Bullish Archives

How can I invest in Bitcoin Profitably? – Part 1

Posted on February 20, 2017 | by [email protected]

Bitcoin has showed great character during 2016 and the start of 2017 as an investable asset providing good returns to its investors. Its high non-correlation with other commodities made it a very important portfolio diversifier which found its place in the portfolios of even institutional investors. With growing adoption levels, predicted potential and rising prices people have moved on over the question on whether they should be investing in Bitcoin. Rather, they are now exploring for ways to invest in Bitcoin and reap the benefits of steady increase in value and short term volatility. People have indeed stumped me with questions on how the investing procedure is different from currency trading or about its similarities with commodity trading. Given Bitcoin’s analogousness to Gold and its defined characteristics of mimicking a currency, it often becomes difficult to understand how to treat the digital asset in terms of investment. To clear out the uncertainty and let know people of various investment methods in Bitcoin, I decided to chalk out few means that might help everyone to the best of my knowledge. I broadly classified them into long term and short term basing on the time frame to expect returns.

Direct Investment – Long Term (Buy and Hold):

As stated already, Bitcoin acts both as commodity and currency. You can own Bitcoin as an asset or spend it as any other currency. This means that Bitcoin would be influenced by a unique set of fundamentals that might affect currency and commodity markets respectively. But more importantly, Bitcoin fundamentals relate to the increase in the adoption of the digital asset, venture capital movements, implementation of disruptive technology and Chinese market dynamics.

A long term investment in any market would involve investment of heavy capital with heavy reward expectations. In Bitcoin market, with the prices moving more than 150% in an year, a long term investment for good returns might range somewhere between just a few weeks to an year depending on the market momentum. For taking a long term position in the market, it’s always imperative to get a clear idea of the existing market trend. Since Bitcoin market is bullish in the long run and with the adoption levels always on the rise, it is wise to only go for buy side investments in the market. Shorting wouldn’t reap long term profits and might backfire if the market becomes heavily bullish. Therefore, with a good entry position having strong support and good risk to reward ratio, one can reap good amount of profits from the trade. More often than not, price targets would be a better judge of exit positions than the time period in volatile markets.

Direct Investment – Short Term (Algorithmic Trading):

Bitcoin markets are blessed with volatility that will attract automated trading practices which contribute to the dense volumes observed in the digital currency recently. Short term trades that help in quickly scalping money from Bitcoin markets can be done algorithmically. While these trades are very effective in making money in quick time, strict safeguards have to be placed for quick shift in market dynamics that might lead to losing heavy money if caught in the opposite direction of the market.

These trading soft wares have to be updated regularly to adjust to the changing market dynamics and updated compliance regulations.

Further investment methods to be revealed in consequent parts of the posts.

Here’s Why Bitcoin Might Soar Higher Under President Trump

Posted on February 8, 2017 | by [email protected]

Donald Trump, the 45th President of the United States is already settled in the Oval office and he has begun implementing some policy changes. However, Wall Street is still somewhat immune to the expected negative effects of a change in the leadership of the American government. Many analysts submitted that Trump’s victory at the polls would cause equities to crash but U.S. stocks have gone on to record new highs.

Market bears also held out hope that the U.S. equities markets will crash once Trump takes the oath of office. However, U.S. stocks have maintained the bullish rally and the Dow Jones is actually staying on course to 20,000. Interestingly, Trump’s victory has a direct influence on the price of Bitcoin because Bitcoin is an alternative currency that provides investors with a safe haven in times of volatility in the economy and in the financial markets. This post seeks to explore how Bitcoin is likely to fare under President Trump.

Bitcoin to shine brighter under president Trump

Donald Trump’s actions, inactions, and words have a huge influence on the global economy and Bitcoin is not likely to be spared from that influence. Nonetheless, it is becoming increasingly obvious that the Trump factor could provide bullish tailwinds for the Bitcoin investment community.

To start with, Bitcoin was the only asset that recorded marked gains on the heels of Trump’s victory in the 2016 U.S. the presidential elections. After Trump won the election, Bitcoin recorded the biggest gain among all financial instruments from under $700 to more than $736 within a couple of hours. In contrast, U.S. stocks recorded a flash decline before they recovered after investors started warming up to the idea of President Trump.

Of course, realists will be quick to point out the fact that Bitcoin recorded those gains because of an increase in market fears that Trump’s victory will trigger a fresh bout of uncertainty in the global economic and financial landscapes. However, the fact remains that Trump is one of the most controversial public figures in recent times and his position as the president of the United States will amplify the volatility and uncertainty caused by the controversies surrounding his presidency and his policies.

Trump might become sympathetic to Bitcoin

The second reason Bitcoin investors might enjoy bullish tailwinds under President Trump is that Trump might turn out to become sympathetic to Bitcoin. Trump already has Bitcoin supporters such as Mick Mulvaney and Peter Thiel in his team.

For instance, Mick Mulvaney openly supports Bitcoin, Blockchain technology, and the development of cryptocurrency. Mulvaney is tapped as the Director of the Office of Management and Budget in Trump’s administration. Peter Thiel is another outspoken Bitcoin supporter and he has investments in a number of Bitcoin startups. Hence, we can reasonably expect that these men who has the president’s ears could ‘lobby’ for policies that provide an enabling environment for Bitcoin to thrive.

Why Bitcoin Price drop shouldn’t be a surprise?

Posted on January 9, 2017 | by [email protected]

2017 started with a dream Bitcoin Bull Run with the cryptocurrency prices surging towards the all-time high. Before bitcoin enthusiasts could cherish the currency peak, there was a sharp drop in the price taking the currency back to $900 levels. Most people were shocked and disheartened about the abrupt shift in market dynamics. Market players started scurrying for reasons and comforted themselves with the circulating rumors involving China’s Policies. While it is true that China has always been a major influencer on Bitcoin prices, it might not be the driving factor here. Let’s look into why Bitcoin prices were bound to fall at peak levels and what would be the trajectory from here:

It’s all technical:

Bitcoin market has always followed the standard rule of currency markets: market trades all the regions adequately before moving to higher levels. It is very important to keep this in mind as market has always come back to trade low volume regions before resuming the Bull Run. This was evident when market went from $700 to $800 level and crashed back to compensate the lack of volumes.

Similar to that swing, market went from $900 to above $1000 with scanty volumes. Hence the crash was expected and the market came back to trade the low volume regions.

The peaks are always sloppy:

The prices have been bullish for most part of last year and the market has been trending. The only way this could have been halted was the effects of strong, long term and negative fundamentals. This happened for a brief period in 2016 when China announced capital controls on Bitcoin which lowered the prices. Later the sentiment settled and the market became trending in bullish direction.

When the market approached the peak for the first time in three years, the apprehension surrounding the speculation became very intense. With low number of buy orders at the top, traders and programmed algorithms can be set into a sell mode with little panic. With unstable market dynamics, the rumor acted as a catalyst for the quick crash.

What’s next?

Following the pattern, the market has consolidated at 78% Fibonacci Retracement level. Algorithms are coded to have strict adherence to these levels. Infact quick acting algorithms would be reason for the crash of the market which ignited a sell off. These $900 levels would be a better entry position to set oneself up for long-term trades. If the all-time high breaks, the market is bound to go very high with good volumes and strong support.

Towering speculations over Bitcoin price in 2017: $2000 on the cards?

Posted on December 8, 2016 | by [email protected]

Bitcoin supporters are seeing 2017 as a very positive year owing to a pool of factors. From Trumps presidency to EU – led bail outs, improving adoption to increasing investments, the market dynamics look very favorable for the price. Many mainstream groups have openly come out with their support towards the cryptocurrency and discussed about the possible factors influencing their decisions. Bitcoin has recently touched its year’s high and has still been on a bullish path. Going strongly into the next year, let’s look into the predictions centering Bitcoin and possible investment opportunities:

The Trump Factor:

Trumps economic policies as per his Presidential Campaign, look very favorable for the growth of Fintech services. Especially Trump promised fiscal spending binge might add to approximately $20 trillion of U.S National Debt. This would triple the current U.S budget deficit from about $600 billion to $1.8 trillion. The move would cause the growth and inflation to increase unproportionately. Consequentially this would result in a hike in the interest rates and might see US dollar soar new heights. The economic fabric would be disturbed on a hike and would have a significant impact on the emerging markets and China in particular. To get away from the rippling effects of such impact, people would move to invest in cryptocurrencies and opt for alternate payment systems.

The EU Fall Out:

Post the housing collapse and its crippling effects; the European Union has experienced real turmoil in terms of ‘Debt Crisis’. Luckily Greece will receive a short term debt relief from Eurozone creditors to stay afloat, though IMF was not on board. Bad lending practices have landed Italy in the same zone, with people voting against constitutional reforms. Italian Prime Minister Matteo Renzi is now poised to resign after suffering the referendum defeat. With so much turmoil in Eurozone, next year is going to be very unpredictable and would see European commodity prices waver with high volatility. Historically with events like Brexit, where European commodities tanked, Bitcoin prices soared proportionately indicating the inflow of funds. Hence a similar move can definitely be expected for any of these eco-political events.

Saxo Bank predictions:

Saxo Bank is a Danish Investment Bank that has been prominent since 1992. Earlier CEO of Saxo, Lars Seier Christensen was personally vested in Bitcoin and hence the firm took a keen interest in cryptocurrencies. According to their recent prediction list, Saxo bank says that Bitcoin price might very well surpass $2100 in 2017.

Saxo explained that:

“If the banking system as well as sovereigns such as Russia and China move to accept bitcoin as a partial alternative to the USD and the traditional banking and payment system, then we could see bitcoin easily triple over the next year going from the current $700 level to +$2,100 as the block-chains decentralised system, an inability to dilute the finite supply of bitcoins as well as low to no transaction costs gains more traction and acceptance globally.”

This is also backed by Trump’s policies, Russia’s steps to legalize Bitcoin after a temporary ban and many other factors that are favorable.

Bitcoin Price Analysis: Hyperinflation to push the price higher?

Posted on October 18, 2016 | by [email protected]

Second week of October has started off with a break out propelling the market to over $620 level. The bullish trend continued with the market trading all the way to $640 before turning sideways on short term frame. The market has traded scantily over the $620-$630 region with no good residual volumes. While the long term setup still looks bullish, let’s see if hyperinflation can push the prices higher for the coming week:

Fundamental Key Points:

The adoption of the cryptocurrency and its underlying technology has always been fundamentally positive for the Bitcoin ecosystem. Here are few highlights of the past week fundamentals that might continue to have effect on the prices:

Bitcoin Trading on LocalBitcoins surges in Europe to all time high, turnover in Turkey and Venezuela explodes due to hyperinflation
Japan to drop Bitcoin sales tax by 8%
SEC Seeks Additional Comment on Winklevoss Bitcoin ETF
Polish Parliament Holds Public Consultation on Cryptocurrency
The Russian Government is Testing Blockchain for Document Storage
Bank Trials Show India’s Blockchain Interest on Rise

From a macro perspective, there has been an increase in the trading volumes of Bitcoin in countries like Venezuela that are facing hyperinflation. This is because of the devaluation of the local currency; people preferred to convert savings into Bitcoin. Economies facing recession might opt this as a way out to save value. How SEC might react to Winklevoss’s ETF request coupled by hyperinflation effects might have impact on prices of the currency.

Technical Analysis:

Long Term Trades:

The Long Term chart has been in an uptrend from the start of this year, with no sign of any set up change currently. The market has traded constantly over $630 with very low residual volumes in the range of $620 – $630. There is a strong possibility that the market might trade again in these levels to close the gap. This might be a chance to enter into a long term position around the zone of heavy support. The previous swing low of the market at $594 can be the stop with swing high at $770.89 as the target.

To get apt entry positions for the long term trade, let’s take a closer look:

On the daily chart, in the recent period the market has been trending in a channel. Eversince market failed to penetrate the $594 price due to heavy support; it has been trending upwards with middle Bollinger as support. Taking a position at middle Bollinger around $624 with $594 as stop loss and target $770 would be an ideal long term trade that can be executed with good support.

Short Term Trades:

On a daily chart, 100 SMA has now joined the zone of heavy support around $620, with the middle bolligner, 9, 13 and 34 SMAs. Market is looking to test this region before taking to the Bull Run.

On shorter time frame (4 Hrs), the Bollinger bands have broken out and the market is bearish. All the support averages have been broken and market is moving towards 100 SMA. Good short term trades with 100 SMA as target and $640 as a stop on bearish side would be feasible. Since market could to be sideways in $620- $630 range, short term trading from both sides would be feasible for some period.

While taking long term positions, keeping an eye on macro factors would be really helpful.