I think it’s important for investors to still understand that Bitcoin is a risky asset right. It trades almost tick for tick with the Nasdaq 100. It trades very similar to what Tesla does. If you actually match up the Tesla chart and the Bitcoin charts very similar, when it was making its highs around that same period. So, we have to remember that if we’re anticipating a scary market, where we’re scared of inflation, we’re scared of recession and the tech stocks do take a hit in the near term. I expect further downside in Bitcoin. You know, safety trade to offset inflation that’s not quite where bitcoin is just yet. You have to wait a little while for it to mature as an asset and then eventually you will get into that situation.
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The Bitcoin Fall
So, I actually have over the next 6 to 12 months, I think Bitcoin could be headed to 20 000 or even sub 20 000, before it finally makes that bottom. So, I’m in the camp where the fed will raise as much as they can. My big feeling is that by the end of this year and I’m guessing at least four or five times this year and they’re projecting 8. You’re going to see the economy start to come to a screeching halt and potentially head into recession. I’m making a bold call saying that by the end of 2022 – early 2023, we will see the economy into some sort of recessionary period and I don’t think the fed will hike at that point.
Impact of a recession
Once we get into a recession, what kind of impact does that have on the traditional markets? As a whole and I’m talking mainly about the stock market. So, it’s going to have a profound impact right you have the risk that the fed is going to have to be more aggressive in raising rates so therefore that will hurt the economy. Therefore that kind of trails through the earnings and has the potential to force a recession or create a recession, where people have less money to spend on buying things. Then you have the fact that prices are much higher, so people can only afford to buy a certain number of things versus what they could have bought a year or two ago.
So, I think it’s a big issue now. You’re coming into where if you see a recession in this economy – how do we get out of it? I mean over the last 20+ years the fed has been able to print us out of a recession because inflation was two percent or sub-two percent. You can’t do that when you have eight or ten percent inflation because then you’re going to see 20 inflations. So, it’s very interestingly scary. I will say the situation that we’re coming into and I do think the markets will be heading lower.
If you look at the charts from where we were pre-covered to where we still are, we’re still extremely elevated which means that we’re on a hyped-up printing press and economy or at least stock market. There’s a lot more downside to going at least to where we were on the longer-term trend.
In fact, looking through the chat here, so you can get a sense of this, but this is the SP 500 right, and while zooming all the way out going back to 2 000 and kind of 12 down here. We can clearly see that this was your longer-range trend right and what you could see here – is this was your cova dip. Then this was the market on steroids where the fed was printing as much money as they were. Now we have come off of that but you’re not back to your longer covered or pre-covered kind of trend line. So, I think in the very least, you’re coming back to this level on the spiders, which is around the 380 marker and my guess is when we start to see the recessionary situation, maybe even stagflation coming out, that could really spooky the markets to even more downsides. So, I do say that investors should be very cautious. It doesn’t mean there are not good opportunities for shorter-term swing trades, but just be aware. We could be entering this period in the market where the gains of the upside have been now infused for the next few years. And we could be in a struggling market. So, I think it’s important for investors to still understand that Bitcoin is a risk asset right it trades almost tick for tick with the Nasdaq 100. That bottom, I think, starts to mature into the digital gold and you will see it far outpace the returns on gold in the next 5 to 10 years easily, surpassing a hundred thousand. Maybe even five hundred thousand! But short term it trades with technology when people get scared. You see, Bitcoin fall and I think that will continue at least this year. So I think in terms of the charts here and you can see how we are getting a bounce. I want to show you this trend line because I think that’s the way the crypto market to me is. But look at this beautiful trend line and how it connects through this area and it makes sense that we’re getting a bounce right here now! My guess is you’re going to kind of head back towards 40 041 maybe 42 000 before you get into resistance. So as a shorter-term trader moves but then I do think it’s going to see some further downside. After that, so again if you’re a trader, there’s a lot of opportunity in Bitcoin.
Becoming the Bitcoin Investor
In fact, if you look at this larger channel, it has played perfectly off. This one looks at the bounces and then the pullbacks of the high end and these lines are perfectly parallel. It’s kind of the amazing thing about the charts! There’s no rhyme or reason why it happens! It just happens. It’s psychological for the market, but how you came right up here and then that’s where the selling started. If we came down to this line.
Let’s say in a couple of weeks, I would be a buyer of Bitcoin, until it breaks this lower trend area. So being a trader is great otherwise. If you’re someone who wants to be in Bitcoin for the longer term, I would recommend dollar-cost averaging. There are no guarantees – it’s going to 20 000 that’s where the charts are saying, but it’s not a guarantee. So, the best thing to do is basically say “I’m gonna put X amount of dollars every month consistently long because I see that future in Bitcoin. I’m such a big believer that we need an asset a digital gold that is not controlled by the printing presses of the federal reserve, where we can store our money in a digital fashion and then ultimately let it become a bigger asset down the line and grow much more to the sky”.
This article is a transcription of a video made by Jamie Tree
Original video: https://youtu.be/cVJQRGikASE