Bitcoin Supercycle theory - bottom in
Updated
Bull theory – Bottom is already in for Bitcoin 
BTCUSD
There are severeal technical indicators and measurements that suggest it could be.
Firstly, the 50-week MA already crossed the 100-week MA. Each time this occured, the bottom was already in, both times as the weekly RSI dipped into oversold conditions. The price behavior has also been similar to the 2014 bear market for months with a drawdown of -53% below the 50-100WMA. (-But there is more time for that special fractal in another post.)
Secondly, this current level happens to be a 0.786 Fibonacci Retracement of our entire run up from Covid-19 to the November top in addition as it is the support oft he previous all time high(2017). Furthermore sitting right now on the weekly 300MA.
The Fear and Greed Index has only registered prolonged periods in Extreme Fear(below 10) as we have witnessed at the 2018 capitulation bottom and the 2020 Covid-19 selloff.
Therefore the capitulation happened in June, with Luna (+UST), the depegging of USDT, 3AC, blockfi, Celsius… which are all max fear events. But everyone is now expecting 13-15k thinking we are in the middle of a bear market rally. While the GBTC Grayscale Bitcoin Trust value sitting already at chart comparable 11k.
From technical analysis we couldn’t have bottomed more.
Even on chain indicators signal the bottom is near. NUPL, RHODL Ratio, Puell Multipli, Entity adjusted Dormancy-Flow, MVRV-Z Score, 2Year MA Multiplier, CBBI-Bull Run Index. We have already seen arguably the most extreme network capitulation in Bitcoin‘s history, with now also a Hash Ribbons blue ball on the daily timeframe.
Bitcoin is trading at a fair value. I am still hoping for an expanding flat 3-3-5 elliot wave correction, a double three WXY pattern, or even a simple overshooting B of an ABC.
But if that 17,6k gets structural taken out we are not talking about recession but deflationary depression and just the start of a longer bear market.
Fortunately the global narrative is shifting. People are now saying we are going into a deep recession. CNBC‘s Cramer saying to avoid all speculative investments like crypto, while the worst is priced in already. It starts to look like the main worry is becoming recession with deflation and not inflation now. That idea gets strengthened by US-CPI showing a second month of decline. Based on the 5-year break-even inflation rate, a leading indicator, it can already be said with certainty that we have seen the short-term peak in inflation. And that inflation is expected to recover further through 2023. Keep in mind every time inflation tops - Stock market rallies! Once the consumer price index print comes in significantly lower (September~7,9% but October ~7%) the stage will be set for a Powell flip flop. FED pivots systematically lead to strong rallies. So November FOMC potentially for a midterm or year-end Christmas rally. This means that the Fed will step back on better CPI-data and inflation will eventually start running again in 2023.
Nobody does see a fruitful future for investments right now. To trick the retail there is no need for a positive narrative so everyone keeps being bearish. Only technical analysis matters.
Afterwards we will see what the news catalyst was.
Btc may range more than equities first, then rotation into more risk happens later.
Hence Bitcoin Dominance will rise and Altcoins will pump after Bitcoin. But Btc is not yet in a multi-year bear market within its 4 year cycle because BTC.D would be at that point much higher while we are seeing new 4 year lows. Something is different.
As a trader you have to adapt the possibilities. Invalidation of that bull scenario if we set a new low in Bitcoin. Then there will be much bigger problems in the market. So all eyes on the DXY and the behavior oft he FED, because Btc is at this time just the risk-taking follower of Nasdaq and SPX.
Special greetings to Blockchain Backer, following him for almost a year.
BTCUSDThere are severeal technical indicators and measurements that suggest it could be.
Firstly, the 50-week MA already crossed the 100-week MA. Each time this occured, the bottom was already in, both times as the weekly RSI dipped into oversold conditions. The price behavior has also been similar to the 2014 bear market for months with a drawdown of -53% below the 50-100WMA. (-But there is more time for that special fractal in another post.)
Secondly, this current level happens to be a 0.786 Fibonacci Retracement of our entire run up from Covid-19 to the November top in addition as it is the support oft he previous all time high(2017). Furthermore sitting right now on the weekly 300MA.
The Fear and Greed Index has only registered prolonged periods in Extreme Fear(below 10) as we have witnessed at the 2018 capitulation bottom and the 2020 Covid-19 selloff.
Therefore the capitulation happened in June, with Luna (+UST), the depegging of USDT, 3AC, blockfi, Celsius… which are all max fear events. But everyone is now expecting 13-15k thinking we are in the middle of a bear market rally. While the GBTC Grayscale Bitcoin Trust value sitting already at chart comparable 11k.
From technical analysis we couldn’t have bottomed more.
Even on chain indicators signal the bottom is near. NUPL, RHODL Ratio, Puell Multipli, Entity adjusted Dormancy-Flow, MVRV-Z Score, 2Year MA Multiplier, CBBI-Bull Run Index. We have already seen arguably the most extreme network capitulation in Bitcoin‘s history, with now also a Hash Ribbons blue ball on the daily timeframe.
Bitcoin is trading at a fair value. I am still hoping for an expanding flat 3-3-5 elliot wave correction, a double three WXY pattern, or even a simple overshooting B of an ABC.
But if that 17,6k gets structural taken out we are not talking about recession but deflationary depression and just the start of a longer bear market.
Fortunately the global narrative is shifting. People are now saying we are going into a deep recession. CNBC‘s Cramer saying to avoid all speculative investments like crypto, while the worst is priced in already. It starts to look like the main worry is becoming recession with deflation and not inflation now. That idea gets strengthened by US-CPI showing a second month of decline. Based on the 5-year break-even inflation rate, a leading indicator, it can already be said with certainty that we have seen the short-term peak in inflation. And that inflation is expected to recover further through 2023. Keep in mind every time inflation tops - Stock market rallies! Once the consumer price index print comes in significantly lower (September~7,9% but October ~7%) the stage will be set for a Powell flip flop. FED pivots systematically lead to strong rallies. So November FOMC potentially for a midterm or year-end Christmas rally. This means that the Fed will step back on better CPI-data and inflation will eventually start running again in 2023.
Nobody does see a fruitful future for investments right now. To trick the retail there is no need for a positive narrative so everyone keeps being bearish. Only technical analysis matters.
Afterwards we will see what the news catalyst was.
Btc may range more than equities first, then rotation into more risk happens later.
Hence Bitcoin Dominance will rise and Altcoins will pump after Bitcoin. But Btc is not yet in a multi-year bear market within its 4 year cycle because BTC.D would be at that point much higher while we are seeing new 4 year lows. Something is different.
As a trader you have to adapt the possibilities. Invalidation of that bull scenario if we set a new low in Bitcoin. Then there will be much bigger problems in the market. So all eyes on the DXY and the behavior oft he FED, because Btc is at this time just the risk-taking follower of Nasdaq and SPX.
Special greetings to Blockchain Backer, following him for almost a year.
Note
Nothing changed, BTC still in the range. Oscillators show it may take a while. My beds are that 17.6k will be the bottom if the global economy will allow that to remain true in the next months. My advice, don't listen to fud from the news around you. Stick to your plan and don't forget every Wyckoff Accumulation has a spring (at least a second test of that low). At 18k there are a lot of liquidations, stay alert.Note
In the last few days we have seen another media capitulation event. First the dispute between Binance(CZ) and FTX(SBF) and then the unreal bankruptcy of Alameda and FTX Group(second largest crypto exchange). It is an absolute scandal that speaks against the industry and for much-needed regulation. How the consequences will affect the market and whether other companies will go bankrupt as a result is not yet foreseeable. Fear across the market with USDT depegging again, confidence is at an all time low. There is extreme skepticism of crypto right now. Who in their right mind would buy? Well, there has never been a bottom that is exiting, they are always horrifying.
Chances of it being bottoming formation have dropped drastically after 17.6k has been taken out structurally. The Wyckoff Accumulation schematic with PO3 is the only last bullish hope. For this, 21.6k must be reached as quickly as possible with an impulsive bullish upward movement. A weekly close back inside the range would be a good sign. If we don't get consistently above 18.5k BTC again in the near future, this was just the bearish retest by positive falling inflation numbers and we will see much lower prices and spend even more time down here until next halving in 2024.
Everyone calling 10-12k next targets may be right as a stock index correction can be expected. Don't forget, there is also a CME Futures opening gap at 9.7k BTC from 07/27/2020.
Crazy times but stick to your plan.
Note
Nothing changed - volume decreases. Let's see if the new year invalidates this idea!
Note
Initial range target hit.
Update: Small changes in expansion size after new impulse structure.
Trade closed: target reached
Last correction took longer than expected. Can't predict time. Patience is key.
Now let's look at how high Bitcoin will push and how strong we get our Altcoin-Season rotation in the coming weeks.
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