Why I Am Not Bearish Bitcoin. . . and will be surprised if we break down below 1st and 2nd quarter lows

My good friend and great analyst Tone Vays remains very bearish bitcoin. . . and for good reason. Moreover, he is very encouraged in his sentiment so long as he continues to get a plethora of bullish prognostications. The majority analysts I respect are bearish . . . at least short term. . . so I do not have the same input. . . and I have no respect for those calling for $100,000 bitcoin in the near future. I see a double top at $20,000 at best.

So this shorty will help to solidify Tone Vay’s bearish posture. . . and I am certain he hopes he is wrong and I am right. Remember it always takes two sides to make a market. . . a buyer and a seller.

We are in agreement that the best thing for bitcoin is to have an exhaustion collapse well under $5,000 ASAP but I just don’t see it until we first go up. . . which is actually a much scarier scenario in the long run.

So here goes. . . .

BASIS

The number one reason I remain bullish bitcoin is that the basis in bitcoin for the most part remains in a backwardation

Sep and Dec futures briefly trade at par or small premium on rallies but have yet to reflect full carry.

What this means is that fundamentally the futures markets do not provide miners with a premium to hedge. The only sellers are speculative sellers which are by far the weaker hands. Futures are simply a better buy than spot for strong hands.

Incidentally, the same is not true of etherum which maintains its carrying charge on rallies and dips, thus providing miners a viable hedge.

See charts below. This makes me bullish bitcoin and bearish ethereum.

Notice that Sep futures go into contango on every dip

Not so for ethereum, carrying charge remains on dips and rallies, which is healthy for a bear market

RELATIVE STRENGTH

Bitcoin tested but did not break June lows. Ethereum and all other alts traded on Bitmex broke June lows. . . . moreover the alts all continued to make new lows. . . bitcoin did not.

The bears argue that an imminent collapse in alts will drag down bitcoin, but this is by no means assured. And there seems to be a huge struggle right now with bitcoin to break free of all ties to the alts, which will happen eventually. . . the question is when? Now or later?

Bitcoin failed to penetrate 1st Quart Low, and remains substantially higher than June low

Ethereum penetrated June low and has made new lows.

TIMING INDICATORS

The random number generator indicates this is a low risk buy zone on quarterly, weekly, 8 hour, 6 hour and 4 hour.

Quarterly 3 candle correction from quarterly 9

Weekly says this is buy time

8 hour says this is buy time

6 hours says this is buy time

4 hour says this is buy time

One other reason on a technical note is that while no spot market took out the 2 week highs, Bitmex did. The professionals have been big sellers every time bitcoin spiked above 6800.

Yesterday Bitmex took out the previous weeks low, while the spot markets failed to do so. The professionals have been big buyer when bitcoin spikes below 6300.

IT’S TIME TO PULL THE TRIGGER

The basis, relative strength, the timing indicators all say it is time to pull the trigger and risk 1st and 2nd quarter lows. Yes, if we break it will be hard but that is fear. . . everything else says this is a low risk time and place to be a buyer.

Hope this helps.

UOG