At the time of writing Bitcoin is trending in the range 40.000 USD again and I am asking myself it is too late to get into Bitcoin. Let’s stick to some simple facts that I find convincing for the near-term success of Bitcoin.

Ray Dalio, who has been skeptical on Bitcoin turned bullish recently and announced last month (https://www.bridgewater.com/research-and-insights/ray-dalio-what-i-think-of-bitcoin) that he will consider adding BTC as investment of new funds to counteract the debasement of fiat money. In the long term he remains skeptical but that shall be not our concern as we are looking for short term opportunities.

Jamie Dillon, who called Bitcoin a fraud not even three months ago, seems to have changed his mind and JPM announced that Bitcoin could rally as high as USD 146.000 in the long term.

There are more examples of this type and you are free to google names like Fraser Jenkins from Bernstein, formed FED Kevin Warsh, Nick Maggiulli from Ritholtz and Marc Cuban. There are plenty more but the message I am getting - institutional investors and billionaires are getting ready to get into the game. They were just looking for a front-runner like MicroStrategy. It is probably worth mentioning that Microstrategy offered a playbook for corporate bitcoin adoption at their annual summit last week. (https://www.microstrategy.com/en/resources/events/world-2021/bitcoin-summit) I encourage everybody to check out the website. It is wort it. I consider this summit not as an ordinary event as some high-profile people attended. I believe we will see the outcome of this summit shortly and it will be reflected in the market.

So, what does this mean for the price of Bitcoin on the short term. We are very close to ATH and what happens then? 

• In the last couple of weeks BTC has worked off his overbought values; in simple profit taking has been exhausted. Resistance between 29.000 – 30.000 has been tested twice with high buyer interest. I consider that bullish.
• According to bybt.com BTC future open interest is at all time high slightly above 13.5 billion USD. What does this high value mean for short sellers compared to previous months. I believe most short sellers will be hedged taking benefit of the premium. They buy the asset and simultaneously selling futures. But not everybody is hedged so I expect some covering once there is a breakthrough at ATH. Also, these hedged positions do not indicate liquidation risk
• Looking at the BTC option open interest (also on bybt.com) it reveals that most positions are at 40.000 USD strike price. It shall be noted that calls need to be in the money, whereas not all puts are desperate to be at there strike price. There is a high likelihood that buyers will try to push the price above 40.000 USD with expiration in February and March 2021.
• I believe that some institutional investors want to front run BTC (in response to the MicroStrategy Summit) and will keep buying BTC starting from next week. It already started: According to www.Cryptoquant.com the exchange reserves dropped from 2.38 Million BTC at the end of January to 2.34 Million BTC as of January 05, 2020. Nearly 40.000 BTC are withdrawn from the market. That is quite significant. This momentum reminds me of August 2020

Based on the above I believe that BTC will not retrace at ATH. It will break through and continue his run to 50.000 USD which I consider as the next resistance. We have seen a similar move last year when BTC broke through 20.000 USD which highly surprised me. Why not repeat it. There will be probably not so much short covering anymore, but the momentum shows strength. Of course, it will be bumpy, and I expect the new 42.000 USD support will be tested a couple of times but at the end the bulls will succeed.

My strategy will be. Buy BTC with low leverage once it breaks out with higher volume. Once the move is complete deleverage the position and stay invested. If this move will be accompanied with a bullish flag formation that will make me quite comfortable to stay invested.

As usual there is a 50 % chance that i am wrong but that's the name of the game.

Comments are very much appreciated.