Rougher Waters Ahead

PASSING GOLD - Bitcoin has been on a tear in 2017, breaking to a record high, even pushing past the price of GOLD for the first time. The cryptocurrency continues to gain traction and acceptance around the globe and is being used more and more as a form of currency. All of this has enthusiasts super excited about the prospects for this market going forward. Still, we continue to take a more cautious view, at least over the short to medium-term. While we don't doubt there is a very bright future here that involves a world more actively engaged in blockchain technology, we also still feel this market has more growing pains it will need to endure before truly establishing itself as a stable asset.

NOT READY - Our biggest concern at the moment is the ability for Bitcoin to hold up if the global financial markets go through a period of downturn. We all see how elevated the global equities market is right now and if that market comes under a period of intense pressure, investors will be running for safety. While there are arguments to be made for Bitcoin as a safe haven alternative, we don't believe the market is ready to start diversifying into Bitcoin in a risk off environment just yet. We still view Bitcoin as more of a risk on play, despite its potential to ultimately become a risk off play further down the road. The technology is too young and the market simply won't be ready to start running into Bitcoin if things get dicey out there.

We believe #Bitcoin is still in growing pain phase. Via @joelkruger

LOWER LEVELS - With all that said, we continue to see value in Bitcoin but believe it will see another considerable decline in the weeks ahead that takes the BTCUSD price back to the $500-700 range. In our previous update, we also highlighted our view that the price would be unable to sustain gains above 1200 for any meaningful period of time, citing severe technical overextension as a very good reason to expect a major pullback on its own merits.