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Bitcoin is ripping rallying. The current setup is becoming challenging for investors. We’ll explain why, but this is the exact reason we changed how we interpret the ‘Trend’ and the trigger for switching from a downtrend to an uptrend and vice versa, as we wrote about in last week’s bitcoin letter. It reflects the uncertainty of being around zero, where some indicators show bullish signs while others still show bearish ones.
The current trend, as measured by our framework, sits at -0.7. It’s becoming challenging because we’re nearing a T-split, and investors are feeling this, consciously or unconsciously. The difficult choice is this: if price breaks through $80,000 and manages to stay at these levels, we’ll probably flip to an uptrend. That makes it a good time to buy more bitcoin. But if price gets rejected here, we’ll probably revisit the range lows again around the low $60,000s in the coming weeks, maybe months.
So the challenge is that if the trend flips, this is a very good place to enter or increase your stack. But if price gets rejected and the trend stays in a downtrend, you’re probably better off waiting to buy 25% more bitcoin in the low $60Ks. At the end of the letter, we’ll bring more nuance to this, because at relatively low valuations, the odds favor stacking throughout this entire bottom formation.
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