Why I'm Bullish On Bitcoin Mining Stocks
Investors,
Bitcoin is flashing a rare bullish signal that last occurred in October 2020.
Specifically, the 2-year Williams%R Oscillator is making an A→B→C thrust above the overbought threshold, which resulted in a +400% following the signal flash in Q4’20.
The pattern is as follows:
A = Overbought Thrust: 2-year W%R > overbought threshold
B = Momentum Reset: 2-year W%R < overbought threshold
C = New Momentum Thrust: 2-year W%R > the former high from part A
The last time the signal flashed was in mid-October 2020, foreshadowing a parabolic move in the price of Bitcoin in which the digital asset gained +393% (nearly a 5x) in less than 6 months.
This bullish signal is NOT a one-off event, as it also happened in 2016:
An A→B→C pattern flashed in December 2016 (after the price of Bitcoin had already gained +370% from the bear market lows in 2015), which was subsequently followed by the price of Bitcoin rallying from $800 at the time of the signal flashing to a market peak of $19,600 (a +2,400% gain) one year later.
In other words, this signal has flashed at the beginning stages of the past two bull markets for Bitcoin, in which the price of the digital asset increased by several magnitudes.
Is it guaranteed to produce the same results this time? Nope.
As I saw whenever I present these types of studies (particularly those with small sample sizes), statistics do not operate in a vacuum absent of macroeconomic factors.
The market and all asset prices are influenced by a myriad of factors; however, these types of statistical studies tell us how past market psychology manifested in terms of future price action in order for us to simply acknowledge that more good things could still be around the corner. Therefore, by acknowledging the validity of this study and the indicator itself, we can move forward with a new piece of the puzzle and continue to stack weight of the evidence in terms of favorable or unfavorable outcomes.
Without question, this recent signal improves the probability of favorable outcomes.
And that’s all we can ask for, so long as we continue to observe data & market dynamics with an objective lens and an open mind.
In the remainder of this report, which is exclusive for premium members, I’ll be breaking down each of the following topics:
Bitcoin mining stocks (the thesis, key price structure, and upside targets)
S&P 500 under-the-hood dynamics and market internals
Q4 2023 earnings insights
As always, these weekly premium reports serve as a way to collect my thoughts on market dynamics and to provide in-depth analysis on the stock market and/or Bitcoin & crypto with the purpose of providing actionable research for the reader.
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