Summary My technical analysis of BTC-USD shows bullish price action, momentum, volume, and relative strength, indicating a strong buy opportunity. BTC-USD has consistently stayed above the 30-week EMA, with bullish momentum confirmed by the Percentage Price Oscillator (PPO). Volume patterns reveal buyers are in control, and BTC-USD is outperforming the SP 500, reinforcing the bullish outlook. I invest in BTC-USD through intermediaries, Bitcoin ETFs, and companies like MicroStrategy and MARA Holdings, which hold BTC-USD on their balance sheets. Now that the election is over, there is a risk on feel to the markets. In this article I will outline my investment thesis for the some say risky cryptocurrency Bitcoin ( BTC-USD ) and also discuss some Bitcoin proxies that I hold. My analysis of BTC-USD is technical, and it revolves around the four elements of price action, momentum, volume, and relative strength. I last covered BTC-USD back in March . Since then BTC-USD has consolidated but now it looks like it is ready to rally. Chart 1 – BTC-USD Weekly with Momentum, Volume and Relative Strength www.stockcharts.com When I perform technical analysis on a stock or ETF I start with price action. My favorite time period is weekly, and I like to use the 30-week exponential moving average (EMA) as a gauge for the trend. The weekly time period removes the day-to-day market fluctuations and as for trend, when the stock is above a rising 30-week EMA that indicates a stock in a bullish trend. I find that the 30-week time period offers a medium to long term time horizon which allows for the opportunity to capture substantial moves in the stock or ETF. BTC-USD has performed quite well since its bottom in November 2022 at $15,480. Since then, BTC-USD has rallied in a steady almost methodical manner. In 2023, BTC-USD recaptured its 30-week EMA and spent the majority of the time since then above that level. When BTC-USD failed to hold the 30-week EMA it has done so while consolidating sideways. These periods of consolidation are outlined in the green boxes below. Each time BTC-USD has entered these boxes it has managed to breakout to the upside which is bullish. BTC-USD has been in a consolidation box since the early part of 2024 and has broken out of this box this week after the election. BTC-USD is trading above an upward sloping 30-week EMA and has broken out to new highs. I see this price action as bullish and the beginning of a new leg upward in the rally. Momentum is the next technical tool I look at for technical analysis. I use the Percentage Price Oscillator (PPO) as my indicator of choice. PPO is easy to understand. When the black PPO line is above the red signal line, that indicates short term bullish momentum. The opposite situation indicates short term bearish momentum. PPO can also be used to show long term momentum. When the black PPO line is greater than zero, that indicates long term bullish momentum. Conversely, when the black PPO line is less than zero, that indicates long term bearish momentum. Right now, BTC-USD has the best of both worlds. PPO shows that BTC-USD has bullish short term and long term momentum. That is the best situation for an investor. Volume analysis is the next step. In the volume pane I want to see black volume bars which are higher than the red volume bars. Black volume bars show the volume in weeks where BTC-USD closed higher. Red volume bars show the volume in weeks where BTC-USD closed lower for the week. When black volume bars are generally higher than red volume bars that shows that buyers are in control of the market and that buyers are willing to pay higher prices for the asset. You can see in Chart 1 that as BTC-USD has rallied from its most recent low in August 2024, black volume bars have been more prevalent and higher than the red volume bars. My analysis of the volume pattern is bullish. Relative strength is an important aspect of my analysis because I want to own stocks that are outperforming the SP 500. The relative strength indicator helps me with this assessment. When the black relative strength line is rising that means that BTC-USD is outperforming the SP 500. Conversely, when the black relative strength line is falling, then BTC-USD is underperforming the SP 500. Right now, the black relative strength line is above an upward sloping 30-week EMA showing that BTC-USD is outperforming the SP 500. My analysis indicates that BTC-USD is a buy. Price action is bullish as price has broken out of an area of consolidation, and price is above an upward sloping 30-week EMA. Momentum is bullish in both the short term and the long term. Volume patterns show that buyers are bullish. Lastly, relative strength shows that BTC-USD is outperforming the SP500. An appetite for risk is on and BTC-USD is benefiting from that risk on appetite. There are several ways to invest in BTC-USD and I’ll share how I have done so. I own BTC-USD through various intermediaries such as Coinbase ( COIN ) and PayPal Holdings ( PYPL ). I also own two Bitcoin ETFs. I own the Fidelity Wise Origin Bitcoin Fund ETF ( FBTC ) and the iShares Bitcoin Trust ETF ( IBIT ). Both of these ETFs started in January 2024, so they don’t have a great deal of weekly price action to analyze. Chart 2- FBTC Weekly with Momentum, Volume, and Relative Strength www.stockcharts.com Chart 3 – IBIT Weekly with Momentum, Volume, and Relative Strength www.stockcharts.com Both Charts 2 and 3 show the same bullish indications that I see on Chart 1. They have bullish price action, momentum, volume, and relative strength. The last two ways I participate in BTC-USD are that I own shares in MicroStrategy ( MSTR ) and MARA Holdings ( MARA ). Both of these companies hold BTC-USD on their balance sheets, which I find intriguing. Therefore, I see them as a proxy for owning BTC-USD. Bitcoin is still new to me, and I am trying to understand all of the aspects of it. Some people that I respect say it is a Ponzi scheme and other people I respect say it is not. What I know is that right now it is a tradable asset that I can assess using the tools that I discussed in this article. I also know that my analysis of BTC-USD or any other stock or ETF that I analyze could be wrong. Bitcoin could be proven to be a Ponzi scheme. Or Bitcoin could run into some regulatory hurdle that causes a large decline in price. Because I can’t tell the future, I have an exit plan for any investment I own. If the asset closes below its 30-week EMA, that tells me it is time close or meaningfully reduce my position. I don’t want to own a stock, ETF, or cryptocurrency that is trading below a falling 30-week EMA. That is a simple stop loss strategy that has saved me from owning assets that decline substantially.
