Bull Market Baby

There is nothing better than being a market participant during a long, strong, and explosive bull market. The energy and intoxicating optimism is second to none. The last bull market I was privy to was in the summer of 2007.

I Eat First

2007 was the best year in terms of financial services bonuses in human history. Around the globe the Finance Insurance and Real Estate (FIRE) industries were rocking.

I landed on the Deutsche Bank Asia Ex. Japan Equity Derivatives Sales desk in Hong Kong that summer. The desk was nicknamed the snake pit. I could tell stories for days about my three months spent with the team, but I’ll tell one of the best here.

The head of the desk was a burly Canadian. Let’s call him Moose. His sales desk was one of the most profitable in Asia, and he let everyone know it by the way he carried himself. I was an intern on the desk. We would arrive before the morning meeting, hungover of course, buy breakfast, buy lunch, and do whichever other menial tasks the desk required. There were strict rules, of course. If you missed the morning meeting, you had to buy breakfast for the whole team (about 10 people) from the Mandarin Oriental. Believe me, that’s not cheap, especially when they know you’re buying.

We thought Moose was away at a conference. As such, we didn’t include him in that day’s kebab lunch print. The whole desk loved this particular kebab joint located a 10 minute walk away from the office. We slogged through a wall of heat from the office to the restaurant and back, still in shirt and tie. I don’t recommend it – or the smell.

We return to the office with our bags of kebabs, and to our surprise, Moose appears. He asks us where his kebab was. We politely told him we didn’t order him one because we thought he was still away. Oh, that was the wrong answer.

He goes to his desk and sits down. A few minutes later he comes storming down the aisle, looks right at us, and yells loud enough for the whole trading floor to hear, “On this desk, I eat FIRST!”. I then offered up my kebab, and the Moose was mollified. Legendary.

The market, of course, turned. Fast forward 18 months, the desk was half the size and Moose was far away, enjoying his middle age on his compound back in Canada.

Steps, then Ramp

Bitcoin’s $1,000 milestone has held, and so did $1,500. We are less than 20% away from the next milestone: $2,000. The rally to date has been relatively calm. The price quietly stair steps higher, with minor corrections. The parabolic euphoric spike has not occurred yet.

There are still haters who proclaim scaling, lack of liquidity, lack of regulation, and other similar issues as reasons why Bitcoin cannot continue to creep higher. The price action says otherwise, and forces bears to cover higher and higher.

In 2013, a mention of Bitcoin in Bloomberg, the Wall Street Journal, or the Financial Times would make traders wet. Now, not a day goes by where a mainstream financial media outlet isn’t talking about something related to the digital currency industry.

The constant barrage of stories only causes the FOMO to increase for the general investing public. In America, Joe Sixpack cannot trade an ETF yet, but in Europe the Bitcoin XBT Provider ETN (listed on Nasdaq Nordic) continues to trade well.

A few money managers are starting to dip their toes in the water. Small investments of a few million USD are flowing into the ecosystem. The market cap of digital currencies is still insignificant. A few million here and there continues to supply a strong floor to prices, which allows the speculators to pump them higher.

The euphoric stage has not been hit yet. When CNBC starts trotting out random retail investors who doubled their money investing in Bitcoin and shitcoins, then it is time to sell. For now, the haters are in awe of the sheer power of the bull market.

However, a nasty correction could come earlier. In my opinion, Bitcoin is due for a 20% to 30% correction in one 5 minute candle. When that will happen is anyone’s guess. But the market is a cruel and capricious lover.

$2,000 is the next key level. If Bitcoin breaks above and manages to hold the level after a correction, that is the signal that the euphoric phase can begin. The price testing and failing at $2,000 could lead to a meaningful retrace to $1,500 or even $1,000.