FlaviusTodorius67
Long

BTC bullflag and what to expect in the coming weeks

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
After exactly one day of action, BTC wants to make you fall asleep again. I think we won't see a fast climb to 5000, that scenario is for me completely off the table. Instead, the new bullflag will probably break to
the upside at some point, and then BTC will bore us to death by rising very slowly upwards, towards a maximum of 4600.

It wants to rise slowly, so that the weekly Stoch RSI is nicely overbought at 80-100, and the weekly RSI also rises a bit again, after having been very low.
This is of course all in preparation for an epic dump. If we take the magnitude of the last dump, which went without any major bounces from 6500 to 3200, we could easily go from 4600 to 2000, maybe even lower for a very short time.

I am just not buying into the "probability for bitcoin bottom has greatly increased" narrative, some traders are suddenly proclaiming, just because BTC is pumping a bit.

Reasons why 3200 has NOT been the bottom:

1. Daily transactions are still below ATH , the bearmarket historically only ended when daily transactions were at least 20% above the previous ATH
2. We are still very far away from the halving in mid 2020
3. I think stocks will see another sell wave this year, and since wallstreet is now actively involved in BTC , they will just treat BTC as any other asset, and also sell BTC
4. The sentiment is still far too optimistic imho . Just look at all the people who everytime think that we have reached the bottom. Normally, we have the bottom when
there is absolute despair, and even hardcore BTC fans become doubts, and everyone has brutal panic, and a feeling of hopelessness is everywhere, THEN we'll have the bottom.
5. The cycle time gets longer every cycle. It is illogical to think that this bitcoin cycle is exactly as long as the last one. The cycle time increases every cycle, which makes
absolute sense, since BTC is gaining more mass
6. The MAs that provided support, increased in number, every bearmarket. In 2012 it was the MA100. In 2014/15 it was the MA200. It is logical to assume that it now will be
the MA300 that provides solid support.

Well, these are my reasons to remain calm and not euphoric about the recent rise.

I'll patiently wait to re-enter BTC , but this point will certainly be reached sometime this year, probably in the next 2-4 months.

I am long till mid 4000s, then opening shorts when we near the log resistance.
Comment: Well, I'm not sure about the breakout of the bullflag any more:



I really don't like the high long short ratio on Bitfinex, don't like it at all !
This increases the dump probability imho. I don't think we'll see a pump under these conditions, and if yes, then only a fake pump in order to dump afterwards.

A long squeeze is likely to happen.
Comment: Apparently the bullflag is stronger than the high longs. It seems that we are breaking upwards out of the bullflag, as I initially thought. I am amazed that the extremely high longs have no effect.

Well, I won't complain, as this would make my initial theory valid again: that we'll go to 4500, and then the final drop of this bearmarket.
Comment: Or more probably, neither the we're going down, nor the we're bouncing people are right. What is happening: We are going sideways while the weekly Stoch RSI is getting into overbought zone. Genius BTC, genius. I knew that it had to go to overbought, but doing so without a bounce is crazy. That means, when the next leg down comes, it will start from a much lower price level, and therefore go much deeper down. I'll make a new chart about this idea.
Hello,

What are your thoughts regarding the correlation between crypto and equities? Seems the general consensus, even from seasoned traders is that there is no correlation between the asset classes. How do you think bitcoin will fare if a global recession occurs?

Thank you,
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@mowgliasia, Hi, excellent question, and I am unsure also. There are two lines of thought here: 1. Since the bitcoin CBOE futures, many people from wall street are now involved with bitcoin. They will treat bitcoin as any other asset class, and in case of a global recession, will also sell bitcoin.
2. Bitcoin is anti-correlated to stocks, and bitcoin could even benefit from a recession, when all that liquidity from stocks comes pouring into safe haven assets like bitcoin.

The fact is: We don't have enough data. Sometimes bitcoin is strongly correlated to stocks, I've witnessed it often, it sometimes followed the SP500 like clockwork. But other times absolutely not. And there never has been the case that btc was around in a recession. I am always torn between 1 and 2, but the truth is, I don't know, as does no one. We'll have to find out ourselves when the next recession hits.
Reply
mowgliasia FlaviusTodorius67
@FlaviusTodorius67, Thanks for getting back to me! Indeed we shall see and we all hope it's scenario 2...
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@mowgliasia, Yes, let's hope so. I would really be sad to see bitcoin being the b*tch of stocks :/
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I agree 4.4 area is gonna be stiff resistance. this is the 38.2% fib extension from the Dec lows and btc has not been able to brake this level in most of it's recession. In other pieces here I'm spreading some sunshine on this horrible market....

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best explanation
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Very similar to my own mid term perspective! I do like your point about 300 MA, I did not think of that at all, but now I think it's a great idea! I was pretty sure that we will break the 200MA before we see a bottom, but did not know where it would stop. It certainly is a great idea to use 300MA as a reference point!

Thank you for sharing your insight! Good stuff! ;)
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@mcmz, thanks :) I hope this theory with MA300 proves to be right. The problem with BTC is always that we don't have so much data. With stocks, you can basically go back over 100 years, but with BTC, we only have a few major rallies and bearmarkets. So we have to come up with some theories in these 9 years since BTC is traded. But the MA theory could prove to be right, if the bottom in this bearmarket is indeed the MA300, we would have a powerful tool for future bearmarkets.
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BTCUSD H4 Correction up. Checkout the idea detail's and all the update's for the complete picture.
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Makes sense. I also think more time is needed for true bottom, with another big short opportunity arising.
MA transition due to cycle expansion is very interesting, here's something I doodled based on the fractal:
Do you mind if I share your post of twitter?
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