Bitcoin Is Currently Facing the Iceberg Illusion
Don't be fooled by the price stagnation, the Bitcoin revolution continues to strengthen.
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For almost a week now, the price of Bitcoin has been fluctuating in the $41K-$44K range. A range that can have two meanings. It all depends on how you look at it. Those who believe in a Bullish scenario, of which I am one, will tell you that this is an accumulation range and that the market is just waiting for a spark to start a new bullish wave.
For this to happen, the crucial resistance around the $46K mark will have to be passed as I explained earlier:
Then Bitcoin will have to get past the resistance around $49.5K to tackle the $52K resistance. Bitcoin could then break out of the range in which its price has been stuck since the beginning of December 2021. As you can see, we are not there yet.
On the other side, you have the Bearish scenario advocates who will tell you that macroeconomic conditions will work against Bitcoin in the weeks and months ahead. Inflation at 7% in America by December 2021, a Fed that is expected to raise key rates between 3 and 5 times in 2022, and economies that remain under the threat of the upcoming COVID-19 variants.
The stock market even seems to be coming out of its euphoria, although this will have to be confirmed, as the S&P 500 is still around 4,600 points. We are far from a stock market crash on Wall Street. The rise in the 10-year U.S. Treasury bond rate is causing fear among some, but others believe there is still time to take profits.
While we wait to learn more about how this situation will evolve, you can always check out the 3 scenarios I see for the price of Bitcoin in 2022:
As always, no guarantees, but content to feed your thinking.
Everyone is focused on the short-term price of Bitcoin
Having said that, I feel that we are wasting far too much time right now focusing on the short-term price of Bitcoin. You might say that I am somewhat responsible for this, since I write technical analyses on the short-term price of Bitcoin, while at the same time presenting scenarios for its price.
I am simply responding to an expectation of some in this market where it is difficult to gain enough confidence to remain a HODLer no matter what. However, I always remind you that the best strategy for me remains the simplest one: Buy Bitcoin, HODL Bitcoin, Repeat.
Be sure to send your Bitcoin to cold storage to keep the private keys of your Bitcoin in your possession. Not your Keys, Not your Bitcoin. It would be a shame to have the Bitcoin revolution stolen from you by intermediaries like banks or PayPal.
PayPal is currently in the headlines, as the payment giant has just been sued by three individuals who accuse it of having frozen their accounts and confiscated their fiat money without explanation. These three PayPal users have just filed a federal lawsuit against PayPal.
We'll see what the outcome is, but it reinforces what I've been saying all along: don't buy Bitcoin through middlemen who prevent you from getting the private keys to your Bitcoin. That would put you at risk of this type of risk where an intermediary can freeze the fruits of your labor for arbitrary reasons.
The Bitcoin market is facing the iceberg illusion
While extreme fear still dominates the Bitcoin market, I feel that Bitcoin is currently in the middle of an iceberg illusion. Let me explain through this illustration I just made:
As you can see, you have the tip of the iceberg on the surface, which is where all the attention in the Bitcoin world is focused. All anyone is talking about right now is the price of Bitcoin or a potential Bear Market ahead. Rather than being afraid, I recommend that you follow 8 indicators carefully to see when a potential Bear Market is about to happen:
By spending all this time focused on the short-term price of Bitcoin, as well as the FUD around Bitcoin's impact on the climate and the environment, you need to make the effort to look at the submerged portion of the iceberg. Not easy, you might say. Fortunately for you, it is easier to see this for Bitcoin than for a real iceberg.
All you have to do is take a step back. What will you see then?
Those with a long-term view can see that the Bitcoin revolution is only getting stronger
You will see that Fidelity, one of the largest asset managers in the world with $4.9T in assets under management, thinks that more governments and maybe even a central bank could buy Bitcoin in 2022. I'll let you discover this Fidelity blog post in detail, but here's a passage that stood out for me:
“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of Bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future. We therefore wouldn't be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”
Then you'll see that Tonga has already paved the way legally for Bitcoin to be adopted as an official currency by the end of 2022. With the game theory in play, I'm sure other countries will soon follow suit. As Fidelity says in its report, the first to embrace the Bitcoin revolution will be the most rewarded next.
Because that's how it always works with the Bitcoin revolution. You always pay your Bitcoin at the price you deserve, and your patience will always be rewarded.
You'll see that Jack Dorsey, a multi-billionaire entrepreneur who founded Twitter and Square, has turned his words into action. After repeating several times in 2021 that Bitcoin was probably the most important area he would work in the future, he left his position as CEO of Twitter to fully dedicate himself to improving the Bitcoin ecosystem.
Bitcoin needs entrepreneurs like Jack Dorsey who want to work to solidify its foundation. This includes creating a fund to defend developers in the Bitcoin world from potential lawsuits they may face. Without developers, the Bitcoin network could not continue to be the most secure decentralized system in the world.
Then there are the Bitcoin miners. To make mining more efficient, greener, and more accessible, Jack Dorsey has just signed on with Block (the new name for Square) to develop the next generation of ASICs for BTC mining. This new generation of ASICs will benefit the entire community, as Dorsey explains, and he wants to work to improve the environmental impact of Bitcoin:
“Moving toward clean and efficient energy use is great for Bitcoin's economics, impact and scalability.”
This initiative by Block is in addition to the previously announced creation of a hardware wallet.
In the field of mining, where the competition between the different companies is going to be fierce, we have just learned that Intel, a tech giant with a market cap of $220B, will enter the Bitcoin-mining hardware business. Intel will not enter the business with new GPUs, but rather a new line of processors called “Bonanza Mine”. The announcement will be made in detail at the ISSCC Conference 2022 which will take place at the end of February.
This conference is a yearly gathering of the best and brightest minds in the chip industry. The presentation announced by Intel is called “Highlighted Chip Releases”. We are already looking forward to discovering this in detail.
On the environmental front, the latest report from the Bitcoin Mining Council has just been published. In it, we learn that the share of renewable energy used by Bitcoin mining companies that are members of this organization reached 58.5% in Q4 2021. This represents a 1% increase over Q3 2021, and makes it “one of the most sustainable industries globally”.
Here is Michael J. Saylor's comment following the release of these numbers by the Bitcoin Mining Council:
“This quarter we saw the trend continue with dramatic improvements to Bitcoin mining energy efficiency & sustainability due to advances in semiconductor technology, the rapid expansion of North American mining, the China Exodus, and worldwide rotation toward sustainable energy & modern mining techniques.”
This is where the banning of Bitcoin mining in China is starting to pay off. America is now the dominant area for Bitcoin's Hash Rate with all the environmental benefits this brings to Bitcoin.
Speaking of Hash Rate, the Bitcoin network has just reached a new ATH:
Those who predicted the end of the Bitcoin network after China banned mining in May 2021 must face the facts: Bitcoin is antifragile and does not need China. The end of China's dominance is effective. In the future, there is a good chance that China will end up regretting this strategic mistake.
I haven't even mentioned here the billionaires of traditional finance who continue to end up investing heavily in Bitcoin because of their ability to take the long view. While some are wasting their time explaining that Bitcoin is a Ponzi Scheme, others are acting to take advantage of its revolution at a time when inflation is expected to continue to wreak havoc in the coming months.
The feeling that emerges from all of this for me is that Bitcoin is well in the middle of the iceberg illusion. Well, I say Bitcoin as a misnomer, since the Bitcoin network continues to move at its own pace block by block. It is rather the Bitcoin market that is facing the iceberg illusion.
Those who get caught up in the short term can't see beyond the tip. Those who will benefit most from Bitcoin in the future step back and see the underwater part. This part, which represents the fundamentals of Bitcoin, is getting stronger all the time.
It is the part that will keep the Bitcoin revolution moving forward in the months and years to come. For without solid foundations, no revolution can triumph. Fortunately, Bitcoin's foundation is getting stronger all the time.
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