Investing in the Tulip Crypto Mania 2021
Currencies / cryptocurrency Jun 19, 2021 - 12:12 PM GMTBy: Nadeem_Walayat
This is part 1 of an extensive full spectrum analysis of the crypto markets, of what I expect to happen over the next 6 months in terms of a Bitcoin price trend forecast, and the strategy I am deploying to capitalise on as well as 5 potential black swans that could collapse the crypto markets where Stable Coins such as USDT are what could be imminent catalysts for.
Bitcoin Bear Market Trend Forecast 2021 and Model Crypto Portfolio Buying Levels
Topics covered in this analysis:
- Investing in the Tulip Crypto Mania
- Bitcoin Price Trend Forecast Review
- Lessons Learned
- Cathy Crypto Wood's View on Bitcoin
- BITCOIN HALVINGS TREND TRAJECTORY
- Stock to Flow Infinity and Beyond!
- Bitcoin, Crypto's and the Inflation Mega-trend
- Black Swan 1 - Will Crypto's Get Banned?
- Black Swan 2 - GOOGLE
- Black Swan 3 - USDT Tether Un-Stable Coin Ponzi Schemes!
- BLACK SWAN 4 - Bitcoin 51% Network Attack by China?
- Black Swan 5 - Bitcoin is Already Obsolete
- US Trending Towards Hyperinflation
- BITCOIN TREND ANALYSIS
- Bitcoin Bear markets analysis - How low could she blow?
- Bitcoin Trend Forecast
- Bitcoin Long-term probable Next bull market price target
- Alternative Scenarios
- My Crypto Bear Market Investing Strategy
- Crypto 1 - Ethereum (ETH) $2600
- Crypto 2 - Bitcoin $40,375
- Crypto 3 - Ravencoin $0.078
- Crypto 4 - Cardano $1.59
- Crypto 5 - Pokadot $25
- Crypto 6 - ChainLink $26
- Crypto's 7 to 10
- Creating The Perfect Crypto
- How to Invest in Crypto Without Getting SCAMMED
- CHIA SCAM COIN
- Binance vs Coinbase
- Have ARK Invest Funds Bottomed?
The whole this extensive analysis has first been made available to Patrons who support my work. So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.
Investing in the Tulip Crypto Mania
I have always been skeptical of having any meaningful exposure to crypto's for the fundamental fact they have no intrinsic value, no earnings, backed by nothing, where at least the fiat currencies are backed by each nations tax payers and military. A store of value I hear you say? Well you cannot call something a store of value if it can double or halve within a matter of weeks which is what Bitcoin has done THIS YEAR! What's that? Bitcoin supply is limited to 21 million unlike fiat which is unlimited supply with the worlds central banks printing press going 24/7 at full speed. Yes it is true that fiat currency is continuously being devalued but along with Bitcoin there are what? 12,000 additional CRYPTO's, so called Alt Coins and smart contracts, reminds me a lot of mortgage backed securities giving the illusion of safety from money printing when in reality they are the exact opposite, leveraged up to the hilt where just like the subprimes it does not take much to bring the whole house of cards crashing down, hint USDT.
And then there are some really loony crackpot ideas that the many have fallen for hook line and sinker such as CHIA COIN that is busily soaking up the worlds supply of hard drives populated with tens of 100gb files each all for the chance to win a pair of chia coins in the 4608 daily CHIA coin lottery, in fact I consider CHIA to be a SCAM as I will elaborate on later. Then we have the GPU mania, the worlds stock of GPU's gobbled up mainly by Ethereum by 'miners' investing tens of thousands of dollars in mining rigs, hoping that the ETH price will stay high for long enough to get a return on investment which has sent the price of GPU's soaring to ridiculous levels, double, even triple MSRP, with 3 year old GPU's selling for more than what they cost when NEW!
Then there is the fundamental issue of how to value the likes of bitcoin, and as far as I can tell one cannot value it, it is pure speculation, does not matter if the supply is limited to 21 million, those 21 million bitcoins could just as well be valued at worth $1 than $1 trillion!
So the crypto's, regardless of what the crypto enthusiasts that flood the internet with their perma HODL messages are VERY HIGH RISK! Even worse one cannot spread ones risk to a basket of crypto's because they are all basically riding on the coat tails of Bitcoin i.e. whatever Bitcoin does up or down then the others will do twice more! So I consider investing in Crypto's as being very high risk, much higher than investing in a small cap stocks such as featured in my recent article. As at least there each has a real chance of making it, than all being directly correlated to Bitcoin. Which translates into Crypto's being assets that should NOT be held for the long-run, at best for the duration of a bull cycle as there is always the risk of the Emperor has no Clothes event happening i.e. the likes of Bitcoin could become worthless literally overnight as I will elaborate upon how in this analysis.
So Crypto's are HIGH risk, however to offset that high risk they offer high potential returns, especially during the mania peaks! As long as one does not get sucked into the crypto hype than one should be able to profit from the crypto booms by buying during the busts hence this article as we are at the beginnings of the great Crypto bear market of 2021, regardless of the what the likes of Cathy Crypto Wood pronounces such as Bitcoin bottomed at $35k.
So BUY LOW and SELL HIGH 'should' work with the more liquid of crypto's just as it does with most markets most of the time hence this timely analysis that seeks to present my accumulation strategy for what I am going to do over the coming weeks and months as well as the potential risks that could deliver huge flash crashes to the crypto world. So far I have limited myself to mining ETH with payout's in BTC with a couple of desktop PC's though knowing that bitcoin was going to CRASH and enter a bear market have ensured that the bulk of crypto generated has been SPENT.
My primary focus is to fund the accounts and set the limit orders for the accumulation phase during the crypto bear market, following which I will rinse and repeat for the distribution phase of the next bull market as I don't buy into the hype that crypto's such as Bitcoin and Ethereum will replace fiat currencies or that Bitcoin is as good as Gold. We'll Gold's done diddly squat in terms of being a save haven if you go back and see what the gold bugs have written during the past decade then the Gold price today should be trading over $10k! The same could happen to the crypto's i.e. they hit a ceiling in terms of speculative interest given that neither generate earnings unlike stocks. So I cannot see how the decentralised crypto's are ever going to be as big as the hype implies as of courser the governments can and probably will adopt block chain technology in favour of their own centralised crypto's that will be backed by tax payers and thus supplant much of what today's crypto developers can ever hope to achieve.
So I am aiming to invest upto 1% at the right price in a small basket of crypto's for about 2 to 3 years., and who knows I may get lucky and double or triple or more my money for maybe a 50% risk of loss of funds invested and of course one can fantasise about crypto's X10ing again just as they have in the past.
DISCLAIMER - Investing in Crypto's is VERY HIGH RISK, all the way from putting funds on deposit with exchanges to the actual holding of crypto coins Therefore the analysis in this article is a matter of opinion provided for general information purposes only and is not intended as investment advice. Using Information and analysis derived from sources and utilising methods believed to be reliable, but I cannot accept responsibility for any trading or investing losses that may be incurred as a result of this analysis. Individuals should always consult with their personal financial advisors and do their own research before engaging in any investing or trading activities.
Bitcoin Price Trend Forecast Review
Before I venture down the crypto rabbit hole in attempts to map out a potential multiyear trend forecast, here's a review of how my previous Bitcoin trend forecasts panned out.
17th Sept 2019 - Bitcoin Price Analysis and Trend Forecast
Forecast Conclusion
Therefore my forecast conclusion is for the Bitcoin price to hold support at $9,400 in preparations for an assault on $12k, a break of which would target a break of $14k. However if support at $9.4k fails than Bitcoin could trade down as low as $6k BEFORE heading higher.
Peering into the Mists of Time
It looks probable that Bitcoin will be trading at new all time highs, north of $20k during the second half of 2020. And if the price goes parabolic as Bitcoin has a tendency to do then $20k could be a mere blip in a much more aggressive bull run.
Which I updated in March 2020
4th March 2020 - Coronavirus Parabolic Pandemic, Bitcoin Price Trend Forecast
Forecast Conclusion
My forecast conclusion is for the Bitcoin price to mark time by trading down to as low as $7,500 before basing for a run higher to resistance of $10,500 that 'should' break to propel the Bitcoin price towards the next resistance level of $12,000. Thus the bitcoin price could drift lower for the next couple of months or so before resuming a bullish trend as illustrated by this chart.
Whilst my most recent quick take penciled in a target accumulation zone of between $19k and $22k after spending several months warning not to hold any crypto as Bitcoin traded along it's Q1 highs
10th May 2021 - Five More Small Cap Bio and Tech Stocks to Invest for 2021 and Beyond!
So $19k to $22k is where I would consider accumulating Bitcoin which I will develop further in my next analysis that I aim to soon complete and to include a strategy of what to do during an anticipated crypto bear market, of what crypto's I will be looking to accumulate at much lower prices than where they trade today with a significant amount of holdings generated via GPU mining, but for which we have plenty of time as I expect the bear market for most crypto's to run for a good year or so from peak to trough, so I am in no rush to panic buy on chaotic price action.
And this is what has transpired to date over the past couple of years.
Bitcoin traded down to $4k before going higher to $20k, breaking above $20k late 2020 to go parabolic before Bitcoin peaked along it's early 2021 highs and has now entered into a bear market that this analysis will seek to fine tune the probable destination of in terms of price and time with objective of replicating a similar outcome in terms of accuracy as my preceding bitcoin analysis.
Lessons Learned
Bitcoin price can tends to go a lot higher AND lower than anything that can be concluded from technical analysis, very high volatility i.e. it traded to well below $6k before bottoming and traded to well above $20k before topping where I personally thought in a parabolic move it could hit $50k as a far distant price target that it eventually exceeded by 15K to top out at $65k earlier this year. So to factor a higher probability for more distant price targets than technical analysis suggests.
Cathy Crypto Wood's View on Bitcoin
Virtually every one of Cathy Woods crypto videos this year has her restating that she expects Bitcoin to hit $500k, and a few mention an Ethereum target of $10,500. As in her recent video she reiterates Bitcoin going to $500k and that Bitcoin probably bottomed at $35k (https://www.youtube.com/watch?v=oT3vGInOjyY) And apparently in the not to distant future many millions of homes will have Tesla power walls and solar panels all for mining crypto's such as Bitcoin and ETH, so Cathy kills to birds with one stone, pumps Crypto's and Tesla at the same time!
Bitcoin $500k, if only things could be so simple! The ultimate free easy money, Sounds too good to true and so I am skeptical that it's ever going to happen! Still it gives a taste of the mindset of the crypto community, a case of HODL for $500k!
BITCOIN HALVINGS TREND TRAJECTORY
The rest of this extensive analysis has first been made available to Patrons who support my work. So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.
Bitcoin Bear Market Trend Forecast 2021 and Model Crypto Portfolio Buying Levels
- Investing in the Tulip Crypto Mania
- Bitcoin Price Trend Forecast Review
- Lessons Learned
- Cathy Crypto Wood's View on Bitcoin
- BITCOIN HALVINGS TREND TRAJECTORY
- Stock to Flow Infinity and Beyond!
- Bitcoin, Crypto's and the Inflation Mega-trend
- Black Swan 1 - Will Crypto's Get Banned?
- Black Swan 2 - GOOGLE
- Black Swan 3 - USDT Tether Un-Stable Coin Ponzi Schemes!
- BLACK SWAN 4 - Bitcoin 51% Network Attack by China?
- Black Swan 5 - Bitcoin is Already Obsolete
- US Trending Towards Hyperinflation
- BITCOIN TREND ANALYSIS
- Bitcoin Bear markets analysis - How low could she blow?
- Bitcoin Trend Forecast
- Bitcoin Long-term probable Next bull market price target
- Alternative Scenarios
- My Crypto Bear Market Investing Strategy
- Crypto 1 - Ethereum (ETH) $2600
- Crypto 2 - Bitcoin $40,375
- Crypto 3 - Ravencoin $0.078
- Crypto 4 - Cardano $1.59
- Crypto 5 - Pokadot $25
- Crypto 6 - ChainLink $26
- Crypto's 7 to 10
- Creating The Perfect Crypto
- How to Invest in Crypto Without Getting SCAMMED
- CHIA SCAM COIN
- Binance vs Coinbase
- Have ARK Invest Funds Bottomed?
Including access to my recent analysis: Five More Small Cap Bio and Tech Stocks to Invest for 2021 and Beyond!
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My analysis schedule includes:
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For crypto trading and investing see Binance for 10% discount on trading fees - Discount Code LZ728VLZ
For managing your crypto's see Coinbase
For GPU mining check out Nicehash (affiliate links).
Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.
Your seeking to accumulate during the great crypto bear market of 2021 analyst.
Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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