin was almost worthless. Remember it took over 10k Bitcoins just to order 1 pizza. These days since BTC is more valuable people are more careful with how they approach it and how they send the coins. They are more careful so I dont see us really losing 5 million more. I may be wrong but when something is more valuable people tend to be more careful. People will continue to lose BTC and that is a boost to everyone else in the game. When you send your BTC into cyberspace and it disappears due to you making a mistake you lose that BTC. But that increases the value of everyone elses BTC. The mining rewards have drastically decreased since 2010 as well. You could mine like 25-50 BTC every ten mins. (Not really you but every block produced 25-50 BTC and a block is created once every ten mins on average) Each halving cuts this in half. That is why they call it the halving. It halves the reward miners receive and has always resulted in the price rising. New supply is lower and this creates a demand. When demand is created it usually increases the price of said asset. This is totally evident with Bitcoin. An economic experiment gone horribly right.
People will say inflation is healthy. That is great for the USD. Bitcoin will ultimately be deflationary. Bitcoin has a limit and this alone makes it more rare than the USD. The USD is infinite. This effects value. They just print more USD to solve their issues. But you cannot do that with BTC and this is why the US will never use BTC for anything except a taxable investment for them to take more of our money. The thing is Bitcoin is proving why inflation isnt the best thing that can happen to money. People truthfully argue with me saying the USD is better because of inflation? LOL. Ya I dont agree. They say it prevents people from hoarding money and encourages them to spend which in essence boosts the economy due to them spending and not saving. Sure I can see the logic in this line of thinking but I dont think this is so great. Inflation is a hidden tax. People dont see the tax on their pay check therefore they dont pay attention to it. But when you see that cup of coffee go up from 99 cents to $1.78 over a few years that isnt because coffee is becoming more rare. It is because of the inflation. The same thing that happened with that cup of coffee is happening with BTC. Just because we see BTC gaining value in terms of the USD that doesnt really mean its more valuable so to speak. It just means the USD is inflating and we are seeing the results. Btc is acting like a hedge. Very similar to gold.
100 years ago an oz of gold bought you a really nice suit. Today that same oz of gold can buy you a really nice suit. That is the basic explanation of a hedge. Bitcoin is acting the same though it is a bit more volatile. Keep in mind BTC is only 12 years old and it will take a number of years before it really resembles gold IMO. The thing is gold will eventually be mined in new ways. Asteroids. The ocean is supposedly filled with microscopic gold we will eventually be able to filter out. Its only a matter of time. I bring this up due to the fact gold is rare. So is BTC. But BTC is the one where we know there wont be more mined from any asteroid folks. There will only ever be 21 million. Period. Gold has always been rare because of the effort it took to mine and find it. But if we start mining asteroids that are supposedly "filled with gold" this will inevitably effect the price of gold and as a result could cause inflation just like increasing the supply of the USD does to the USD. So many factors. An the one thing we know for sure is the amount of BTC that will be created. This gives us an idea of what to expect. With the USD and gold we really dont know where the limit to the supply is. Gold is uncertain and the USD is definitely going to increase much more. But Bitcoin is limited and people are even losing it occasionally. This means ultimately BTC will be deflationary. Something that is incredible in terms of money. Imagine simply leaving 100 USD in your bank acct and when you pull it out 10 years later the purchase power increased vs decreased? This is Bitcoin. Im sorry I went on so long this a.m. I couldnt shut up. LOL. Sometimes when I get talking about BTC I get a bit crazy. But Im passionate about it and I want to share my thoughts. I hope you all have a great day. Make good choices folks! And always remember WTFDIK???
TLDR: Cmon!! You dont want to read all that? Bitcoin good, USD bad
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