Last summer, I made an analysis showing the ratio of Bitcoin/SPX to illustrate how Bitcoin has performed as an investment compared with traditional markets. Here's the original post:
Since then, Bitcoin has still performed decently well against traditional markets, after bouncing from the trendline. Interestingly, BTC tested the previous all-time high against the S&P 500 during the summer of 2021. However, it is starting to drift below the main trendline, and is getting closer to the 2018 peak again. This isn't necessarily bad in itself, since a sustained trendline break occurred in 2020 as well. What concerns me is that traditional markets seem to be close to a generational peak, by all logical accounts. And if they're close to a peak, it doesn't seem likely Bitcoin would outperform, at least initially. In that case, a sustained break below this trendline could be catastrophic for Bitcoin and crypto. Indeed, the BTC/SPX ratio is now sitting very close to what can be drawn as a trendline dating back from Bitcoin's early years. This forms a giant rising wedge on the log scale. I think this is a critical moment in Bitcoin's history.
What concerns me even more is that Bitcoin is lingering just under major resistance with volume drying up, as coins like ETH, LTC, XLM, and XRP all rally on their own. Looking at LTC, we could easily be near the top of a bear market rally. If I had not already reduced my inventory substantially I would sell a bit here. I may decide to anyway.
Usually these coins move on their own towards the END of a Bitcoin upswing, and I look for Bitcoin dominance to go DOWN as Bitcoin moves up, for a true uptrend. That's not what's happening here. If LTC were moving just on its own, I would find it a little more bullish, since the halving arrives sooner.
Here's dominance zoomed out, showing my long term trendlines.
I was thinking Bitcoin could test the important liquidity zone between 46-50k, but honestly it might not even be capable of that. Volume is starting to become pretty weak. The only reason I can see Bitcoin testing those higher levels is to squeeze shorts who opened up in the lower $40k zone.
On the bullish side:
If Bitcoin confirms a bottom here, perhaps Bitcoin can set up a pretty big launchpad to head towards the top of the giant wedge. That would be a crypto-lover's wet dream, and likely to happen if the many countries begin to adopt Bitcoin as a reserve asset.
Sure, the utility of crypto is a bit different from the stock market. But in that case, price doesn't matter much anyway. This analysis is purely about price performance. Maybe I'm wrong, and perhaps I've just become a salty old-timer who's projecting frustrations about society onto this market. This is why it's really important that I emphasize that this is meant for speculation and entertainment only.
-Victor Cobra
Since then, Bitcoin has still performed decently well against traditional markets, after bouncing from the trendline. Interestingly, BTC tested the previous all-time high against the S&P 500 during the summer of 2021. However, it is starting to drift below the main trendline, and is getting closer to the 2018 peak again. This isn't necessarily bad in itself, since a sustained trendline break occurred in 2020 as well. What concerns me is that traditional markets seem to be close to a generational peak, by all logical accounts. And if they're close to a peak, it doesn't seem likely Bitcoin would outperform, at least initially. In that case, a sustained break below this trendline could be catastrophic for Bitcoin and crypto. Indeed, the BTC/SPX ratio is now sitting very close to what can be drawn as a trendline dating back from Bitcoin's early years. This forms a giant rising wedge on the log scale. I think this is a critical moment in Bitcoin's history.
What concerns me even more is that Bitcoin is lingering just under major resistance with volume drying up, as coins like ETH, LTC, XLM, and XRP all rally on their own. Looking at LTC, we could easily be near the top of a bear market rally. If I had not already reduced my inventory substantially I would sell a bit here. I may decide to anyway.
Usually these coins move on their own towards the END of a Bitcoin upswing, and I look for Bitcoin dominance to go DOWN as Bitcoin moves up, for a true uptrend. That's not what's happening here. If LTC were moving just on its own, I would find it a little more bullish, since the halving arrives sooner.
Here's dominance zoomed out, showing my long term trendlines.
I was thinking Bitcoin could test the important liquidity zone between 46-50k, but honestly it might not even be capable of that. Volume is starting to become pretty weak. The only reason I can see Bitcoin testing those higher levels is to squeeze shorts who opened up in the lower $40k zone.
On the bullish side:
If Bitcoin confirms a bottom here, perhaps Bitcoin can set up a pretty big launchpad to head towards the top of the giant wedge. That would be a crypto-lover's wet dream, and likely to happen if the many countries begin to adopt Bitcoin as a reserve asset.
Sure, the utility of crypto is a bit different from the stock market. But in that case, price doesn't matter much anyway. This analysis is purely about price performance. Maybe I'm wrong, and perhaps I've just become a salty old-timer who's projecting frustrations about society onto this market. This is why it's really important that I emphasize that this is meant for speculation and entertainment only.
-Victor Cobra
Comment:
Finally getting a move up towards the top of the formation. Let's see if Bitcoin can hold a local high.
Comment:
Very interesting
Comment:
Comment:
Short term structure
