Another View On The Bitcoin Market Cycle (BLX + DXY + DOMINANCE)
It's been a while since I've made a longer written post. Unfortunately for those of you who like reading, I'm keeping this one short. I do have my main market cycle chart with the phases numbered, but this view also includes DXY (the USD currency index).
This is color coded as follows:
Lines -
Pink: DXY/USD
Yellow: BTC
Blue: BTC Dominance
Boxes-
Teal: The USD (DXY) bounces from lows and Bitcoin/crypto enters a bear market.
Magenta: Accumulation at first bottom for Bitcoin. USD moves sideways and Dominance increases during the BTC accumulation process.
Dark Blue: Dominance begins to decline as Bitcoin accumulation ends. Note how the accumulation period in 2016 differs from the recent one. Interestingly, altcoins are behaving much more like Bitcoin from 2016, which I will show below in another chart.
Red: Dominance achieves its first major breakdown and altcoins rally, while Bitcoin fails to break all-time-high. The market stagnates and the USD begins to break out. I believe we could be at the end of this phase.
Purple: First, dominance rises slightly as Bitcoin finally heads towards all-time-high. The USD moves up a bit but plateaus. In this current cycle, it's unclear to me whether we have already begun this phase. It's also interesting to speculate what could happen with DXY here. In the last cycle, DXY actually moved up at first during this period. But right now, DXY and Dominance are tracking each other, even if it's only a loose correlation. Part of me thinks that if DXY moves up, dominance will do the same, at least for a short while until Bitcoin breaks ATH. However, if DXY gets rejected here and heads to new lows, I can see Dominance also dropping substantially.
Interestingly, altcoins seem to be repeating Bitcoin's bottoming cycle from 2015. I've made this comparison a number of times over the last couple of years. So far, it's actually playing out. The first higher high within the bottoming structure occurred not too long ago.
Look at that!
Key differences between the two cycles:
1) This time, the USD and Dominance seem to be somewhat correlated in terms of overall movement, but not necessarily day-to-day.
2) Bitcoin has spent much less time near the cycle lows (sub $6K)
3) Altcoins exist now, and seem to be repeating Bitcoin's bottoming action from 2015. Bitcoin and altcoins seem to be behaving differently at different times - not moving together as much as they have in the past.
Based on the fact that, given the current economic situation, DXY (both strength and supply) seems to be heavily influencing markets, I am a little doubtful that a sustained rally in DXY would actually result in bullish price appreciation for Bitcoin. As such, I also expect altcoins to perform quite poorly in this scenario. However, if we do follow the last cycle, we can see dominance continue to increase slowly until Bitcoin tests its old ATH.
In one of my last written crypto analyses, I suggested buying at the 100d MA for altcoins was the way to go, but only if we're seeing a repeat of 2016-2018. Ultimately I was right in assuming a correction to that particular Moving Average would happen relatively soon. I do think the 100d MA will need to continue to hold, for the most part. Otherwise, I will have to look at more bearish/less optimistic projections. You can see it holding quite well so far (green):
Last bull run for comparison, with the 100d MA. Just look at how many times it held!
Anyway, that's basically it! I wanted to post this chart, mostly to press play and see what happens. This is not financial advice. This is to be used for education, speculation, and entertainment only. Thanks for reading!
-Victor Cobra
This is color coded as follows:
Lines -
Pink: DXY/USD
Yellow: BTC
Blue: BTC Dominance
Boxes-
Teal: The USD (DXY) bounces from lows and Bitcoin/crypto enters a bear market.
Magenta: Accumulation at first bottom for Bitcoin. USD moves sideways and Dominance increases during the BTC accumulation process.
Dark Blue: Dominance begins to decline as Bitcoin accumulation ends. Note how the accumulation period in 2016 differs from the recent one. Interestingly, altcoins are behaving much more like Bitcoin from 2016, which I will show below in another chart.
Red: Dominance achieves its first major breakdown and altcoins rally, while Bitcoin fails to break all-time-high. The market stagnates and the USD begins to break out. I believe we could be at the end of this phase.
Purple: First, dominance rises slightly as Bitcoin finally heads towards all-time-high. The USD moves up a bit but plateaus. In this current cycle, it's unclear to me whether we have already begun this phase. It's also interesting to speculate what could happen with DXY here. In the last cycle, DXY actually moved up at first during this period. But right now, DXY and Dominance are tracking each other, even if it's only a loose correlation. Part of me thinks that if DXY moves up, dominance will do the same, at least for a short while until Bitcoin breaks ATH. However, if DXY gets rejected here and heads to new lows, I can see Dominance also dropping substantially.
Interestingly, altcoins seem to be repeating Bitcoin's bottoming cycle from 2015. I've made this comparison a number of times over the last couple of years. So far, it's actually playing out. The first higher high within the bottoming structure occurred not too long ago.
Look at that!
Key differences between the two cycles:
1) This time, the USD and Dominance seem to be somewhat correlated in terms of overall movement, but not necessarily day-to-day.
2) Bitcoin has spent much less time near the cycle lows (sub $6K)
3) Altcoins exist now, and seem to be repeating Bitcoin's bottoming action from 2015. Bitcoin and altcoins seem to be behaving differently at different times - not moving together as much as they have in the past.
Based on the fact that, given the current economic situation, DXY (both strength and supply) seems to be heavily influencing markets, I am a little doubtful that a sustained rally in DXY would actually result in bullish price appreciation for Bitcoin. As such, I also expect altcoins to perform quite poorly in this scenario. However, if we do follow the last cycle, we can see dominance continue to increase slowly until Bitcoin tests its old ATH.
In one of my last written crypto analyses, I suggested buying at the 100d MA for altcoins was the way to go, but only if we're seeing a repeat of 2016-2018. Ultimately I was right in assuming a correction to that particular Moving Average would happen relatively soon. I do think the 100d MA will need to continue to hold, for the most part. Otherwise, I will have to look at more bearish/less optimistic projections. You can see it holding quite well so far (green):
Last bull run for comparison, with the 100d MA. Just look at how many times it held!
Anyway, that's basically it! I wanted to post this chart, mostly to press play and see what happens. This is not financial advice. This is to be used for education, speculation, and entertainment only. Thanks for reading!
-Victor Cobra
