Don’t Call it a Bottom

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Another small price rise sees another chorus calling a bottom. Trading volumes have not been so high since boom times, how is this not a bottom? So goes one. Hash is rising, miners have confidence, goes another. Nasdaq has an index now, ETF soonish brah, says a third.

Like clockwork, bullish technical analysis charts come out to draw some nice lines with usually crazy upwards directions that has this space at 20 quadrillions in about five seconds. Fine, here’s ours:

Bitcoin’s price on weekly candles, Feb 26th.

Bitcoin has been in one of its longest sidewaying period beginning on November 19th circa three months ago.

Sidewaying on pretty high volumes is interesting. Such volumes, in fact, are higher than early December when bitcoin first reached $10,000 and celebration engulfed the entire space over its Wall Street debut as futures launched on CME and CBOE.

Bitcoin was handling about $5 billion in volumes during the up and up in November and early December. Then volumes jumped and pretty quickly to a high of about $20 billion.

From then, it was only downwards. A low of circa $3 billion is reached in December, with it then up to $5 billion, $7 billion, and the current circa $10 billion.

Where this all coming from isn’t very clear. There’s a bit of CNY coming up from an exchange called Fatbtc. There’s some ENJ fomo adding to bitcoin volumes cus Samsung, but overall there isn’t really a dominant theme.

That might mean there are many new markets and fiat pairs entering, rather than fire-spreading adoption within one country.

Nigeria, for example, is handling more bitcoin volumes than England in the peer to peer Localbitcoins exchange. Venezuela is handling quite a bit more than even USA.

On their own, they’re little dots, but combined they might tell a story of non-speculative adoption in regions where there’s actually a need for something like bitcoin.

Nigeria BTC volumes on Localbitcoins, Feb 2019.

There are many interesting things in this chart, including how volumes kept decreasing as price skyrocketed in December 2017.

That suggests there was a specific need for BTC to perform a certain function, rather than to buy and hodl. As price rose, less bitcoins were needed to perform that function.

Now that price is down, volumes are rising. That’s presumably because they’re probably dealing in fiat, so they don’t care about price. They need x BTC to transfer x fiat from wherever to somewhere else.

We can also give a different interpretation, that this chart perhaps does show speculation in as far as when bitcoin was cheaper they bought more, but it reached a stage where they couldn’t afford it.

You might think the former is more probable because it isn’t easy to see why Nigerians did not fomo when all others did, but regardless of angle, the story is the same.

Ethereum’s price on weekly candles, Feb 2019.

The second dominant coin has fallen in price below the level it had in the first 2017 bull run during spring which then gave way in winter 2017 to effectively the moon.

Like bitcoin, however, this too has been sidewaying for the past three months. Yet here too volumes have grown recently to levels not seen in more than a year.

The natural inclination might be to envision just how many there are on the sidelines and just how many might rush if this shows any sign of upwards movement.

Hence we get these calls of bottom all the time with implied dreams of now this will go vertical straight to 10 quintillion for your richness and your pleasure.

Yet that’s not quite how supply and demand works. Nor does price necessarily reflect demand because supply is quite concentrated in ICOs or in industrial mining farms, or in stupendously early adopters.

So demand can grow and can grow considerably, but “deluded” supply can put a lid on it. Once that supply gets over the delusion of this will only go down, then you might get a squaring effect of not just demand increasing, but also supply decreasing. That then completely loses touch with not just earth, but the universe, and so we get to enjoy the reverse of it as we have for the past year and more.

That’s what they mean by no backing. If stocks crash, the central bank pumps money, intervenes, tries effectively all it can to ping pong the ball back up. In oil, you have the OPEC cartel that tries to do the same in coordinating supply to maintain price levels. In crypto, you have brutal reality that eventually does the same, but in a more de-coordinated way.

So you can call it the bottom if you want, but that would make you far too boring at this stage. Just go off with silly leaflets preaching the satoshi gospel. Or go pester merchants to accept your funny munny. Or go find some dapp and tell us about it.

Copyrights Trustnodes.com

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