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Bitcoin

Monumental Price Action
 
Bitcoin has gotten everyone’s attention on it’s epic parabolic rise to $42,000 at the beginning of 2021, more than a 10x move from it’s $3,850 low in March of 2020. Like most markets, Bitcoin found a bottom after the Covid 19 panic sell off. It then began a bull run breaking past it’s 20k previous all time high and continuing on to hit 42k before retracing 32% back to the $29,000 area and has traded within that range for the last two weeks. 
 
Hard Asset Fiat Hedge
 
Bitcoin has greatly outperformed Gold as both institutions and individual investors have looked to it as a hedge against the seemingly endless printing of the US Dollar and other fiat currencies. Where Gold has served this purpose in the past, in the last year it managed only a 44% gain before topping out at $2089 and then finishing the year in the $1900 area. It appears that many investors opted for Bitcoin this time around which may speak towards a growing number of millennials entering the marketplace. This is a group that sees the future of digital assets while also beginning to see Gold as an old story. 
 
Individual investors have certainly been contributing to the Bitcoin bull, but several institutions have also announced that they are making bets on digital gold this cycle. We already knew that companies like Square and Greyscale have been acquiring BTC for some time, but within the last year we’ve seen Michael Saylor’s Microstrategy and insurance Giant MassMutual announcing that they have entered the space. PayPal is also now allowing their customers to purchase BTC on their platform, furthering it’s demand. 
 
With a capped supply of 21 million, demand for this scarce asset has certainly been reflected in recent price action.

Where is Bitcoin Headed?
 
Price has gone parabolic and really nobody has any business calling tops in a market like this. Volatility is high and many retail traders are getting chewed up in stop runs on their leveraged positions. In the last two weeks the market has put in a well defined market structure M top that suggests we could be headed lower but at the time of writing this BTC is 34k and at about the middle of the range. It has not broken down in earnest and only time will tell if this pullback was a buy the dip moment or if we have in fact topped out for this cycle. 
 
At best we have to be patient and let this parabolic move calm down. Once price consolidates for a bit we can get a sense of direction for the next move. For now this market is too dangerous for the average investor to consider any new positions.
 
Unfortunately no one wants to hear that if you’re on the sidelines and excited to buy Bitcoin. But it’s this exact situation where as investors we must ask ourselves, “Am I buying Value?”  At TRI the answer is a big NO. From a fundamental perspective we see that Cost of Production (around $8k) is quite a bit lower than current price and looking at our technical indicators we need to see a retracement to at least the 61.8% Mountain Man Level around 18k before we can consider buying. But the good news is that BTC has repeatedly seen up to 80% corrections in it’s past and it is reasonable to think that there will be another opportunity to buy value in the future. Now is the time to do your research and get your trading plan in order so that you will be ready to take advantage of the next opportunity that presents itself.
 
Bitcoin Chart