Yellen Says Rude Things About Bitcoin

You knew it was going to happen sooner or later …

You knew Bitcoin (Ticker: BTC-USD) was going to face regulatory headwinds.

Well, the breeze just picked up.

President Biden’s Treasury nominee Janet Yellen said cryptocurrencies are a “concern” in terrorist financing…

And on Thursday, Bitcoin was down 13% to $30,492, it’s largest drop since March 2020.

However, I think Bitcoin will dig in and fight back .

Here are five reasons to be positive on Bitcoin:

  1. It’s an “open” peer-to-peer software monetary system that can store and transmit value.
  2. There is no singular authority that controls it. Instead, it uses encryption based on Blockchain technology, calculated by many parties on an extensive network.
  3. It is limited in quantity to 21 million coins in total. That gives it scarcity and potential value if there is demand for it. 
  4. It possesses many of the attributes of “Money” such as being: portable, divisible, verifiable, storable and fungible. … However, again it needs sustained demand to have value.
  5. Bitcoin has a whole ecosystem built around it, including many banks that borrow and lend against it. It has also proven its dominance in the crypto universe by going through an initial period of losing market share to gaining it all back and more.

For me, Bitcoin’s utility is that it allows people to store value outside of any currency system. 

That provides great value when your Fed and Government are devaluing their own currency….

They are trapped under MOUNTAINS of debt and there is only one way out …

Inflation!

Bitcoin provides a great hedge against inflation along with Silver, Gold and Commodities … the so-called “Inflation trade.”

Once the market gets past the deflationary challenges from Covid-19, I expect inflation to break above 2% and the inflation trade will be off to the races…

Bitcoin, because of its limited supply, isn’t as reliant on inflation … HOWEVER, it may have to navigate regulatory challenges first …

Let’s Take a Look at the Technicals 

When uncertainty enters into the equation, focusing on technicals will help you manage the risk …

The Descending Triangle (outlined in blue below) is usually a continuation pattern. So, if it breaks below 31200, a good place to buy would be the gap below at 24700. 

We may get a similar correction as happened on May 2019 (circled in red on the right) … 

Bring it Home

So, to summarize Bitcoin…

  • Fundamentals are very bullish
  • The long-term technical picture is very bullish
  • The short-term technical picture is slightly negative because of the descending triangle … probability favors a continuation of the short-term trend
  • Regulatory oversight creates uncertainty

All this means to you is this: 

Be more disciplined trading Bitcoin now … with a well thought out plan it is still a great alternative asset.

Please keep sending me your comments and questions. Maybe I’ll do a mailbag column one of these days. Until then …

Live and Trade with Passion my Friends,

Griff


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