Categories: Bitcoin Business

‘HODL Bitcoin To The Moon’ – Or At Least $50,000 In 2020

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Summary

Some phraseology enters the lexicon of a particular culture and quickly becomes a constant. "HODL Bitcoin to the moon!" has become a favorite, classic meme of Bitcoin bulls.

Traders may find that HODLing Bitcoin during the current move higher could continue to be increasingly profitable. Reaching the 2017 Bitcoin high of $19,891 seems plausible in 2019.

Bitcoin has experienced five major crashes in its brief history. Three of the four previous crashes rebounded to make new all-time highs. The fifth rebound is now underway.

Trader's Idea Flow believes existing catalysts will drive Bitcoin well beyond its previous all-time high. We are calling for new highs in 2019, followed by Bitcoin $50,000 in 2020.

We believe the current volatility dip into the $9,500 range may offer an opportunity to purchase Bitcoin before it trades higher on its way to new all-time highs. We believe Bitcoin is a compelling buy at this level.

This idea was discussed in more depth with members of my private investing community, Trader's Idea Flow. Start your free trial today »

Trader's Idea Flow subscribers hopefully earned a trading profit from our bullish trading call on Bitcoin (BTC-USD) posted Wednesday 7/3/19. The cryptocurrency posted a one-week, 22% gain from our trading call to its short-term high of $13,095 today on Wednesday 7/10/19, before pulling back sharply. Bitcoin cryptocurrency is among the most volatile and tradable asset classes available to short-term traders. Because we believe the current move higher in Bitcoin has a very long way to run, we are aggressively adding to our position during this current dip to the 9,500 range.

This current volatility dip has coincided with congressional hearings on Facebook's (NASDAQ:FB) proposed Libra cryptocurrency. Facebook's proposed payment tool, Libra, is another step forward in the evolution of cryptocurrencies as they become increasingly accepted and acknowledged as a viable asset class.

We believe there's now a confluence of powerful catalysts combining to drive this current move in Bitcoin higher. Our very aggressive view forecasts the current move in this cryptocurrency to extend far beyond its previous high set in December 2017 at $19,891 as quoted on Bitfinex. Trader's Idea Flow is on record now calling for Bitcoin $50,000 in 2020. This uber-bullish call requires supportive commentary to explain our position.

Bitcoin has experienced five major crashes in its brief history. This cryptocurrency has rebounded from three of its four previous crashes to make new all-time highs after each crash. By definition, of course all four earlier crashes have rebounded to new highs. We know that markets love repeating patterns. It's difficult to ignore patterns that have historically repeated in any market. This is accurate because there are market participants who will act upon these trading patterns. Oftentimes, this group psychology can make the repeating pattern a self-fulfilling prophecy. This is one of the key elements that drives pattern recognition and technical analysis. The recent rebound from the bottom of the fifth crash in Bitcoin's history has acquired new, powerful catalysts not present in previous rebounds. Bitcoin may now be rebounding from its fifth crash on its way to new all-time highs.

  • This article will take a look at the previous five major Bitcoin crashes and the ensuing recoveries for this cryptocurrency after each crash.
  • We also will address a few of the major catalysts helping to drive the current move higher in Bitcoin that were not present in previous rebounds.

Five Previous Bitcoin Crashes

The following graphic enumerates each of Bitcoin's previous five crashes:

  1. After Bitcoin's first major crash bottomed in November of 2011, this crypto rebounded from $2 to $16, but it did not surpass its previous all-time high "ATH" of $29 before experiencing a second major crash in August 2012. By definition this first crash did rebound to new all-time highs eventually, as Bitcoin traded well into triple digits after the second crash.
  2. Bitcoin's August 2012 crash bottomed at $7. By April of 2013 Bitcoin then rebounded to an astounding new ATH of $259. This move higher from bottom to top represented a move of approximately 3,700%.
  3. The April 2013 third crash bottomed at $68. By December of the same year in 2013 Bitcoin had rebounded to an amazing ATH of $1,147. That bullish move returned approximately 1,600% from trough to peak. Volatility and resiliency of this magnitude are rarely found in any asset class for traders of this cryptocurrency's market.
  4. The fourth Bitcoin crash ran its course over 411 days to bottom in January 2015 at $177. By December of 2017 Bitcoin had rebounded once again to another new ATH of $19,891. This rebound to a new ATH represented perhaps one of history's greatest bull moves in any recognized asset class by returning approximately 12,000% from the bottom to top of the move in just under three years.
  5. The fifth and most recent crash in Bitcoin saw this cryptocurrency bottom at $3,625 in November of 2018. We have witnessed the current rebound in Bitcoin take this cryptocurrency to a recent high above $13,000. This is not yet a new ATH, which we believe will be achieved before the end of year 2019. Markets love repeating patterns, which may become a contribute to Bitcoin experiencing a new ATH and continue higher to above $50,000 in 2020.

A Few Major Bitcoin Catalysts

Seeking Alpha's Victor Dergunov does an excellent job of discussing both the limited amount of Bitcoin available in the marketplace and also the network effect in this recent Bitcoin article. The following graphic depicting the rapidly-growing number of global blockchain wallets on the Bitcoin network has become a powerful factor as an upside catalyst. The actual number of Global Blockchain Wallet Users has now surpassed 40 million as of Q2 '19.

The graphic below illustrates the rapid and steady growth of the Bitcoin blockchain in megabytes as institutions globally have embraced this technology as an asset class:

Both the number of blockchain wallets and blockchain size in megabytes have doubled since the previous high for Bitcoin in Q4 '17. This strong growth in the number of investors who can now access purchases of Bitcoin bodes well for continued inflows of cash into the cryptocurrency as momentum takes Bitcoin higher.

Perhaps one of the most important differentiators in the current move in Bitcoin is that institutions hungry for strong percentage gains and trading volatility are reportedly now driving Bitcoin higher. The retail investor can be notoriously late in such moves higher, which may drive prices further in the future. At this time, we believe that momentum is building to the upside in Bitcoin as market sentiment has been improving. We are buyers of Bitcoin on the current pullback and we believe that new highs will be made in this cryptocurrency before the end of 2019.

These new highs above $20,000, if achieved, may be early in the move higher for Bitcoin if the patterns of previous recoveries to new highs repeat. All four previous recoveries in Bitcoin took this asset significantly past its previous all-time highs. This current fifth rebound may repeat the pattern of the four previous rebounds as justified by the growth of the Bitcoin network, while the supply of Bitcoin has not kept pace with the growth of potential demand.

Please note that the number of Bitcoin network wallets and the size of the Bitcoin blockchain have both doubled since the previous all-time high for Bitcoin in Q4 '17. During this same time period the number of new Bitcoin mined / released has only increased by a few million Bitcoin. The supply vs. demand equation for this cryptocurrency is positioned for significantly higher highs in the event of a breakout higher for Bitcoin.

The Bitcoin chart below illustrates the price action that is now taking place since our bullish call on 7/3/19 at $10,706. After making a 22% one-week gain, Bitcoin has now declined to about the $9,500 range. We believe this dip is a compelling buy for both a short-term trade and a longer-term hold for this cryptocurrency. The Bitcoin market presents traders with the type of volatility that is conducive for short-term trading. The Bitcoin market is often in sync with chart pattern recognition analysis to provide traders with some direction. The short-term double top on the chart's recent price action below is an example of this market recognizing a common pattern:

Summary

We believe that this current pullback may be one of the last opportunities to buy Bitcoin ahead of what could become an epic run to new all-time highs. The world has acknowledged Bitcoin as the leader in an emergent asset class. Many of the former skeptics have been silenced as this new asset class has gained greater legitimacy, while building an institutional following. This much improved market sentiment for Bitcoin could certainly be playing a key role in its current move higher after an 81% crash since December 2017.

Conclusion

Trader's Idea Flow has been adding to our long position in Bitcoin and we believe a new ATH will occur in 2019. More aggressively, we believe a continuation pattern higher will unfold for this cryptocurrency that will take Bitcoin above $50,000 in 2020. As always, risk management is paramount in trading such a volatile, high-risk market.

Certainly Bitcoin is a speculative, high-risk trading vehicle that's only appropriate for traders with an aggressive risk profile. Trader's Idea Flow urges caution and the use of risk management in any consideration of Bitcoin trading.

Members of our Trader's Idea Flow community always receive our trading ideas and updates first. Traders know that timing is everything. Receiving information early and being prepared ahead of the competition is valuable. Please feel welcome to free trial our marketplace service, Trader's Idea Flow. Just one successful trading idea can cover the cost of many years of the very affordable subscription price.

Disclosure: I am/we are long BTC-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Some phraseology enters the lexicon of a particular culture and quickly becomes a constant. "HODL Bitcoin to the moon!" has become a favorite, classic meme of Bitcoin bulls.

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Illuminati, Mason, Anonymous I'll never tell. I can tell you this, global power is shifting and those who have the new intelligence are working to acquire this new force. You matter naught except to yourself, therefore prepare for the least expected and make your place in the new world order.

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