Where now for Bitcoin?

Bitcoin has certainly had its ups and downs recently.

With China clamping down on cryptocurrencies exchanges and seemingly going after small miners, JP Morgan’s Jamie Dimon announcing to the world that Bitcoin is a fraud, and the prospect of Central Banks looking into the possibility of starting their own cryptocurrencies, you could be forgiven for thinking that bitcoin is falling apart.

A quick look at the charts though, and a different story emerges. This is Bitcoin’s daily chart for the past six months. The most obvious thing is that the climb from $1000 to almost $5000 has been exponential.

The bottom part of this chart with the red and green “triangles” is an indicator which shows a “pulse” when a major change of direction in the market is indicated. As with all charting indicators, there are always exceptions to the rules that govern their predictions but even a brief glance at this chart will show that the historic picture has been fairly accurate.

Bear in mind that all the usual warnings apply as it seems that this particular indicator has now fired a bullish pulse (as indicated by the green upward spike to the extreme right of the blue dotted line in the bottom panel).

If you look closely underneath this green spike you will notice a red dot. This indicates a major change in direction of a trend. The last time this happened can be seen around the midpoint of the chart, around 20 July. The major difference though, with this first of the three green triangles, is that there was no red pulse signal dot accompanying it. This means that the signal was not as powerful as the one showing now.

Other indicators also support the trend reversal.

The top indicator on our chart in the middle with the single line with the red and blue dots has a red dot on the extreme right. This indicator shows represent the end of a trend. In this, case it shows that the market has ceased its downward movement and it is about to turn on more positive sentiment.

For clarity, here is an enlarged view of the same chart:

Combining the fundamentals with this technical view we believe that bitcoin will continue its upward journey.

Back in July, Fundstrat’s Tom Lee, said in a report that: “Bitcoin could be worth as much as $55,000 by 2020.” He further said: “We believe one of the drivers (of bitcoin) is crypto-currencies are cannibalizing demand for gold”

Lee said in the report: “Based on this premise, we take a stab at establishing valuation framework for bitcoin. Based on our model, we estimate that bitcoin’s value per unit could be $20,000 to $55,000 by 2022.”

We do not see Bitcoin rise to such stratospheric heights just yet. But it is another opinion to take into account when looking at investing in Bitcoin.

There are many variables involved with this “new kid on the block” that it is impossible to do too much homework on the subject of cryptocurrencies.

Just watch the charts carefully and read up on the news…

Noble Gold specializes in IRAs and 401(k) rollovers through precious metals and cryptocurrencies investments.