According to Brandt, the argument for Bitcoin relates to the eventual destruction of fiat currency units. To illustrate his point, Brandt shared a chart comparing Bitcoin (BTC) against the total U.S. money stock (M1), a ratio that he says remains below the December 2017 high.
Placing side by side, Brandt highlights striking similarities between this chart and the Dow Jones Industrial Average (DJIA) during the Great Stagflation of the 1970s.
The 1970s was a period marked by high inflation and stagnant economic growth, a phenomenon known as stagflation. The DJIA during this time exhibited a particular pattern that Brandt believes is now mirrored in Bitcoin’s performance against the increasing supply of U.S. dollars. This pattern, known as an inverted head and shoulders, is often interpreted as a bullish signal, suggesting further upward movement in Bitcoin’s value.
The inverted head and shoulders pattern is a technical analysis chart formation that indicates a reversal of a downward trend. It consists of three parts: a low point (head) flanked by two higher low points (shoulders). When this pattern forms, it signals the potential for a significant upward price movement once the price breaks above the resistance level formed by the shoulders.
In the context of Bitcoin, this pattern suggests an impending momentum shift that could propel the cryptocurrency to new heights, much like the Dow eventually emerged from the stagflation period.
Brandt’s viewpoint is not without skepticism, as he states that some market watchers may disagree with the definition of the pattern as a “continuation inverted head and shoulders.” Thus, he presents an argument using many references to back up his statements.
The identified inverted head and shoulders pattern, if validated, might be the technical confirmation of a much larger fundamental shift — one that could redefine the very concept of money in the years to come.
At the time of writing, BTC was trading at $67,722.
This article was originally published on U.Today
Source: Cryptocurrency - investing.com
