Bitcoin Structure and Anxiety - More Extremes Seem Likely
Markets are anxious and emotional. You can see it in the volatility. I think markets are likely to continue being volatile, and the emotion that comes with this means people can become quite irrational. This leads the market to extremes (both to the upside and downside).
Honestly, if Bitcoin is to make a new all-time high without going into a full-blown downward spiral to some seemingly unlikely low levels, this current test of the market's resolve is necessary. This cycle, most of the attention was stolen by memes, NFT's, and newly hyped projects like Solana. A sustainable Bitcoin rally only happens when people lose faith in other cryptocurrencies. Since we're now entering a period of extreme uncertainty and high anxiety, I would expect Bitcoin dominance to increase at least in the short term, as people look towards assets that seem more "reliable." The only scenario I see where Bitcoin sustains a new ATH, is if dominance also increases. If dominance continues to decrease, I think the probability of a longer bear market will increase. I'm thinking of something like this, to end the cycle. This would be my *ideal* scenario, but it probably won't play out this way.
Based on the broadening structure, a breakout should be pretty violent in either direction. As I noted in my previous analysis, Bitcoin was likely to see a pretty substantial move - either to break out of the wedge to the upside, or to break down to the bottom of the wedge. BTC broke down to the bottom of the wedge, and even briefly below it to the $42k level. You seriously can't make this up. Bitcoin peaked at $69k and of course drops to precisely $42k shortly thereafter. This proves to me that psychology (and even humor) are extremely important. Anyway, I think a breakout would likely send Bitcoin to one of the long term trendlines (pink, green X). I put a hypothetical target around $88k, because that seems like a nice number. No kidding, that's the only reason :) On the downside, Bitcoin can break to the bottom of the wedge again and test the $35-36k zone. If that fails, I think we can see a new low and a true bearish reversal, towards $24k. We're already at extreme fear, so I think we'd need even broader panic across all markets for Bitcoin to get to that level. I think it's possible, but I'm speculating on making a significant new high first. Unfortunately, many alts appear to have already entered bear markets, and would likely only be rescued by Bitcoin breaking ATH. For instance, the ADA chart looks pretty terrible, though I suppose consolidating near the previous all-time high is somewhat promising IF the market holds here.
But for another example, XLM has broken its uptrend, and would only be rescued by a big move up for the market.
Interestingly, the Stellar ecosystem/Stellar Decentralized Exchange has gotten a pretty incredible boost in liquidity through the AQUA (Aquarius) Liquidity pools and rewards system. AQUA has gone roughly 7x in price since mid-November. A Stellar-based project I've been following for years, Smartlands (SLT) had its first rewards distributed to people who stake the token yesterday. This is a huge milestone for the small project, which has been making pretty impressive advancements in Ukraine. Asset tokenization (including for real estate) is a pretty interesting application for crypto.
Anyway, I'll end that little tangent. if you look at the daily BTC chart, the Ultimate Oscillator is in a downtrend. Once it breaks the downtrend, I think downside risk will be limited for the time being. Price should also not drop much lower and linger there for too long. To resume sustained upside, Bitcoin will need to get back above $59k in a pretty violent upside move. This is perfectly possible.
My general opinion is that we're near a generational top for traditional markets. What this means for crypto is that if it's going to push higher, there will need to be a substantial narrative surrounding price action. The media will need to be convinced that crypto is the future of finance, and that everything else is crap. Then, we could get the mania needed for a "blow off" moment. If we get such a media push (and of course this is total speculation), I think it would fail and cause massive losses for everyone who buys into the hype. Only once the dust settles will people realize the true potential of this technology, and its capacity to secure trust and stability across many different industries.
We'll see what happens. This is meant for speculation and entertainment - not financial advice!
-Victor Cobra
Honestly, if Bitcoin is to make a new all-time high without going into a full-blown downward spiral to some seemingly unlikely low levels, this current test of the market's resolve is necessary. This cycle, most of the attention was stolen by memes, NFT's, and newly hyped projects like Solana. A sustainable Bitcoin rally only happens when people lose faith in other cryptocurrencies. Since we're now entering a period of extreme uncertainty and high anxiety, I would expect Bitcoin dominance to increase at least in the short term, as people look towards assets that seem more "reliable." The only scenario I see where Bitcoin sustains a new ATH, is if dominance also increases. If dominance continues to decrease, I think the probability of a longer bear market will increase. I'm thinking of something like this, to end the cycle. This would be my *ideal* scenario, but it probably won't play out this way.
Based on the broadening structure, a breakout should be pretty violent in either direction. As I noted in my previous analysis, Bitcoin was likely to see a pretty substantial move - either to break out of the wedge to the upside, or to break down to the bottom of the wedge. BTC broke down to the bottom of the wedge, and even briefly below it to the $42k level. You seriously can't make this up. Bitcoin peaked at $69k and of course drops to precisely $42k shortly thereafter. This proves to me that psychology (and even humor) are extremely important. Anyway, I think a breakout would likely send Bitcoin to one of the long term trendlines (pink, green X). I put a hypothetical target around $88k, because that seems like a nice number. No kidding, that's the only reason :) On the downside, Bitcoin can break to the bottom of the wedge again and test the $35-36k zone. If that fails, I think we can see a new low and a true bearish reversal, towards $24k. We're already at extreme fear, so I think we'd need even broader panic across all markets for Bitcoin to get to that level. I think it's possible, but I'm speculating on making a significant new high first. Unfortunately, many alts appear to have already entered bear markets, and would likely only be rescued by Bitcoin breaking ATH. For instance, the ADA chart looks pretty terrible, though I suppose consolidating near the previous all-time high is somewhat promising IF the market holds here.
But for another example, XLM has broken its uptrend, and would only be rescued by a big move up for the market.
Anyway, I'll end that little tangent. if you look at the daily BTC chart, the Ultimate Oscillator is in a downtrend. Once it breaks the downtrend, I think downside risk will be limited for the time being. Price should also not drop much lower and linger there for too long. To resume sustained upside, Bitcoin will need to get back above $59k in a pretty violent upside move. This is perfectly possible.
My general opinion is that we're near a generational top for traditional markets. What this means for crypto is that if it's going to push higher, there will need to be a substantial narrative surrounding price action. The media will need to be convinced that crypto is the future of finance, and that everything else is crap. Then, we could get the mania needed for a "blow off" moment. If we get such a media push (and of course this is total speculation), I think it would fail and cause massive losses for everyone who buys into the hype. Only once the dust settles will people realize the true potential of this technology, and its capacity to secure trust and stability across many different industries.
We'll see what happens. This is meant for speculation and entertainment - not financial advice!
-Victor Cobra
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