A Detached View of Bitcoin
The Chart, and Nothing But
Dear Readers,
The year rolls on, and so does the chart. Any objective observer of the chart, unfamiliar with the market and not being caught up in it, will no doubt wonder what the panic is regarding price [yes, people can be emotionally detached toward Bitcoin]. Their initial impression of the chart would be a visual one, seeing a regular series of moves and corrections, and they would most likely incline toward seeing the price currently at the end of yet another correction.
And yet most of those more closely tied to the market, watching its every daily move in price, are currently in a state of near panic. The explanation of this phenomenon in my opinion is collective/ crowd sentiment on the one hand, and ‘money illusion’ on the other.
The investor is not interested in some abstract price point, either peak or low, but rather on the potential return [or loss], the ROI [Return On Investment]. The investment is relative to the entry and the exit, and the return, in percentage terms, between these two points. The actual price of the instrument is irrelevant [buying into a high nominal price/ FOMO is a variant of money illusion]. What matters is the appreciation or the depreciation of the instrument that one is speculating in, and, as discussed in the previous article on money illusion, the reason why Crypto-currency moves exponentially is due to the available money/ capital on the sidelines looking to be ‘put to work’.
And so to technical analysis on the chart, which ideally should give us that perspective of the objective observer that has come to the market for the first time.
Visually, the first fact that would strike our detached observer is that price is pushing all time highs… with it in an uptrend and higher than the previous cyclical highs. No doubt with his curiosity piqued, he’d want a closer look at the price action; indeed, wondering whether to get in on such action. And so to the weekly chart below.
With a simple multi-year trend line drawn, our ideal observer remains interested - price is half way through the long-term channel [LGC] and maintaining a relatively steady rate of appreciation. Now, with interest increasing, he no doubt will look more closely at the technicals.
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