BTC 4 Year Cycle Double Tops Right On Time. 2022 Year of Pain.
Long Term Long, Short Term Short.
BTC has recently close below the 10W moving average and broken down from there. We are nearing completion of a head and shoulders pattern, which when complete will print a devastating double top.
If this price action ensues we may see 70%+ drawdown, not unlike previous. BTC’s bull / bear cycles which has been like clockwork, reoccurring ever 4 years, with the last year of the cycle bringing immeasurable pain to late investors with drawdowns in the 75%-85% range. The market always punishes those late to the party, and this cycle looks to be no different.
The peak of this bull run has been slightly less euphoric than the previous, and optimist can hope for a softer drawdown than what we’re used to. But the realist knows that the recent all time high needs to be digested by the markets, and the price action suggest we will witness something similar to past draw downs.
Fundamentally, Bitcoin’s last bull run was built upon government stimulus, ETF excitement, and an explosion in overvalued risk on momentum tech stocks fueled by a trigger happy fed with a deflationary backdrop. These combined drivers sent the price of BTC soaring which attracted institutional investors and mass retail participation. All of which have run exhausted, and begun to unravel. The deflationary back drop for the Feds expansion of the money supply has eroded, and recent surge in inflation has backed the Fed into a corner. While the Fed becomes increasingly more hawkish, over valued tech stocks and ETF’s slide, and the whole market looks to unravel from the tech sector out. BTC price action is set up for a painful unraveling.
For those who felt like they missed out on BTC as it climaxed to 69k, a new opportunity to enter the market long may come right on time for Jan 2023.
Long term I am bullish on bitcoin, but short term im short. Bitcoin can always go to zero, but I don’t expect it will. Neither do I expect it to bounce back fast. If this cycle continues we would expect a year of sharp declining then stagnant price ranging.
Regulation has been the talk of the town, and 2022 will most likely prove to be a year of regulation. Regulation will be more palpable, and politically acceptable considering the pain and losses of the constituents who were previously so enthusiastic about BTC and looking for someone to blame or bail them out. I expect bitcoin to receive blame as the rest of the markets unraveling risk assets, especially in the overvalued tech sector, will be correlated to bitcoins decline, or vice versa. All these factors will slow the recovery and BTC price will remain low until almost all hope is lost, and like clock work, BTC will begin to rise again.
Price action is no magic 8 ball, but IF we are dealing with a more hawkish fed, and a slightly less expanding money supply, it is likely to pave the way for completion of this 4 year cycle.
However, if the Fed ignores inflation, and continues to purposely debase the currency then all bets are off and we may see BTC rise to the top of the logarithmic channel in a melt up economy along side other highly speculative risk assets and the sky is the limit.
So we can some up this whole analysis with “If it doesn’t go down, it will go up, or at least sideways.” The blue rising trend line has been of particular interest on the logarithmic chart since 2015, and we find a confluence with the conclusion of this recent Head and Shoulders pattern thats been building. When price has broken down in the past which only happened once in March of 2020, we rushed to test the bottom of the channel at 3800. If this were to happen again we could be looking at ~20k bitcoin.
The future price of BTC, and all risk-on assets hang in one side of the balance, while inflation rages in the other, and Fed puts its finger on the scale.
-Jon
BTC has recently close below the 10W moving average and broken down from there. We are nearing completion of a head and shoulders pattern, which when complete will print a devastating double top.
If this price action ensues we may see 70%+ drawdown, not unlike previous. BTC’s bull / bear cycles which has been like clockwork, reoccurring ever 4 years, with the last year of the cycle bringing immeasurable pain to late investors with drawdowns in the 75%-85% range. The market always punishes those late to the party, and this cycle looks to be no different.
The peak of this bull run has been slightly less euphoric than the previous, and optimist can hope for a softer drawdown than what we’re used to. But the realist knows that the recent all time high needs to be digested by the markets, and the price action suggest we will witness something similar to past draw downs.
Fundamentally, Bitcoin’s last bull run was built upon government stimulus, ETF excitement, and an explosion in overvalued risk on momentum tech stocks fueled by a trigger happy fed with a deflationary backdrop. These combined drivers sent the price of BTC soaring which attracted institutional investors and mass retail participation. All of which have run exhausted, and begun to unravel. The deflationary back drop for the Feds expansion of the money supply has eroded, and recent surge in inflation has backed the Fed into a corner. While the Fed becomes increasingly more hawkish, over valued tech stocks and ETF’s slide, and the whole market looks to unravel from the tech sector out. BTC price action is set up for a painful unraveling.
For those who felt like they missed out on BTC as it climaxed to 69k, a new opportunity to enter the market long may come right on time for Jan 2023.
Long term I am bullish on bitcoin, but short term im short. Bitcoin can always go to zero, but I don’t expect it will. Neither do I expect it to bounce back fast. If this cycle continues we would expect a year of sharp declining then stagnant price ranging.
Regulation has been the talk of the town, and 2022 will most likely prove to be a year of regulation. Regulation will be more palpable, and politically acceptable considering the pain and losses of the constituents who were previously so enthusiastic about BTC and looking for someone to blame or bail them out. I expect bitcoin to receive blame as the rest of the markets unraveling risk assets, especially in the overvalued tech sector, will be correlated to bitcoins decline, or vice versa. All these factors will slow the recovery and BTC price will remain low until almost all hope is lost, and like clock work, BTC will begin to rise again.
Price action is no magic 8 ball, but IF we are dealing with a more hawkish fed, and a slightly less expanding money supply, it is likely to pave the way for completion of this 4 year cycle.
However, if the Fed ignores inflation, and continues to purposely debase the currency then all bets are off and we may see BTC rise to the top of the logarithmic channel in a melt up economy along side other highly speculative risk assets and the sky is the limit.
So we can some up this whole analysis with “If it doesn’t go down, it will go up, or at least sideways.” The blue rising trend line has been of particular interest on the logarithmic chart since 2015, and we find a confluence with the conclusion of this recent Head and Shoulders pattern thats been building. When price has broken down in the past which only happened once in March of 2020, we rushed to test the bottom of the channel at 3800. If this were to happen again we could be looking at ~20k bitcoin.
The future price of BTC, and all risk-on assets hang in one side of the balance, while inflation rages in the other, and Fed puts its finger on the scale.
-Jon