Background (looking at December until end of April):
- 75% of the time breakouts occur in week 4 of the month; arguably 100% of the time but reference the analysis below
- 75% of the time corrections begin in week 2 of the month; arguably 100% of the time but reference the analysis below
- MM/industry/whales stopped buying Bitcoin over 60k which was evident in the lack of , positive price action and reduced outflows
- The number of Coinbase OTC accounts over 8k Bitcoins created in March>April was more than was created in the preceding 4 years
- Miners started hodling after the February correction despite notably higher prices
- Whales and Industry continued accumulating from retail though March>April until whale sized accounts finally reached/exceeded pre-COVID numbers again
- February is the exception to all of the patterns. This was due to news (remember the Elon candle?) that triggered extreme sentiment and extended the uptrend by about a week, and delayed the correction about a week.
- The February correction was rather urgent and extreme, in this chart it posted a 68 degree downtrend, far exceeding what we saw in January and March, with their downtrend angles during correction at between 30 and 40 degrees.
- Options expiration are towards the month end, and while its awfully convenient to blame them for some of the corrective price action, there is probably some truth to it
- The April correction posted a 68 degree downtrend the same as February. And their % corrections both almost identical at a hair over 25%. The late April>May pattern appears to be painting an extremely similar to the late February>March pattern. This suggests similar actors and price action at play, and if we don't dip farther indicates that MM are comfortable with a maximum of 25% correction
- However- unlike previous months, I suspect the breakdown of the macro uptrend that we were in since December indicate a change in MM behavior and clearly the retail behavior is affected by the weak breakout and second strong correction since February. The numbers clearly show short term retail holders of Bitcoin are parting ways with their investment and that industry/whales/MM are scooping it up.
Bottom Line/Whats Next: I want to be based on the fractals that appears as a copy/paste correction from February to April, but I think with the breakdown in the macro that we saw in April will still lead to closing the month in the red, and one of two things will happen entering May-
1.) We post a similar pattern to March and climb back up to retest mid 60k. I think we need to close over 60k then 65k to regain momentum; this will also validate our monthly cycle theory of week 4 breakouts and week 2 corrections; or
2.) We range in consolidation until the MM feel like they fed enough and in this case a logical point to fall to and spring from would be a retest of the 20/ 21W / . I mapped them to the bottom of our chart and you can see an opportunity for us to meet by the 2nd/3rd week of May. To reach that target we would drop to ~50k or slightly under at 49k. From there we would have a healthy retest of the bottom of our bull pattern.
In scenario 2 we will see continued accumulation by big money. Keep a close eye on the box in May between 50k and 56k, That is a fair target for consolidation/accumulation as it ranges between two strong value areas from a price/ perspective. In a scenario where we consolidate several weeks, I expect altcoins/ TOTAL2 to breakout again as long as BTC ranges slowly within this consolidation zone. If you are looking for swing trades, keep an eye between 49/50k for long entries and 55/56k for shorts. Until I see evidence of distribution or true bear cycle, I'll remain and at the end of this consolidation we'd look for a retest of the 20/ 21W / and spring from there in a breakout.
Note: As always this is complete speculation on my part and will be invalidated if we close under 49k or over 57k in the next two weeks. There is a lot of talk about entering a possible bear cycle, but these can be very unpredictable- its possible we are in a bear cycle but those can last anywhere from a few weeks to months or longer. I think that FA is still extremely . I think the fact that miners stopped selling despite BTC rising almost 20k more in value is . I think the rampant accumulation by industry/MM/whales is . However if you observe any patterns of distribution, that is a strong sign to move into stablecoins because bigger drops are coming.