How Can You Predict These Moves?

I’m still bearish on bitcoin but the facts say otherwise. As I wrote back in January, there is going to be a move up or down and it’s going to be strong. Well, we had it and it went bull not bear. The point is, investing and trading are about probabilities, and if you know there is a strong move coming up and you don’t know the direction, you are still good if you want to play because you can jump on that move.

I didn’t because having traded for a decade or two my brain and my stomach lining tells me there is more happiness to be had in investing and long-term positioning than riding the tiger of the short term.

So how can you tell if there is a big move ahead?

The answer is, under certain circumstances.

Let me show you what led me to that prediction and how that affects the current situation.

Here is the chart:

So the key is volatility. Whatever anyone tells you, volatility is noise and noise in markets is a function of uncertainty.

High volatility means the market as a whole doesn’t know the price. Low volatility means almost everyone agrees this is the right price for now.

When volatility is low, calm equilibrium is the order of the day, but when that price is violated, something is happening and in markets that tend towards eruptions of volatility that means a big move:

The simple takeaway is when you see a noticeable and sustained compression of volatility it is winding up for a move. Likewise when volatility is high there is a fight for the future outcome.

You can see this compression in the boom/bubble cycle of 2018:

For the bulls they can point to this and say, the recent rally is a clear repeat of the previous cycle’s bottom. Why not?

Right now there is only one call: Can crypto survive the rolling onslaught of regulators “Operation Crypto Chokepoint?” If so, we will have a new cycle soon enough; if not crypto will be stunted for several more years to come. However, the death of crypto in the U.S. is not yet fate, and if it is then Asia will accelerate crypto to strategically take on the U.S. at its core economic layer. While readers of this probably know it and U.S. nomenclature most likely doesn’t, crypto is a revolutionary computer technology and to spurn it undermines the global competitiveness so key to economic and political primacy. Superpowers have fallen on that sword many times, let’s hope the mangled U.S. system is still smart enough not to add itself to that list of fallen empires.