A Massively Compelling Chart

Bitcoin's Weekly Chart Beckons

Sep 16, 2024

IN TODAY’S REPORT

What we cover: TECHNICAL ANALYSIS Edition. Huge patterns. Conviction. The alchemy of Uncertainty —> Risk.

Once Again, Growing Conviction

My conviction to hold Bitcoin in size prior to the late 2020 upside breakout was driven by many factors, not least among them being the genius of a new decentralized money with both a precisely known (eventual) supply — 21 million BTC by 2140 — and cryptographically-enforced scarcity (i.e., there will never be more).

U.S. Dollars? Fungible but hardly scarce, to put it mildly.

Van Gogh painting? Scarce but hardly fungible.

Gold? Fungible and scarce, but with an unknown supply (sorry goldbugs, gold’s supply is just a damn estimate, and don’t think about crossing any borders with it in size).

But as a technically and statistically-driven trader, Bitcoin’s weekly chart heading into 2020 was what finally compelled me to act with far greater conviction and commitment than I had previously. With few massive triangles in Bitcoin’s past at the time, and limited data to query due to the relative youth of the asset, my conviction leaned almost completely on the technicals rather than on any statistical conclusions.

Fast forward roughly half a decade and there appears to be a new massive pattern forming in Bitcoin.

`BITCOIN (BTCUSD). Weekly Chart w/ 4-year Moving Average. Late 2017 - Now.`

This year’s consolidation — forming since the March 2024 high — has been obvious for some time now. But from a technical perspective, only recently did I zoom out far enough to see what’s potentially at play. Yes, I look at a wide variety of timeframes thoughout the week and over the years, but sometimes you finally see what’s there, or perhaps what just appeared, so to speak.

Just as the last cycle’s massive Symmetrical Triangle preceded Bitcoin’s huge 2020 upside breakout, Bitcoin appears to be in the process of forming a huge Cup & Handle pattern.

Last cycle’s symmetrical triangle initiated from the euphoric 2017 high tracing all the way down to the soul-crushing 2019 low and beyond. Similarly, the current potential cup & handle pattern initiated at the late 2021 high with its bottom-of-cup trough hit in late 2022.

The current months-long consolidation —technically, a lengthy bull flag — now acts as a potential “handle.” For a cup & handle pattern to see complete fulfillment, it must close well above the highest high of the handle. This would put Bitcoin at a new all-time high.

Share REKTelligence Report

Of course, this could all be wrong.

I was spot on last cycle, but there’s a very good chance that things may not unfold as I’m currently envisioning.

But a good trader or investor is an alchemist, transmuting the human condition of utter uncertainty about the future into quantifiable risk. Once uncertainty gets defined as risk, a trader is free to walk forward into the unknown.

Until next time…

peace_love_crypto

-DB

IMPORTANT DISCLAIMER

The information presented and made available in this newsletter is intended for educational purposes only. THE INFORMATION IS NOT AND SHOULD NOT BE CONFUSED WITH INVESTMENT ADVICE AND DOES NOT ATTEMPT OR CLAIM TO BE A COMPLETE DESCRIPTION OF ANY SPECIFIC COINS, TOKENS OR MARKETS OF ANY KIND, BUT RATHER EDUCATIONAL EXAMPLES OF THE APPLICATION OF TECHNICAL ANALYSIS AND QUANTITATIVE ANALYSIS TO THE MARKET. This information has been presented and prepared without regard to any particular person's investment objectives, financial situation and particular needs because as individuals come from diverse backgrounds, with diverse objectives and financial situations. This information is of a general nature only so you should seek advice from your investment advisor or other financial professional as appropriate before taking any action. The opinions and analyses included herein are based on sources and data believed to be reliable and are presented in good faith, however no representation or warranty, expressed or implied is made as to their completeness or accuracy. It is imperative to understand your investment risks since all stock investments involve significant risk. The user of REKTelligence’s newsletters, podcasts, courses, coaching and other educational services agrees to indemnify and hold harmless REKTelligence LLC from and against any and all liabilities, expenses (including attorney's fees), and damages arising out of claims resulting from the use of this educational content. REKTelligence LLC is not a licensed investment advisor.