BTC Technical Analysis: How It Differs From FIAT?
How does Bitcoin technical analysis differ From FIAT Trading Practice? So we are going to explain (without the graphs) our own technical analysis of BTC today.
Of all of the questions we here in CryptoDetail get on a daily basis it is the "technical" questions that we dread the most. No, we are not talking about coding technical; we love those questions. It is the ones asking about the Wall Street type analysis of Bitcoin and crypto trading that terrify us most.
Why?
Well, there are a few reasons. Firstly, we do not have a Wall Street background. So, we are honestly a bit lost in all of that lingo. Sure, we understand the concepts. But seeing someone with a traditional fiat financial background make up a candlestick graph and explain how the imaginary lines on it allow them to predict some future price (almost always dismal) is; well, it is all a bit baffling.
However, many of our readers go for that traditional analysis. So, we are going to explain (without the graphs) our own technical analysis of Bitcoin today.
First Let's Discuss The Basics
In the beginning, there was the Bitcoin Bible. That is what we here at CryptoDetail call the Bitcoin Whitepaper. This document is the end all and be all of Bitcoin. In the Whitepaper, we learn that Bitcoin is a currency. As such, it is not intended to be an investment. So, any technical analysis of Bitcoin's past performance and future outlook are immaterial as those are merely history and; well, guesses based on that mystical chart making process we discussed earlier.
But, for the record, and just so you know our thoughts on the matter; Bitcoin has taken a roller coaster ride since its creation in 2008 and release in 2009. Back then there were only a handful of Bitcoin users. And each of them understood the concept that; regardless of the "value" as dictated by the supply and demand of today's market transactions; Bitcoin is, and always will be a currency. That means that we can send money to each other anywhere in the world with just a few clicks of the mouse. So, if 1 BTC= $ 1 and we want to send you $100; I just send you 100 BTC. If today's value is 1 BTC = $ 1000 and we want to send you that same $ 100 we just open our Bitcoin wallet and send you 0.1 BTC. Either way; you received what was worth $100.
A lot of people (specifically our "friends" the FUDsters) talk about that simple math as if there is some scam involved. But none of those people is complaining about the fluctuations in the Peso to USD ratio; which, by the way, changes constantly as well. The point is; Bitcoin is MONEY; not something to be held in a Wall Street portfolio. Speaking of the FUDsters; we have seen a lot of that Wall Street nonsense applied to the price of Bitcoin today. And, that little catchword they love to use keeps popping up; BUBBLE. We have even seen some of those mystical charts showing up on FUDster analysis sites.
So, let's put that to bed here and now as well
The algorithm behind Bitcoin demands a slow, steady rise in value from the Genesis event (the day the first block was mined) until the vent horizon (the day the last block will be mined). The roller coaster along the way is strictly fear-based manipulation. We have seen drops every time a government makes a statement about Bitcoin. And, we have seen rises when a huge company declares their intention to use Bitcoin.
In December 2017 we saw a huge spike in price as the Wall Street Invasion took place. When that bunch started treating BTC like investment tens of thousands of "investors" flood the Bitcoin market driving the price above $ 19,000 /BTC. The algorithm was not designed for such a huge spike. And, since then we have seen a marked decline back down to where the Bitcoin value should be and would have been if that Invasion never happened.
However, you can quote us on this, one day in the near future the value will start its next advance; back above $ 10k, then to $ 20k, and onward until the ultimate stabilization after the Event Horizon.
Next big thing
With those facts out of the way; let's talk about cryptos that are investments.
In the fiat world, investors throw their money at the "next big thing". As impulsive as that sounds the strategy is actually necessary. When a company builds itself up enough to be able to go public (sell stocks) it needs to generate interest for those stocks. So, the hype machine begins. It only takes an announcement here and a whisper in someone's ear at a party there to get a buzz going. Then, when the stock is available everyone wants to buy it. That flood of funds is what helps a company grow out of their garage and into the international market as a powerhouse.
In the cryptosphere, we have a similar situation. The technology behind cryptos is so secure and advanced that coders have banded together to create some phenomenal software. Adding that software into an ETH-based ERC20 token and smart contract ties the whole thing to the blockchain where it becomes immortal. All of this innovation takes money.
(*** If you are a freelance coder who keeps getting "you should take 6 months out of your life to create a token for me that will make me a millionaire while you starve. Be grateful; $ 30 is a lot of money in my country" messages. Tell those guys to kick rocks. The cryptosphere is massive. If you can write code, there is a WELL PAYING position out there for you).
So, how do crypto companies raise that money?
Same as the fiat guys; idea + hype + well-designed product = investment money to allow you to bring your idea to its most spectacular. This is where the ICOs (Initial Coin Offering) and ITOs (Initial Token Offering) come into play.
While the fiat world puts their ideas; and therefore a share of their companies, into Stocks. We here in the cryptosphere put out ideas into coins and tokens. If you believe in a company, whether fiat or crypto, there is a way for you to financially back that company. And, when you buy fiat Stocks, or crypto Coins and Tokens, you are giving that company the money it needs to grow, which makes their company and product more valuable; thereby increasing the value of those Stocks, Coins, and Tokens.
So the truth is
.. that fiat and crypto investing is much the same. The biggest difference between the two is that it takes a lot of money to be able to buy your first batch of stocks. While your first crypto acquisition can be had for $10, sometimes less. The fact is that you can read all of the charts and analyses you want. Ultimately those are all guesses. Many of the people making those guesses are very intelligent and very well educated. But, seriously, it is still just a guess.
If there was some magic drawing that could tell us when to buy and sell stocks, coins and tokens everyone on the planet would be a millionaire. But that is just not the case. The only way to invest is to trust in your own research and to support the companies, stocks, coins, and tokens that you feel will increase in value. And, the way to do that is to support ideas that, after you have read and understood every aspect of, you believe will succeed long term.
Thanks for joining us for this exploration! Good luck on your own crypto journey!! Happy HODLing!!!
Danny Donahue
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