Long Term XBT Outlook with Andrews Pitchfork

2020年3月14日

This is a long post. A little essay, so if you are curious stick with me. In light of the recent dramatic market volatility I thought I would post this idea to help calm people down.

Where was XBT a year ago? $3600. Where is XBT now? $5500. Where was S&P 500 a year ago? $2900. Where is it now? $2700 after plunging all the way to $2400. XBT did wick down to nearly $3900 for barely a few minutes, but it is still over 150% of where it was a year ago. S&P 500? In the red. Not to mention XBT is a free market with no trading restrictions. This actually makes XBT look pretty good.

So, if you could go back in time and choose to invest in only one of these assets, which would you choose if you knew you would have to sell it in one year?

Some people are panic selling because they assumed XBT was a 'safe haven' on an island away from everything else. Clearly people who thought XBT will be immune to all other market fluctuations need to adjust their philosophy.

BUT......Given the above fact...that XBT is still +150% of its value a year ago where as S&P is in the red, consider the following.

There were leverage traders panic selling to avoid negative margins....but it was not average Joe's panic selling their XBT because they thought the floor was falling. It was private big time investors and wall street style portfolios selling long positions of XBT at a profit to cover their stock loses. In the end...they broke even or maybe even made money across XBT and stock portfolios. So what did XBT do? It buffered an economic meltdown and prevented people from loosing even more money.

If anything what I see is that XBT proved its place in the world by outperforming the stock market and easing economic stress, because without XBT no one could have sold long XBT positions at a profit to buffer their stock losses. More people would have lost greater amounts of money...the government would have more people claiming losses on their 2020 tax returns...and everyone would end up with less.

Another important thing to realize is that big XBT holders who specialize in XBT took advantage of these conditions to plunge the price by selling off big time because they knew next to the wall street plunge that sort of dump would plunge the price and cause a shake out. They didn't want to be stuck in a bull trap and so they sold thinking everyone else would, knowing it would set them up to do what they are and will be doing now......buying back any perceived bottoms, increasing their market share of XBT and making hundreds of millions of $$ when XBT goes backup in value. Remember....there are whales out there. Wall street guys, XBT millionaires, etc. Sure, they may own a huge share of the XBT market. And they've made money doing it. Are they manipulating the market to loose money.....or make it? And is it really manipulation...or just trying to maximize their positions by anticipating what they think will happen? The market is psychological. Everything is psychological. The key is to think like they do because that is the only way they've made all their profit in the first place. Understanding the market.

This is a big reason not to panic. Big people have made big money off XBT. And they want to keep making it. It's in their interest to ride the wave upwards, same as they do with the indexes such as the S&P, common stocks, Palladium, Gold, and everything else in between. Long term Bear markets don't benefit anyone because even though you can borrow to sell hoping it will drop to buy it back later....you can't do this forever. Long term money is in long positions only because no one wants the entire economy of the globe to go to 0.

What we have here is a black swan event. In conditions like this people are not willing to take the risk that any strong negative price indicators may result in short term reversal. The stock market was dropping due to immense fear that a worldwide pandemic would slow economic growth. They called it quits and cashed out of XBT at a profit to cover their stock loses.

I myself sold about 20% of my XBT when it was around $9800 because I saw negative indicators. I am kicking myself for being so conservative with interpretation of these negative indicators...because I bought back 10% of that at $8600 thinking we had hit bottom. I should have plotted this chart beforehand. This is a great reason to get a PRO account. In regards to short term indicators I was using the Phoenix RSI, LSMA, Green Line, White Energy God-Mode type script by user "WyckhoffMode". Starting Feb 10 when XBT was around 10500 there are all sorts of steep downturns of the Green line scattered around in various time frames. On the weekly there was one on FEB 10 when XBT was 10500. 10500 is also a resistance point on the above Andrews Pitchfork. This should have been an indicator to cash out a good chunk of portfolio hoping to buy back a bottom. There are others in shorter timeframes scattered around after the 10th. I'll let you guys find them on God-Mode scripts.

So, my advice is don't panic. Looking at the above Andrews Pitchfork, we can see XBT is trading within resistance lines. The y=mx+b line goes straight through the middle point of 10500 and 4000, with 4000 being the bottom most resistance of the green channel we are comfortably trading in. We are right at the 200 week MA. People are waiting for the close of the weekly candle ending Monday to see if we will go lower than this. We may....and we also may not. But either way, even if there is a dip it's hard to believe it will go below the bottom of the green channel. Remember that people, including the whales, are out here to make money...not loose it. From the above indicators it is reasonable to assume that XBT will be at least at $11000 a year from now...doubling your investment if you invest now. Often it trades above the y=mx+b line so obviously there is room there to fantasize about moonshots. But as the disclaimer this is my conjecture. Your decisions are your own. Do your own research. This is not to be taken as financial advise. I am not your fiduciary.

If you look at fundamentals; Hash rate is good. If it drops, mining costs will go down and everything will equilibrate. All sorts of real world applications are becoming noticed. Power plants mining XBT during low demand to avoid dumping or loosing the electricity being produced. Investors using it to cover stock loses during sell offs. Transferring large sums of wealth across the globe cheaper and faster than any banks do. Not to mention simply a retail payment platform.

Remember...markets are psychological. Fiat is psychological. Even gold is psychological. We are the ones who see the value by finding the application. You will never profit from a market if you don't see its utility, and that is the main advantage we have as a species. Finding utility in the world around us and managing it responsibly. Panic selling at the bottom of the drop will loose you just as much as FOMO buying at the ATH.

What we have is a dramatic reaction to the fear that coronavirus may slow economic growth, resulting in a cascade of panic selling on Wall street which led people to cover those loses by selling XBT at a profit. Nothing more and nothing less. What I see is that XBT proved it's utility by staying in the green while the S&P dropped into the red.

If coronavirus results in a major pandemic with hundreds of millions of people dying, which therefore slows economic growth for years, then perhaps this dramatic sell off will have been justified. But at that point you will have bigger things to worry about....like not dying. And the truth is you shouldn't need to sell off all your assets just to afford a P100 respirator from homedepot, some latex gloves, a 50lb bag of rice along with some soy sauce, and a bottle of 70% ethanol. You should be able to acquire all those critical survival tools for under $100.

Good luck out there!