How to Predict Bitcoin

 How to Predict Bitcoin

John McAfee: “In the long term Bitcoin moves above $500,000 within three years. Bets?” McAfee tweeted on 17 July 2017. In his reply he added that if it doesn’t: “I will eat my d*ck on national television.”

Bitcoin, Bitcoin, Bitcoin.

Its stunning rise has grabbed investors by the eyeballs globally.

Early adopters like the Winklevoss twins of Facebook fame are now billionaires.

The secretive creator, “Satoshi Nakamoto,” or whatever his real name is, has a million coins of the virtual currency, and is worth $16 billion as I write this.

Some are calling for Bitcoin to hit $1 million.

Yup, that’s the kind of top of the soapbox discourse you’d expect to hear near the top before the bubble bursts…

…or perhaps we’ll see the ultimate bubble as this invention vacuums up money from around the globe.

Whatever the case, Bitcoin appears to be the clear winner in the crypto marketplace (out of 1334 virtual currencies), and the CME and NASDAQ are going to start trading futures on it – perhaps as early as this month.

Here’s where things get interesting, so lean in…

If the Bitcoin contract becomes popular enough, and I think it will, then the CFTC will force BTC futures traders to show how they’re positioned every week…

…just like they do with S&P 500 futures and 10-year bonds.

And knowing how a particular set of traders are positioned makes those two markets about 80% predictable.

Obviously not 100%, or the Smart Money Indicator would still be in the S&P 500 (it’s in cash still).

After 20 years of trading, I’m still not able to predict every squiggle in the markets. I’ll let you know if I ever do (Hint: It’s not possible).

Anyway, if the CFTC starts publishing a Bitcoin Commitment of Traders report, it could very well be exceedingly predictable both long and short.

Also, even though Bitcoin is quasi-annonymous, you can suck up a mountain of statistics and peer inside the Bitcoin ledger to see what Joe the plumber and his friends are up to.

In fact, you can see a snapshot of just that right here:

https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html&source=gmail&ust=1512510025410000&usg=AFQjCNGicxnk_jO9pBFxvyChPvBy43u4FQ

I figure it’ll take around a year to gather enough data to see if Bitcoin traders behave more like the S&P 500 or 10-year bonds (they are as polar opposites as James Bond is to Gomer Pyle…may Jim rest in peace).

I know…a year is so far away.

But like I’ve been saying…when Uber drivers and strippers can’t stop flapping their gums about a “can’t lose” investment, the music is about to stop

Just as I’m sure an old-timer from the 1600’s would tell you to beware carriage coachmen and wenches and their irrational fetish for tulips.

Trade smart,

Dan