Don’t get me started on technical analysis in crypto. Some people scream that it works, yet everyone get REKT in 2018 so personally…. calling the big BS on that one! However I do believe that there are certain movements and metrics that are worth noting to give you an idea of when the market is shifting.
Today is December 4th and I have been looking at quick rockets I can ride. A friend sent me an article about SingularityNET ($AGI) CEO Ben Goertzel appearing on the Joe Rogan show later today. As such I took a quick look at the charts for $AGI and I was able to buy in at the second bottom circled in the chart screenshot below.
As such I’ve made a quick $50 from an $880 investment already, and there’s a few hours left until the podcast airs, so after that it could pump even more, I might make a further $50 or even $100. However it’s a far cry however from the bull run gains of 2017.
This got me to thinking that perhaps good old Bitcoin hodling might also still work. I decided to take a step back and look at the bigger picture. Right now, Bitcoin is sitting at around $4000. The last time bitcoin was this price was at the end of September 2017. Interestingly what I noticed that the Bitcoin volume was around $1.7bn in 2017 compared to $5.4bn in 2018. That’s more than 3 times the volume, see for yourselves.
So how come Bitcoin has more volume and is worth less? What does this actually mean? I’ll come back to this later, as first I want to bring something to your attention. If you had checked your Bitcoin portfolio at the end of September 2017 and then again today, you would feel no hardship, in fact you would probably be thinking “C’mon, do something…”
This got me to thinking, I wonder if we have been in this position before, and it turns out we have.
Lets take a look a look at the price of Bitcoin on the 1st of May 2014. It was $460 and the daily trading volume was $12m two years later, on the very same date btc was near enough the same price, just $8 less, but the daily trading volume was $40m ….. guess what? Again more than 3 fold.
I thought that this was interesting so I decided to dig further and look at what had happened to Bitcoin between May 1st 2014 and May 1st 2016. Now what I noticed wasn’t exactly what I could call mirrored correlation, but it wasn’t far off. The price had peaked to $668 on June the 4th 2014 and steadily declined over a 6 month period. It fell to nearly a quarter of it’s all time high value by January 15th 2015 where it touched $176.90
These numbers may not sound familiar, but $20k bitcoin down to less than a quarter of its value does, because that is the ATH priced vs the current price that bitcoin is today. So if I was a May 2014 – May 2016 hodler, again without looking at the price in between I would be thinking “C’mon…. DO SOMETHING!!” and this is where the volume increase starts to look increasingly similar.
In fact after this volume boost the price of Bitcoin started getting interesting, and the volume started picking up a lot of pace between May 2016 and May 2017 which is when Bitcoins daily volume first hit the billions. In fact, after Bitcoin left May 2016 behind, it would never see a $400 price tag ever again, and it would go on to $20k highs.
So what does that mean for our $4k – $4k range with the 3 fold volume increase? Well this is where volume and price start to make sense.
If you look at the volume on December 17th 2017 it was sitting at $13bn however the daily volume was actually significantly higher on 22nd of December, nearly $10bn higher yet Bitcoin fell to nearly half and was sitting at $11k, down a whopping $9k in 5 days.
So what does this tell us? Well, to me it says that the volume increase doesn’t necessary mean the price will increase, but when the price does increase as a result of the volume going up, it means that there are more buyers than sellers, and that is what is causing the price to rise. In the case of the 2017 all time high, it just shows the point at which the scales tipped in favour of more sellers than buyers.
Where does this leave us present day with our $4k Bitcoin with triple the volume of the last $4k Bitcoin? Well, to me it says that the buying pressure is out matching the selling pressure once more. This in turn could mean that we are about to see the final bounce just like we did in May 2016 when Bitcoin left the $400 price tag behind. So the question is, will December 2018 be the last time that we Bitcoin as low as $4k?