Bitcoin has reached another yearly high, but this one is different. This could be the last one we need to hit before something spectacular happens. And that means both massive opportunity, and massive risk.
We published our regular Tuesday market update yesterday, but the action overnight means it’s a good time to put out another update on bitcoin’s price. This one isn’t market analysis like our usual reports, though. Think of it more like a thought experiment, a study of human and market psychology.
Bitcoin just broke above $12k. If you want to visualise the significance of that, head over to BitcoinWisdom and look at the weekly chart, so that you can see the price of BTC stretching back over the past couple of years.
If you place the cross hairs over the current price, you’ll see why this is such a milestone. $12,500 is well above the highest meaningful bounce from the peak of the last bubble. There may be a small amount of resistance at the $14k mark – that impressive doji on the weekly – but almost all of the hard work has already been done. Bitcoin has scythed through every resistance level from $4k to $12k with ease, including the $6k level, which should by all accounts have been the toughest to break in bitcoin’s entire history.
Think about that. Bitcoin has gone from $3,100 to $12k in a relative heartbeat – less than 3 months, anyway. There has barely been a single significant pullback. There is very little resistance overhead before the all-time high is breached. And once it is breached, there is no resistance at all. Just clear blue sky.
Factor in also the reality that this rally has been driven by institutional money, not Retail. Retail money is only just starting to show up. Retail was badly burned last time around, when it bought at these levels and above. Very soon, Retail will be realising that it made a mistake selling at a loss, because if it had held it would have been fine – it would have made a big profit. Retail will want back in.
And so we have two possibilities.
The first is that bitcoin keeps going, pushed higher by institutional money and then the rocket booster of Retail FOMO. At that point, an all-time high is practically a foregone conclusion. $20k is nothing when bitcoin has already done the hard work and hit $13k so easily.
But there’s also the second possibility. And that’s a sell-off just as Retail money comes in, leaving Retail holding the bag while institutions stock up at lower prices once more – and only then send it back up to all-time highs.
This rally has all been down to institutions, who loaded up below $4k until supply ran out, with only one possible outcome. There’s a good chance they will keep up the momentum until Retail money comes in. Then Retail will take the baton and run with it, until the inevitable once again happens.
That’s why it is so very risky to buy here, way up in the thin atmosphere above $12k. And it’s also why there is still such a huge opportunity, because it also means we might be about to head to the moon.
It all depends on whether bitcoin has the momentum to leave the earth behind, or whether it stall out and crashes.
TL;DR this is the point at which we learn whether bitcoin has achieved escape velocity.
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