All eyes were on crypto this week as Bitcoin hit the elusive $100k target.
President Elect Trump’s pro-crypto stance, which initially seemed like a political vote grab, is causing billions of investment dollars to flood into the cryptocurrency market.
Crypto stocks have been the top-performing group I the market over the last one, two and three-month periods.
The obvious names like crypto miners Hut 8 (HUT), MARA Holdings (MARA) and Riot Platforms (RIOT) have made big strides. So have crypto brokers like Coinbase (COIN), Robinhood (HOOD).
But the most liquidity is going to Bitcoin itself, which now has a market capitalization of $2 trillion. Only three companies – Apple, Nvidia and Microsoft – are worth more.
For those interested in dipping your hand in Bitcoin, I have found that it trades in a very technical manner. Consolidations are typically clean, breakouts lead sustained trends higher, and it tends to follow the same 4 Stage Cycle found in growth stocks.
Below is a weekly chart of Bitcoin on which I have marked up each of the 4 stages. If you are not familiar with this process, join me in our Live weekly Stealth Trades sessions every Monday at 4pm ET where I walk members through it.
(Link to full resolution image: https://www.tradingview.com/x/rbDChGNP/)
As I mentioned, BTC also trades in a very technical manner. Below is a daily chart highlighting the shallowing compression pattern it put in from March to November.
(Link to full resolution image: https://www.tradingview.com/x/WIpTir5b/)
This is a proven pattern that often leads to big, fast moves like what we have seen from Bitcoin over the last couple weeks.
In fact, it could be setting up for another move higher (see chart below):
(Link to full res image: https://www.tradingview.com/x/AdQZkj7S/)
Symbolic prices like $100, $500, or in this case $100k are psychologically significant to traders. “I’ll sell it if it gets to $1,000.”
Simple? Yes. But it’s true. We almost always see near-term resistance at these big levels since traders often take profits and slow momentum. That is exactly what we are seeing today in Bitcoin.
But the shallowing pullbacks I have highlighted in yellow on the chart show dwindling supply as coins consolidate from weak hands into strong. Limited supply is one of the key contributors to a stock’s movement since buyer demand can more easily push the price higher.
We saw a similar pattern when it broke out above $30k in 2023:
(Link to full res image: https://www.tradingview.com/x/CvPHCQf5/)
And $12k back in late 2020:
(Link to full res image: https://www.tradingview.com/x/H0CC73zN/)
We saw it again coming off the low 2019:
(Link to full res image: https://www.tradingview.com/x/kkJsnFtD/)
It has even appeared in early-stage breakouts as far back as 2016:
(Link to full res image: https://www.tradingview.com/x/sPWlnz29/)
There is no need to re-invent the wheel. Whether it’s Bitcoin, Nvidia stock, or the price of feeder cattle, look to the market to tell you when to buy.
We have no informational edge over Wall Street. And I won’t pretend to be smarter than the rest. But by learning to interpret price and volume investors can often identify these low-risk, high-reward entry points where supply and demand dynamics give us a statistical edge.
