Bitcoin Above $20,000 - Why This Time Is Different

The thing about Bitcoin right now, though, is I do think it's established itself as— it's proven itself as being something to reckon with. Even those people like you and me who have been looking at this out on the sidelines, you see what's happened to Bitcoin since 2018. Do you remember the last spike, 2018? We hit that $20,000 level. It went live on the CME exchange, and the moment it went on CME, we pretty much sold off solidly. Um, there you got it. Yeah, from December 2018, so from $20,000 all the way down to $4,000, then rally through in 2019, then 2020 just hitting a low in March there about $4,000. I actually think this is really healthy for Bitcoin. I think this has formed a healthy pattern, a healthy base. It's a W formation that you've got there. But now we've been tested. We see the thing with the first rally in Bitcoin, it's almost like the first rally in dot-com stocks. It's like the first rally in any new technology. People don't know what it is yet. It's very quickly for value to dissipate and be exaggerated on both sides. Now, I actually feel pretty confident in Bitcoin. I've not been involved in so long. People who have done the Amplify Trading Program, they've become Bitcoin whales. I have one trader who joined us in 2015, and he's got miners all over Hong Kong, actually just on the other border from Hong Kong because the cheaper costs in mainland China, but he's been fully involved. Everyone in Bitcoin has had a really tough couple of years, really, because a lot of those deep believers have been holding on since the $20,000. I know lots of students who have been involved in Bitcoin who were looking at huge amounts of money in 2018, and it just all went away. They weren't able to take the trade-off because they had a deep belief in this asset. It was a belief trade rather than, if you like, a thought process of a trade. But now, the fact that we've beaten out a bottom around that 4,000 mark, this becomes a much more psychologically interesting product for me. And also, we had that sell-off. If you go back to the 25th of November, go a bit shorter to the 25th of November, because we were tearing higher around the 19,000 level. Uh, yeah, just go back a little bit further. We were tearing higher, and then I don't know if you saw, but one of the exchanges, um, it was OKEx, so OK Exchange, um, they, uh, they, they had a few security issues, so they were holding a lot of Bitcoin, um, not letting it get out. And you can see actually, if you go back then to, uh, oh, is that the—

that's 25th, uh, 26th of, uh, sorry, November.

Yeah, November. So this big red candle here. So do you see that big big red candle. So what's really interesting about this is in the run-up to that big red candle, everyone's getting super excited about Bitcoin. And in fact, the day before that big sell-off, all of the news articles are out there saying Bitcoin $20,000, everybody's getting into Bitcoin. And then the OKX allowed people to withdraw their Bitcoin and we had the biggest outflow, that huge red candle. I actually put a tiny amount long on that red candle only because, you know, this that red candle was a unique event. The fact that the OKEx has allowed— that was actually a positive thing for Bitcoin, if you like. It's a positive thing for the system that it's working, and that it's more stable than it was before that announcement. I think that was a really interesting moment in time. I was following a few people on Twitter, and someone I was following was saying, look, the last time I was this sure about anything, oil was trading at minus $40. I think that leading up to that sell-off, we had such a strong rally, and now we've recovered from that. I just, I really like the technical formation on this. I like the fact that Bitcoin's beat out the bottom. I believe this. I haven't been involved in Bitcoin for this whole story. Everyone's been telling me for years, you're missing out, you must have been involved, but I didn't feel comfortable with it. Now, we've beaten out this bottom, we've beaten out this pattern over the last couple of years. I really do feel comfortable with it. I really do think in this environment, when you're getting IPOs double on the first day, it used to be that Bitcoin was, oh, this is a crazy valuation. Airbnb had a target of $40 to $60, and then IPO'd at $150. What is valuation now? If we're talking about stocks and shares moving away from their fundamental valuations, then now I think that's where Bitcoin can play quite a nice game for heading into the new year, going into 2021. I think now we're through $20,000. My view is, and I can't believe I'm saying this as someone who hasn't been— who's always been one of the naysayers, but I'm interested. I'm interested, and I think this is— it's proven itself. It's had to go through this journey of the last couple of years. To actually win the respect of longer-term traders like myself who have been skeptical before it had been through this battle zone.

Let me ask you, you sound excited, you sound interested. How are you going to get into this market? Are you going to go outright futures? Are you going to buy underlying? Are you going to Are you going to buy ETFs? Talk to us a little bit about how you're—

Yeah, no, it's a really good play. I mean, at the moment, the small one I have is an outright future, but a divided contract on that. I actually think options is a really nice way to play this, especially now we're around this $20,000 level because now we're above that $20,000. Could we go to $25,000, $30,000? Sure. It doesn't matter. So you could probably get some quite cheap options out there for some quite far out prices. I can't— I don't know. The only thing to me that would really stop this movement now would be security, would be something like fraud. Obviously, you can't manage that. That's a risk that I think you have to take in this one. Yes, have you got the— are these options coming up now?

Yeah, what you're looking at is the options chain on Bitcoin futures. I have never seen options this expensive in my entire life.

Well, it's the volatility, isn't it? Right, I mean, the person selling you that option, yeah, it's gonna be a little bit brave.

On the, uh, on like, let's just go out to say Jan '21, okay? I mean, that's, that's quite a close, uh, strike, uh, date. But I mean, let's just say, what are we trading, 27.15? So let's— well, just taking it at the money here, um, if we want to essentially buy one of these bad boys, um, okay, so this call isn't tradable. You might have to go a bit— well, let's go ahead to pay April at the money. Well, I'm actually not getting quotes on this right now, so let's see. No, I'm not getting any quotes actually.

Okay, go to March, go to Feb, let's have a look at those options.

No. Oh, here we go.

They're so far out. Um, all right, try 29. No, not—

I'm not getting trades on this, but essentially you're gonna have to shell out $2,500, uh, well, $2,800, uh, dollars, um, per option. So, so that's going to be about $28 grand. To get one option. Yeah. So that's displacing people.

That starts not being an option.

Exactly.

It starts being an outright. But look, super interesting. And I just wanted to jump on this with you. I think this is one to watch. I think you're going to see this a lot in the news tomorrow. I know how the behavior of these markets work. It becomes self-fulfilling. I think I really like the fact we had the OKEx exchange sell-off and we rebounded really strongly. Watch this space. I think it's interesting. If you haven't traded on Bitcoin before, don't now just jump in, just watch it, just watch how it moves for a while. If you do believe that above 20, then we're going to move higher, then you can use 20 as a nice stop. Do it in the size where it doesn't really matter. Whilst you're learning, if you get stopped, it's fine.

One of the instruments that I would use in order to feel comfortable about buying something elevated is to essentially go out to the monthly bars all time, right, and use the Fibonacci extension tool. And this kind of shows me the general flow. So what you do with the Fibonacci extension tool, right, is you take— if you're, if you're projecting higher prices, you take from the latest swing low to swing high and where the pullback occurs. And this gives you a framework of operation on the trade. Now essentially, if I go down to like a year, 1 year, 1 day you can see where your pullback came into play. This was actually the 113.8% extension.

Okay, so where were you when this happened? I, I, we needed this information.

Well, you could have picked up the phone. Could have picked up the phone.

That's, uh, no, that's, that's got it spot on. Really, really nice. And look, and look at the reaction after testing that.

Honestly, so you see this play out in lots of markets, and so The good news is if you want to get long this contract, the upper extension targets pretty much always come true. So we're looking at— if I was long this contract now, I'd be projecting 21,676, 32,471, and ultimate upside on this extension is 4,9938.

Yeah, well then, then it really will be in the news. And, uh, with my tiny contract on, I'll, uh, I'll Even I'll be celebrating after that. Um, but listen, good to catch up with you, Tim. I just wanted to give everyone a quick, uh, update what was going on in Bitcoin. It's been a really interesting pattern over the last few weeks. Um, I— longer term now, I'm liking the way it's formed. I think it's one to watch. Keep it on your screens. Um, if you really want to study behavior, this is a really good behavioral asset to really focus on momentum moves. Um, and if you are going to trade it, super small, super careful. And use it as a learning process. If it works out, great. But the one type of person I know who has suffered over the last couple of years are those Bitcoin believers that can't let it go. If it doesn't work out, doesn't matter, take it off.

Yeah.

All right, thanks, Tim. Thanks for catching up.