Home Stock Market Commentary Bitcoin Is Lining Up To Crash Again – Mike Swanson (07/17/2020)

Bitcoin Is Lining Up To Crash Again – Mike Swanson (07/17/2020)

I still get a few emails about Bitcoin every month from people still enamored with it. A lot of new people have also gotten into trading since March for the very first time and have also asked me about Bitcoin, because they know it went up a lot a few years ago. They know it crashed, but they think if it went to 20,000 once maybe it can do it again.

I have answered none of these emails nor said anything about it publicly for sometime, because nothing important has been happening with it.

Well today is the time to say something, because Bitcoin and crypto currencies are lining up to crash again.

First realize this – one of the things Bitcoin people claimed back in 2017 when it went to 20,000 was that Bitcoin was something that was “safe” and would go up if the stock market crashed and was something that would also one day be used by everyone and replace the US dollar.

None of this came true.

Bitcoin has never acted better than the US stock market averages, because when the stock market has gone down it has gone down even more. We saw that this March when the S&P 500 fell over 30% and Bitcoin fell over 60%. So if you think the stock market is risky Bitcoin is just even riskier.

And Bitcoin has not and never will displace the US dollar, because it is not better than the US dollar. It is too volatile to act as a store of value and every time you use it as money you get hit with a transaction fee so it can’t act as a real currency. It is good for one thing and that is speculation – everything else people say about Bitcoin is mostly nonsense.

But right now Bitcoin is drifting and lagging the stock market. Take a look at the chart.

Bitcoin rallied sharply after crashing in March back up to 10000, but since it hit that level in May it has been drifting down to 9000 and is lagging the stock market and gold. Bitcoin is likely to continue to drift around 9000, but its next level of support is at 8400, the area of its 150 and 200-day moving averages.

That 8400 level is the key level and if Bitcoin goes through that in the coming weeks it will crash again just like it did this March and last summer too.

I believe its heading for a crash this Fall, because it is lagging the stock market and gold. You can see that in the two relative strength plots on the bottom of this chart. The first one shows you that Bitcoin is performing worse than the S&P 500 and the second one that it is doing worse than gold.

That means when the stock market falls Bitcoin goes down more than the stock market and so far down that when things rally Bitcoin doesn’t make up for the losses. It just swings up and down a lot, but over time such swings devastate an account.

Bitcoin is simply one of the worse investments anyone can make.

There is a reason for this.

Bitcoin is not like a stock. When you own a stock you own a share in a company. That means you have ownership that can give you a dividend and entitles you to participate if a company gets bought out. You can even vote as a shareholder.

With Bitcoin and other crypto you own NOTHING except “virtual currency” that gives you the rights to NOTHING.

And it isn’t like gold or silver that are real and have acted as money for over 2500 years.

Bitcoin is junk and crypto is crap.

If you want to beat the markets the way to do it is buy things that are beating the market averages. You buy things that fall less than the stock market does when it drops. Bitcoin is doing the opposite!

Gold and silver are what are beating the averages.

Those are things to focus on.

If you are new to trading and bought Bitcoin get out now, because another crypto crash is coming.

If you own Bitcoin now is the time to sell and move that money into gold and silver and become a winner!