Although I am still leaning bearish on larger timeframes, it would be silly to discount the bullish possibility (especially in the short term). Sellers have repeatedly failed to take Bitcoin below the $37-38k zone, and buyer volume here remains relatively strong. This idea still presents a selling opportunity, but a bit higher than current prices. Everyone seems to be watching the same patterns right now. Many are comparing current price action to the long consolidation in 2018 before the breakdown to 3k (myself included). This post is an attempt by me to check my own bias. In the above chart, I show two scenarios, though there are infinite possibilities.
Many others are comparing current price action to the Summer 2021 bottom prior to 69k. Ideas seem to be leaning to either extreme. The lack of a clear bias in the market has led to sideways conditions and frustrating volatility for day traders. Crypto tends to do what most people don't expect. If everyone is eyeing a certain formation, it often doesn't play out. The head and shoulders from last summer did not play out, but we're currently forming another one. Maybe this one will come to fruition. Who knows? Formations are only noticeable in hindsight. Take this "bear flag," for instance, in the above chart. I've seen others drawing this too. I can see an argument for this pattern, because I think prices between $45-50k would be optimal for selling liquidity. It would appear as a new local high, but would simply be testing major weekly and monthly resistance. Buyers would begin to FOMO in. Bitcoin can also test the lower bounds of the flag (near 35k) before heading to local highs as well:
Right now especially, it's extremely important to be careful with leverage. As you can see, there are many short-term possibilities. Despite the chance for some short-term bullish momentum, on the weekly Bitcoin will still need to reclaim the 50 MA (red). Funnily enough, it lies right in that important zone, between $45-50k. Bitcoin spent 24 weeks below the 50 before breaking below the 100 (yellow, current support). Bitcoin is now halfway there - 12 weeks below the 50 so far.
To look bullish, Bitcoin will also need to close a month above the 9 EMA (orange, below), which isn not too much higher than current prices. However, a heavy rejection at 47k could quickly send price back to 39k. If it begins closing above these important levels, there should be ample time to wait until a retest to purchase, even if it blows much higher first. My plan is to remain patient until at least some time in 2023, and continue to hold mostly cash. I want to be well-positioned in case things get nasty. If we see Bitcoin touch that $46-48k zone, I may simply sell the rest of my crypto and wait a while. As shown on this chart, this recovery move is clearly JUST a possible scenario. Bitcoin can roll over and drop straight down from current levels, since it can get rejected at the current downtrend.
If Bitcoin is to rally here, I would also expect traditional markets to make a second (lower) peak. Looking at the linear chart for the NASDAQ, this looks like a classic blow off moment. I think it's possible for NASDAQ to head lower from here before bouncing, in which case I think we will either get a failed low for Bitcoin, or a breakdown towards 24k, followed by a large dead cat bounce.
I find it ludicrous to assume that US stocks will only go up, considering other stock markets generally don't perform like this. The Nikkei is still below its all-time high from 1989.
Again, I've been looking at Microstrategy, which is holding a LOWER low than Summer 2021. Perhaps it gets a test of previous support turned resistance before heading lower. Overall, I think MSTR will play out similarly to the dotcom bubble pop (lefthand bubble on the chart below). This gives me caution, even at current prices for Bitcoin, and it's also why I would be a bit astonished if Bitcoin saw new highs from here, though of course I would admit that I was wrong.
In sum, I'm only presenting this possibility because I'm checking my bias, and admitting that things can turn around in the short term. Sentiment is so terrible that I would not be surprised to see a disbelief rally, fueled in part by short liquidations (say bye to my small ETH short). I think there will be some great opportunities over the next year or two, and am happy to wait mostly on the sidelines. I still have some crypto, but am strongly considering selling it on any larger relief rally.
Even if it continues higher, I want to spend the next year or two reassessing my finances. I already did pretty well, so taking my gains is purely a practical decision. It is not meant as financial advice. This is a personal choice, and this article is meant for speculation and entertainment only.
-Victor Cobra
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So far, Bitcoin has moved up slightly, but it getting rejected near my purple trendline. Stocks would need to hold their ground for the higher levels to play out for Bitcoin. I do not like how there is a strong reaction from sellers every time Bitcoin heads near 42k. Sometimes market makers will clear out the order books before the "real" move, but it's still hard to say.
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The TOTAL crypto market cap is butting up against the downtrend again, which has been held since November.
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Short term structure. Bitcoin is having trouble even breaking and holding above 43k. Possible it won't test those highs before another catapult down. A breakdown seems more likely if this smaller wedge fails to hold.
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Here we go, finally getting close to the liquidity zone.
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Nicely done, Bitcoin.
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Now here's where things get interesting!
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Perfecto! A break above the flag could also result in a fakeout, so it might be time to be careful with longs.
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A break above and a successful retest of that trendline would have me feeling a bit more bullish about price in the near term. Otherwise, this can just lead to a failed high and a macro lower high.
My take is BTC is going to move up from here starting into tomorrow following the FOMC decision up to a convincingly high enough price where everyone thinks the next full on upward trend has started and begin taking leveraged longs/FOMO in for it to only crash back to ~30k from where the next true bull run actually starts. I expect this crash to happen in May when the FOMC hikes the rates next likely at double what they decide to hike tomorrow. In the end it's all up to the market makers and whales, not retail. You can do all the TA in the world but what happens follows their will of making the most money possible at retail's expense.
VictorCobra
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@Vampere, Great comment. Thanks for sharing your thoughts! I personally love the collective psychological aspect of TA. It can’t necessarily be used to “predict” but it can be used to understand human behavior. And as you point out, the market is designed to extract capital from retail. These days the AI is strong, as it appears to be learning how to truly exploit human emotion. It’s always a step (or multiple steps) ahead.
You are not wrong on the larger timeframe. I found a formula that historically repeated over and over on all assets from 1800 till today ( don't have data before that ) and gold and silver are one of those assets and even .com bubble and Japan's market, and what I found is fascinating. If that plays out, BTC will hit 340k before 2030 but once it gets there it will collapse and either drop 84% or go to ZERO! There are many reasons that BTC could actually go to ZERO and one of them is climate change and war and massive migrations. I don't think things will be the same as it was in the next 10, 20, 30 years.
B_Musk
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@siamakcgm, yeah 200k-300k by end of 2023 / early 2024 says long term historic fractals, then everything will crash. Going to zero, unlikely unless internet seizes to exist. The worse the world gets, the more value crypto and blockchain has. Distrusted governments with inflationary fiat, stateless migrants needing money everyone can accept, needing to do business during heightened distrust of your fellow man, blockchain and crypto helps solve all of this.
siamakcgm
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@B_Musk, I agree. But personally I would not discard the idea that internet would be alive forever. Looking at historic data, there is a massive chance WW3 could happen and internet has never been around long enough to pass the test of time. I am probably sounding too extreme here but looking at history, things can happen even if we don't expect them to happen. If the internet doesn't die, BTC can drop to 53k after 340k or something like that. I also don't like BTC's Bollinger bands on 2 months time frame! It is negative and I have never seen that in any chart! so maybe it can go to zero for sometime like oil did in 2020!
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@siamakcgm, dropping to 50k after hitting 300k is an incredibly likely scenario. We've consolidated around the price enough that it will act as a major support. The internet could shut down, but I suspect a nuclear war or EMP blast would need to emerge for such a thing to happen. If anything the internet may get taken out for period of time, but should recover. This is where decentralized ISP, compute power and storage is needed.
VictorCobra
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@B_Musk, This was actually my original speculation last year, but things shifted in the market, and I became much more skeptical of sustained higher prices. It would be amazing if this actually played out. This would require bitcoin to reach or surpass Gold’s market cap, which I think is possible. Doesn’t seem likely to me at the moment though.
-Victor Cobra
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@VictorCobra, I strongly believe this will happen for the following reasons - wall street is ramping up involvement in crypto, that's a lot of capital infusion in of itself. Other institutions and influencers will see the green light to follow wall suite. Once prices go parabolic, media attention, combined with retails growing familiarity with crypto and its on ramp options will bring more capital into the markets, especially if inflation persists. Give it 18+ months and BTC and all of its ilk should be at prices most can't imagine today