Donald Trump pledged to make America "The Crypto Capital of the World"
Bitcoin is a decentralized digital currency that operates on blockchain technology, ensuring transparency and security through a public ledger of transactions. Unlike traditional currencies, it has a fixed supply of coins, which contributes to its scarcity and potential value. Bitcoin transactions are pseudonymous, offering a degree of privacy, though all transactions are publicly recorded on the blockchain. It is known for its price volatility, making it a risky asset for most investors. Despite these challenges, Bitcoin is increasingly viewed as a store of value and an alternative to traditional banking systems and currencies. Just a few months ago, Donald Trump pledged to make America “the crypto capital of the world” during a speech at the Bitcoin 2024 conference in Nashville. The price of Bitcoin reached a new all-time high, and the crypto markets have been mostly positive since his election as president. Bitcoin now boasts a one-month return of 36.49%, a three-month return of 57.41%, and a YTD return of 108.84%, drawing attention from even the most conservative advisors. Where once many dismissed it as a scam, large institutions around the world have now established their own funds and ETFs around cryptocurrencies. Moreover, the booming crypto mining industry, which has injected billions into the economy, has created demand for cutting-edge hardware and infrastructure, benefiting engineering firms and utilities alongside the mining companies themselves. Corporate equity analysis will be left for another time, as fintech could be a topic for a future discussion. Today, however, the focus is on Bitcoin futures and current trading activity, with particular attention to support and resistance levels to understand potential price movements. Additionally, considering that Bitcoin has increasingly been seen as an alternative to traditional currencies like gold, Bitcoin’s price movements will be compared to those of gold bullion to analyze this complex relationship.
Bitcoin Continuous Contract (BTC.F) vs. Gold Continuous Contract (GC.F)
In the first attached point-and-figure chart, a head-to-head comparison of the Bitcoin Continuous Futures Contract (BTC.F) versus the Gold Continuous Futures Contract (GC.F) is presented, scaled at 2% to highlight major trend changes in their relationship over time. Starting from the far left, the first period of underperformance is observed, where Bitcoin lagged behind Gold from 2018 to late 2020. However, in the fall of 2020, Bitcoin broke out relative to Gold and maintained dominance for about two years. By early 2022, Gold began to outperform Bitcoin, and by the summer of 2022, this trend had firmly shifted in favor of Gold, continuing until late 2023. As 2024 approached, Bitcoin began to re-establish its dominance over Gold prices, and by the end of 2023, Bitcoin was again trending positively against Gold. This upward momentum continues into 2024, especially with Donald Trump's presidency and his favorable stance on this alternative financial system.
Bitcoin Continuous Contract (BTC.F)
The final point-and-figure chart shows the Bitcoin Continuous Futures Contract (BTC.F), with the SMAX overlay tool applied to color-code the chart based on periods when Bitcoin exhibited a bullish SMAX score of 6 or better (green) versus periods with bearish SMAX scores of 0-5 (red). The SMAX score is a short-term indicator of strength or weakness compared to other asset classes such as bonds, cash, currencies, commodities, and equities. It provides a quick and effective way to gauge Bitcoin’s relative strength or weakness within this alternative asset class. Notice the periods of underperformance in these broader asset comparisons from 2018-2020, mid-2021 to 2023, and a shorter pause this past summer in 2024. With a renewed positive (green) SMAX reading, Bitcoin appears to be regaining dominance, showing relative outperformance against other asset classes. Additionally, the breakout above the $75,000 level, now highlighted with a light green box, could act as strong support if the price pulls back. Current pricing around $95,000 brings Bitcoin closer to the psychological level of $100,000, which coincidentally aligns with a technical point-and-figure resistance level of $101,805 and $105,918, based on a vertical count from prior consolidation levels.
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