We have looked at Bitcoin for some time at Simpler Trading, both in the rooms and individually.
This year has seen Bitcoin and crypto again in the spotlight. We are seeing crypto gain attention for two reasons. The first is the continuing and never-ending money printing by central banks diluting the purchasing power of fiat currencies (inflation). The second is a branch of the first, and that is that institutions are now buying into the idea of alternative currencies. That would not have happened without the year-long attack on fiat around the world.
Because of these reasons, Bitcoin has had an incredible year and has made a new all time high recently. The question is: where is it going?
Using the longest data set I could find going back to 2012 allows me to run some Fibonacci targets on price. Let’s take a look:
There are three swings in total that I measured. Two extensions of previous major swings and the retracement from the previous high to the previous low.
When looking at Fibonacci, we pay extra attention to where there is confluence, or a combination of points that align.
I see two of those on this chart, from $32-$35k and another at $54k.
From a Fibonacci historical swing precedent, I think these make good initial targets until new measurable swings develop.
I also measured the time from swing low to swing high of the previous major swings. If we project forward the same time period from low to next high, the timing for the next major high in Bitcoin arrives in December 2021.
Can we get to $54k by then? I think so, as the breakout pattern in Bitcoin is very large and the concepts are still relatively new.
There are valid arguments for even higher price targets, but until I can see them on the charts, I will stick to a range within one year of $32k-$54k… or simply put, higher from here.
In the short term, we could see a pullback to “test” the market sub-$20k and I think if that happens that will be a great opportunity to buy in.
The best strategy for Bitcoin has been what we have advocated for in the room all year: buy a little bit every week on Coinbase Pro, do it consistently regardless of price, and don’t look at it for a year.
There are few things left in the world that can be considered underpriced after the deluge of money printing this year but, in my opinion, Bitcoin is still underpriced considering the pattern and the narrative that it fits in to.