Hey Everyone. With the recent downturn in BTC and lethargic moves happening, I want to outline what I am forecasting and the reasons why. Of course, this is subject to change as things happen but if things happen the way I see them right now, this is a potential scenario of how things could play out. Couple things to keep in mind before you read or comment. This could play out where Wave 2 is lower, closer to 2k, instead of 3k. While I think 3k is going to be close to the bottom, it's possible it's not. Use this as general guide if things start playing out like I have outlined.
Reason for the downturn and the Wave 2 bottom.
The obvious reason is people are capitulating and are dis-interested.
Here is another theory I find more interesting: I would imagine large brokers and firms are selling their BTC to book loses. Sounds strange, but If we look at the timing of what BTC did in 2017. We had a massive run-up in Dec and started selling off from mid-December to Jan. Put yourself in the position of an institution for a minute that is holding crypto. You started buying in crypto in the 1-2k range, maybe lower? Now you have to report to the IRS that you just booked a MASSIVE gain for 2018 and pay a TON of taxes on it. The only way to mitigate this is to show a loss on the books. What do you do? Book loses and then rebuy. Could this be the reason for the next rally?
Wave 2-3: The move up.
While it could just sky rocket up like it did in 2017, I imagine it will chop it's way there but still rather quickly. The above reason is partly why I will think the rebound is coming in Jan and not December. There are a few other reasons that could drive it higher as well. Namely Bakkt release and a potential ETF approval, Constantinople upgrade, etc... If we get a surprise ETF approval in December the rebound will happen sooner. I think more importantly it will go up because... crypto. It's an asset class that is down right now, there can be buzz again if something were to happen or people get interested in it. With the markets over bought right now and people looking for returns, maybe all it takes is looking at something that is down 85%+ and wanting a piece of it.
Wave 3: Nostalgia.
As it stands right now. This point is where i will be looking to get out across most of my positions and then hang tight. You will hear things like "crypto is going to the moon" "the bull run is back baby" But it won't be. We will need to get out of our positions or scale back dramatically. If the move is based on the ETF. We need to compare this to XLK, the tech ETF that came out in 1999, it drove tech prices from roughly $30 to $65. Then it proceeded to come back down. If BTC gets an ETF approval, the same thing will happen here and we will want to be out of the market because after a lot of chop and volatility up at those levels, eventually the euphoria will wear off, people who have been stuck in those prices will get out. And crypto will resume the steady march down.
Why is my wave 3 target higher than 10k? Well if my thesis is correct or doesn't change dramatically from this point. With everyone calling for BTC to the moon, BTC would in fact push higher than 10k before falling back down. Just like when BTC goes down, it pushes past the point of where people think the bottom will be. Emotions kick in, Fear, Greed, panic, etc...
Wave 4. Critical.
If we stay above the BTC low that is forming right now that will be a tremendously bullish sign and we will want to buy for a large move to the upside following. If it falls below 3k, we can't expect a run at the ATH's anytime soon.
What if Wave 2-3 doesn't happen? I think this wave will happen eventually. Eventually, the key word. If we don't get it on ETF news or Bakkt news it won't come till later. Be prepared to sit on your crypto and forget about it if we don't get any moves in Dec-Jan.
Of course this theory all hinges on a large spike coming soon. If it does, we will know exactly what to do and what to look for when it does.
Hope this helps with what to look for.
Happy Trading and hodling,
-Sherem
Reason for the downturn and the Wave 2 bottom.
The obvious reason is people are capitulating and are dis-interested.
Here is another theory I find more interesting: I would imagine large brokers and firms are selling their BTC to book loses. Sounds strange, but If we look at the timing of what BTC did in 2017. We had a massive run-up in Dec and started selling off from mid-December to Jan. Put yourself in the position of an institution for a minute that is holding crypto. You started buying in crypto in the 1-2k range, maybe lower? Now you have to report to the IRS that you just booked a MASSIVE gain for 2018 and pay a TON of taxes on it. The only way to mitigate this is to show a loss on the books. What do you do? Book loses and then rebuy. Could this be the reason for the next rally?
Wave 2-3: The move up.
While it could just sky rocket up like it did in 2017, I imagine it will chop it's way there but still rather quickly. The above reason is partly why I will think the rebound is coming in Jan and not December. There are a few other reasons that could drive it higher as well. Namely Bakkt release and a potential ETF approval, Constantinople upgrade, etc... If we get a surprise ETF approval in December the rebound will happen sooner. I think more importantly it will go up because... crypto. It's an asset class that is down right now, there can be buzz again if something were to happen or people get interested in it. With the markets over bought right now and people looking for returns, maybe all it takes is looking at something that is down 85%+ and wanting a piece of it.
Wave 3: Nostalgia.
As it stands right now. This point is where i will be looking to get out across most of my positions and then hang tight. You will hear things like "crypto is going to the moon" "the bull run is back baby" But it won't be. We will need to get out of our positions or scale back dramatically. If the move is based on the ETF. We need to compare this to XLK, the tech ETF that came out in 1999, it drove tech prices from roughly $30 to $65. Then it proceeded to come back down. If BTC gets an ETF approval, the same thing will happen here and we will want to be out of the market because after a lot of chop and volatility up at those levels, eventually the euphoria will wear off, people who have been stuck in those prices will get out. And crypto will resume the steady march down.
Why is my wave 3 target higher than 10k? Well if my thesis is correct or doesn't change dramatically from this point. With everyone calling for BTC to the moon, BTC would in fact push higher than 10k before falling back down. Just like when BTC goes down, it pushes past the point of where people think the bottom will be. Emotions kick in, Fear, Greed, panic, etc...
Wave 4. Critical.
If we stay above the BTC low that is forming right now that will be a tremendously bullish sign and we will want to buy for a large move to the upside following. If it falls below 3k, we can't expect a run at the ATH's anytime soon.
What if Wave 2-3 doesn't happen? I think this wave will happen eventually. Eventually, the key word. If we don't get it on ETF news or Bakkt news it won't come till later. Be prepared to sit on your crypto and forget about it if we don't get any moves in Dec-Jan.
Of course this theory all hinges on a large spike coming soon. If it does, we will know exactly what to do and what to look for when it does.
Hope this helps with what to look for.
Happy Trading and hodling,
-Sherem
Comment:
Remember to folks that it isn't going to go just straight up, if we start moving up, we'll see something like this as an example:
Comment:
Also, here are my 2 past posts:
Comment:
SEC ETF decision delayed. So that won't be the trigger of an up move. cointelegraph.com/ne...ne-for-late-february
Comment:
Solid move. Per my last idea in my other thread, I filled my final ladder at $3,350. Good spike above the previous resistance, but a lot of work ahead for further upside.
Comment:
Watch for 4k to break, we move much higher if this happens
Comment:
3.5k first resistance right now, that breaks we go to 4k. 4k breaks we should get a big move.
Comment:
3.5k broken, going to 4k.