Bitcoin: Long Term and Short Term View

by JDH on March 22, 2025

What do you observe from the 5-year Bitcoin chart?

I see an uptrend that started at its current slope in the fall of 2023 (the green uptrend line) that appears to be very solid support, as that line was touched in August and September of 2024, and again on March 10, 2025.

The upper resistance is the line drawn from the three most recent all-time highs.  It is significant resistance.

Zooming in to the 3-month view, the patterns become more pronounced:

  1. The down-trend channel is the dominant pattern today. Until Bitcoin breaks out of that pattern, it will continue to move lower.
  2. The bottom of the channel and the green uptrend converge around $78,000; that level is significant support.
  3. The top of the channel and the secondary red downtrend line converge at around $86,000, which is significant resistance.
  4. Additional resistance occurs at $92,000, $99,000, and $108,000

What does this mean?

I have no idea.

I’m some random dude drawing lines on charts.  I have no idea what will happen next.

It would appear that Bitcoin has some significant resistance to overcome, so a new all-time high this month is highly unlikely.

I assume that the speculators who piled in when Trump ran and FOMO’d all the way to the top on margin are liquidating their positions and taking their losses. Until the selling pressure subsides, Bitcoin will not go higher.  A retest of support around $73,000, and perhaps lower, seems likely, and, if it holds, would probably be a positive development.  If it doesn’t hold, we may have a great buying opportunity.

So, to summarize, I have no idea, flip a coin to make your decision.

Microstrategy/Strategy Inc.

This brings us to MSTR—Microstrategy Inc. (now called Strategy Inc., but the ticker symbol has yet to change).

Since the start of 2024, Strategy Inc. has been in a clearly defined up-channel:

There is significant support/resistance around $183, the conversion price of their convertible debt issued in September 2024.

There is also significant support/resistance around $293, the “gap up” around the Trump election.

Zooming in to the last three months, there is a clear downtrend line that starts at the all-time high in November 2024. As you can see, the downtrend line, the bottom of the up-channel, and the bottom of the gap fill all converge around $300, give or take.

Given this sideways-to-down movement, my strategy for the last two months has been simple: sell covered calls.

I have the March 28 calls, strike $310 that I sold a week ago.  They expire on Friday.  If MSTR is below $310 on Friday, I pocket the premium of just over $12. Sweet.

I previously sold calls expiring on March 14 for $13, and bought them back for just over a dollar.

That’s my strategy: I don’t wait until expiration day, because the possibility exists that MSTR goes on a run the last day and I lose my shares.  So, in the week leading up to expiration I watch the price, and if it gets down to a dollar or two, I buy back to cover, and I’m done.

At some point, this strategy (no pun intended) will no longer work.  Either MSTR will return to an uptrend and selling covered calls will be a bad strategy, or the stock will collapse and I’ll lose a lot on my shares.  But for now, I’ll stick with it.

Gold

Gold is also looking good, although as you can see on the one year chart it is around the top of the channel, so a pull back is likely.

I see this trend continuing for quite a while, so having a position in gold, or solid gold shares, seems prudent.

Those are my ramblings for today.  Take them as you wish.  See you next week.

 

 

 

I Can’t Keep Up With All The Craziness

by JDH on March 15, 2025

Today, the Wall Street Journal has an article describing this past week: The Week the Smart Money Got Whipsawed by the Market.

Monday’s heated trading—when the S&P fell 2.7% and the Nasdaq dropped 4%–capped the biggest two-day flight from risk among hedge funds in four years….The chaos continued Tuesday. ..

By the end of that same day, though, Goldman was telling clients something very different: It had been “the best single day” in three years for those hedge funds compared with the overall market, thanks to a price spike in shares of companies most favored by hedge funds.

As the week continued, though, economists ratcheted up the odds on a U.S. recession and markets continued to fall. By the close of trading on Thursday, the S&P 500 had fallen 10% from its Feb. 19 record high. That amounted to just 16 trading days—the quickest about-face into correction territory in five years and the 11th quickest in the last half-century. A rebound on Friday lifted spirits but left traders more confused about the market’s direction.

So, all in all, not a great week.

There are two big problems:

First, the market has gone up dramatically over the last decade or two, but it can’t continue to rise forever.

Second, no one knows what Trump will do tomorrow.  Will there be tariffs on everything?  Or nothing?

The DOGE experiment sounds like a good idea: cut government spending, but if they do, that removes stimulus from the economy.  That’s good if, in the long term, those resources are redeployed into profitable private enterprises, but in the short term, the transition is a killer.

Gold

Not surprisingly, gold is in a one-year uptrend, up 40% in the last year.

In hindsight, I guess we should have loaded up on gold a year ago.  It took a while, but the gold stocks are also moving substantially higher.

Bitcoin

This brings us to our favourite cryptocurrency, Bitcoin.

Bitcoin is currently sitting around $84,000, exactly where it was on November 11, 2024.  That’s 124 days of sideways action, although there was a lot of up and down during that period.

The chart clearly shows that Bitcoin continues in a downtrend that started at the all-time high in January. $92,000 was significant support, but that didn’t hold, so the next level of support is around $74,000.  Bitcoin got to $76,600 on March 10, so it’s possible that was the bottom.  Or not.  I’ll feel more confident if we have a test of that level that holds for a week.

Microstrategy – MSTR

And so we end with our favourite gamble, MSTR—Microstrategy Inc. (now called Strategy Inc., but the ticker symbol has yet to change).

MSTR is down 45% since the all-time high on November 21, 2024.

But, since August 6, 2024, it’s up 190%.

So, pick your metric and decide whether you are happy or sad.

Conclusion: The Big Picture

With all this noise, stepping back and looking at the Big Picture is helpful.

The USA (and most countries) have a significant debt problem.  If you have a lot of debt due, you want to lower interest rates so you can refinance at lower rates.  A good way to do that is to induce a recession and crash the stock market.  In a recession, there is less demand for borrowing, which lowers rates, and if the stock market crashes, there is a “flight to safety” in bonds.  More bond buying drives rates down.

So Trump may be crashing everything because he can blame Biden if he does it now.  Once the debt is refinanced at lower rates, he can turn the money printer back on and take credit for the recovery well in advance of the mid-terms.

That will be good for Bitcoin, MSTR, and all risk assets.

If you have cash that you are willing to risk, you can start deploying now.

If you are more risk-averse, slower deployment may be advisable.

Or you can do both.

I’m holding my shares of Strategy Inc., but I’m selling out-of-the-money-covered calls two weeks out and pocketing the premium.  On big down days, I buy them back to book the profit, and on up days, I sell them again.

It’s a great strategy as long as MSTR trends sideways or down.

It’s a horrible strategy when it spikes upward, so keep watching to see when I get wiped out!

Thanks for reading.  See you next week.

 

 

Strategic Bitcoin Reserve – Buy the Rumor, Sell The News

March 8, 2025

He announced it during the election campaign, and on  Thursday evening, President Trump signed an Executive Order creating a Strategic Bitcoin Reserve (SBR) and a digital asset stockpile.  The Executive Order says that the SBR and the Stockpile would NOT involve the government purchasing Bitcoin or other cryptocurrencies.  It would be formed from cryptos already […]

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Bitcoin and Microstrategy: The Crash

March 1, 2025

Last week, I asked a simple question: Bitcoin and Microstrategy: Consolidation or Imminent Correction?  We now know the answer.  Last week, I said: My bias at the moment is that Bitcoin, at best, is in a trading range.  Support at $92,000 is very strong:  Nine times since November $92,000 has offered significant resistance and then […]

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Bitcoin and Microstrategy: Consolidation or Imminent Correction?

February 22, 2025

I spent last weekend shovelling snow, but I’m back today to ask a simple question: what’s up, or not, with Bitcoin and Microstrategy? The 5-year chart of Bitcoin shows that the uptrend line joining the two prior highs in 2021 and 2022 are providing significant resistance. A closer view, back to the beginning of December […]

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Bitcoin, Microstrategy, Tariffs and Market Uncertainty

February 1, 2025

Remember when the first “Bitcoin President” was elected?  Bitcoin went up 60%, from under $70,000 in November to and all-time high of $108,000 by the middle of December.  Since then, nothing. How is that possible?  If everyone is buying Bitcoin, why has it entered a new consolidation pattern?  Here’s a closer look: Bitcoin is trading […]

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Bitcoin – New High Incoming

January 18, 2025

I’ll keep this brief.  As I write this at 7:15 am on Saturday morning, Bitcoin is at $103,000 USD ($150,000 CDN) and appears poised to exceed the all-time high of $108,000 within the next few days. While that is interesting, the real question is: what’s next? My guess is that $108,000 will be significant resistance, […]

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Bitcoin: Stuck in a Trading Range: Will it Break Out Up or Down?

January 11, 2025

Let’s zoom out and look at a five-year chart of Bitcoin.  I’ve drawn a red resistance line, joining the two previous all-time highs in 2021. Now, let’s zoom in.  Here’s the chart for the last three months: As you can see, from around November 11, 2024, to around December 19, 2024, Bitcoin stayed in a […]

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Interesting Close on Friday for Microstrategy

January 4, 2025

It’s been a fun ride on  MSTR—Microstrategy Inc. Since November 11, 2024, MSTR has gone up 84% in ten days, but then it “round-tripped” and gave it all back, so 50 days later, it was back where it started. Since bottoming on New Year’s Eve at just under $293, it has been up almost 20% […]

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Bitcoin and MSTR: The Action Starts in January

December 28, 2024

I did a Deep Dive on Microstrategy last week. This week, nothing much happened, which isn’t surprising since it was Christmas week, and many participants were on vacation. In the last five days, the price of Bitcoin has remained flat. MSTR—Microstrategy Inc. closed at $330, which is exactly the price it traded at on Christmas Eve. So, there […]

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