Big Picture look at why 52.5k is such a huge resistance level!

16 lut

Here we see a big picture look of what Bitcoin is currently up against.

You'd think with making a 20% gain in the last 10 days, we'd be able to blast right through this "puny" ~52.5k level. Why is Bitty struggling now?

Well the answer goes back to 2020 and 2021.

You see the 52.5K area is a massive resistance level in it's own right.

It was exactly the level that formed the left and right shoulders of the head and shoulder top of 2021 that plunged Bitcoin ~75% down from 69k to sub-16k.

Add to the fact that there is a second resistance line perfectly lining up with the 52.5k resistance which is the huge old channel which has rejected Bitcoin crossing on numerous occasions. This is a channel resistance that goes back to 2013 in fact.

So to answer the question what can cause a raging bull to stop in it's tracks all of a sudden?

2 big old heavy resistance lines perfectly converging together right now.

Now here's the upside. If, Bitcoin manages to breakthrough these two lines, you will almost never have to worry about lower priced bitcoin ever again. These two lines would become massive support.

For that to happen though, you must understand the proper anatomy of a major line break, which I will demonstrate in pictures below.

Don't get suckered in long right now UNLESS, you see the following happen....

I am personally on the sidelines other than having sold some longer dated calls some 5k higher. If bitcoin breaks through, I'll take the loss. But I imagine we will do something similar to March of 23: Test the heck out of these lines for months (that's right Bitcoin tested this line for 2 full months back in March of '23). And then ultimately turn and head lower before the halving.

Good luck and happy trading!

16 lut

Uwaga

Before I get to the anatomy of proper line break, I want to show the convergence of these two lines on smaller time frame so you can see them clearly...

Notice the larger sell volumes beginning to show up here.

16 lut

Uwaga

16 lut

Uwaga

Let's now look at the anatomy of a proper line break in detail...

First let's take a look on a bigger time frame the line I am talking about. We could say this line break is what set off the bullrun of 2020....

16 lut

Uwaga

16 lut

Uwaga

Ok so now you see that line that spanned the course of almost 2 full years (it goes back even further but I won't show that now), At first it was support, then broke below during the COVID flash crash, then bitcoin tried to break it 2 times and was finally successful in October of 2021. Now let's zoom in when Bitcoin breaks through that line in October of 2021...

16 lut

Uwaga

16 lut

Uwaga

Now do you see the anatomy of that line break more clearly? See what happens...
First there is a massive spike in volume on 3 strong bullish bars with little to no upper or lower wick and rising volume each bar and bigger percentage moves each bar...

Then it has a massive test of it, which initially breaks back below it...

Then we inch back up above and have one more high volume bearish test, which Bitty succeeds in closing above the bar.

This all occurs over the course of 5 days...

And that my friends is the anatomy of a proper big line break.

Now let's compare to what's going on today...

16 lut

Uwaga

Notice the highest volume spikes in this area are sells, not buys. It could of course happen before the end of the week, but I suspect not.

17 lut

Uwaga

The best way to think of a rising resistance line is as a growth speed line. If you look at the entire coinbase history of bitcoin and you see the upper white line (not the current line, you see that it established it's original support at the price of $109 on Jan 5, 2015. It had it's final underside test and rejection of this line on March 26, 2022 at a price of $48240.

If you do the math what the market is saying is that Bitcoin's value against the USD was no longer going to grow at a pace of 240% per year (that is the annualized growth rate between the above two dates I gave and the above two prices). The market determined, through price action, that this was not a sustainable growth rate.

So now it establishes the lower line that we are currently up against. This line established it's first support at the COVID low of $4935 on March 17 2020. Now on Feb 17 2024 we are at $52000 testing the under side of this line and Bitcoin is trying to break above that price. So the market is currently asking the question: should Bitcoin be growing faster than 150% per year against the USD.

150% per annum is a massive growth rate (not to mention 240%).

I suspect Bitcoin could have bursts of growth rates that amounted to 150% per annum on select years, but as an average I simply don't believe it. That may be naive. Given the trillions and trillions of outstanding USD and the very limited supply of Bitcoin. However supply is only one side of the coin. Demand is the other.

While investors are chasing returns and moving to Bitcoin as a potential safe haven against long term dollar destruction, Bitcoin is still not traditionally an asset as such. It doesn't produce wealth for it's holders as such. It has potential as a store of value, less so as a unit of account, but to me it's highest function is as a global liquidity barometer.

I am guessing Bitcoin's ultra long term average growth rate (let's say at 200+ years) against the USD will match its halving rate which is approximately 20% per year. That will take many years to establish, but in any case that long term line would be much much lower than where we currently are. Perhaps the market can sustain an average valuation increase of 150% per year, but I don't believe that narrative and I believe you should have sane reasons to doubt it as well.

Of course, I am open to being wrong. But I suspect the USD is a lot stronger than the naysayers want to give it credit for. It is still the worldwide reserve currency without any question. Until that changes, I wouldn't expect any long term average of Bitcoin to be 150% growth per year.

Let's see!

18 lut

Uwaga

Also one other thing I wanted to add. 99% of bitcoiners only give a f*ck about the dollar value of bitcoin. They could care less about bitcoin, they care about dollars. And yet, they never stop to ask themselves---if what I really care about is having more dollars and what more dollars can buy me, doesn't that make the dollar more valuable than bitcoin?

Food for thought....