Bitcoin - Short And Medium Term
Updated
Along with the video I posted today, I decided to do a new writeup on Bitcoin. As you can see here, I'm comparing the BLX and BTCUSD Bitstamp charts side by side, to show where various long term supports and resistances may align. I'm not including my "market cycle" boxes in this analysis, because I'm doing something a little different here. I did call the recent top perfectly (that analysis is linked at bottom) as well as anticipating the ensuing drop in volume and volatility (also linked at bottom). I used the trendlines drawn on these charts to do so, as well as comparing impulse moves in the previous bull market to current price action.
What's interesting is that the recent rejection near the top of the channel on Bitstamp perfectly aligns with a previous broken log trend support on the BLX chart. I've seen a couple of other analysts on here notice this as well. What this shows is that Bitcoin actually does have some extra room to fall, if the bullish channel I've been talking about fails to hold. Right now, we seem to be drifting lower towards the bottom of the channel and selling momentum actually seems to be gaining a bit. The reason I say this is that the candles are drifting further down away from the recent downtrend. If we lose the 9K area it's perfectly possible to test the low 8K area and still remain on a bullish trend.
If we look at the Coinbase chart, the same channel is actually much closer to current prices (in the $9100 area). Perhaps we could see some sort of bounce there (actually as I was writing this we tested that support a bit and formed a nice bullish hammer).
On Bitfinex, the channel support is in the high 8K area.
What is this all telling us? I think it means that we can MAYBE expect Bitcoin to drop towards even the 8.2K if it cannot hold the 9.1K area. If we fall below 8.2K, we must look at other supports. This is why I've included the BLX chart in this analysis. On that chart, I drew a couple of speculative squiggles back in March (green and yellow). The yellow one is closest to what has played out so far - getting rejected at the previously broken log trend support. Since the BLX chart is the oldest chart, maybe I should give it some credence here. If we're going to follow that scenario I drew in March, it's very possible that Bitcoin corrects even deeper towards 6.4K. You can see how that's possible on this chart.
However, if Bitcoin is to follow a similar pattern from the last bull market, we can't blindly assume that Bitcoin will correct that much lower. With something like this, it's important to recognize the supports and resistances and realize that we're clearly still on a long term bullish trend.
For speculative purposes, here are the support areas where Bitcoin CAN fall to, in case one is actively trading and waiting to ladder in buys. In my opinion, current prices are a decent place to start re-entering if one sold above
13K, but here are some other areas to look at:
$9300
$9100
$8700-8900
$8200-8300
If bullish channel is broken:
$7400-7500
$5900-6400
Regardless of where Bitcoin finds support and starts moving up again, I think the earliest we could see the next crypto bubble peak is around the time of the next Bitcoin halving in April 2020. If you look at my top trendlines on both the above charts, you can see that even within 8 months, Bitcoin can hit 100K prices. This is very soon, so I think time may be running out to load up on some crypto assets, particularly promising ones that haven't shown much price appreciation as of yet. This analysis is mainly about Bitcoin for a change, but I'm an alt guy at heart so I can't help but talk about them a little bit. No matter what happens with Bitcoin in the short-medium term, I think altcoins have a strong chance of reclaiming some dominance here. However, the coins with the biggest gains may wait until the latter half of the cycle for a number of reasons:
1) Retail FOMO/new money coming in if Bitcoin breaches ATH
2) Whales not wanting to start an altcoin run until they can cash out without having to pay serious capital gains taxes (meaning they're already in certain coins, and have been for a while). If the peak of the bubble occurs sometime next year, their tax burden (particularly in the U.S.) will be significantly lower. This matters to whales.
3) Clarity with regulation
I want to note that in November I speculated that the earliest the next bull market could begin would be January-February 2019. February is when Bitcoin started slowly moving up, while Litecoin began its bull run. It'll be fun to see if the next bubble peak occurs near when I'm anticipating : )
This bear market hit altcoins the hardest, and as such, the bottoming for alts was much more severe, and it arguably hasn't even finished yet for many of them. This makes the recent bear market similar to the 2015 bear market for Bitcoin, not only from a charting perspective, but from a psychological one as well. Here is a chart comparison that I posted on Twitter earlier today:
We'll see what happens! This is not financial advice. This is all speculative. i do this for fun, and to record my thought process as I experience and analyze this crazy market.
-Victor Cobra
What's interesting is that the recent rejection near the top of the channel on Bitstamp perfectly aligns with a previous broken log trend support on the BLX chart. I've seen a couple of other analysts on here notice this as well. What this shows is that Bitcoin actually does have some extra room to fall, if the bullish channel I've been talking about fails to hold. Right now, we seem to be drifting lower towards the bottom of the channel and selling momentum actually seems to be gaining a bit. The reason I say this is that the candles are drifting further down away from the recent downtrend. If we lose the 9K area it's perfectly possible to test the low 8K area and still remain on a bullish trend.
If we look at the Coinbase chart, the same channel is actually much closer to current prices (in the $9100 area). Perhaps we could see some sort of bounce there (actually as I was writing this we tested that support a bit and formed a nice bullish hammer).
On Bitfinex, the channel support is in the high 8K area.
What is this all telling us? I think it means that we can MAYBE expect Bitcoin to drop towards even the 8.2K if it cannot hold the 9.1K area. If we fall below 8.2K, we must look at other supports. This is why I've included the BLX chart in this analysis. On that chart, I drew a couple of speculative squiggles back in March (green and yellow). The yellow one is closest to what has played out so far - getting rejected at the previously broken log trend support. Since the BLX chart is the oldest chart, maybe I should give it some credence here. If we're going to follow that scenario I drew in March, it's very possible that Bitcoin corrects even deeper towards 6.4K. You can see how that's possible on this chart.
However, if Bitcoin is to follow a similar pattern from the last bull market, we can't blindly assume that Bitcoin will correct that much lower. With something like this, it's important to recognize the supports and resistances and realize that we're clearly still on a long term bullish trend.
For speculative purposes, here are the support areas where Bitcoin CAN fall to, in case one is actively trading and waiting to ladder in buys. In my opinion, current prices are a decent place to start re-entering if one sold above
13K, but here are some other areas to look at:$9300
$9100
$8700-8900
$8200-8300
If bullish channel is broken:
$7400-7500
$5900-6400
Regardless of where Bitcoin finds support and starts moving up again, I think the earliest we could see the next crypto bubble peak is around the time of the next Bitcoin halving in April 2020. If you look at my top trendlines on both the above charts, you can see that even within 8 months, Bitcoin can hit 100K prices. This is very soon, so I think time may be running out to load up on some crypto assets, particularly promising ones that haven't shown much price appreciation as of yet. This analysis is mainly about Bitcoin for a change, but I'm an alt guy at heart so I can't help but talk about them a little bit. No matter what happens with Bitcoin in the short-medium term, I think altcoins have a strong chance of reclaiming some dominance here. However, the coins with the biggest gains may wait until the latter half of the cycle for a number of reasons:
1) Retail FOMO/new money coming in if Bitcoin breaches ATH
2) Whales not wanting to start an altcoin run until they can cash out without having to pay serious capital gains taxes (meaning they're already in certain coins, and have been for a while). If the peak of the bubble occurs sometime next year, their tax burden (particularly in the U.S.) will be significantly lower. This matters to whales.
3) Clarity with regulation
I want to note that in November I speculated that the earliest the next bull market could begin would be January-February 2019. February is when Bitcoin started slowly moving up, while Litecoin began its bull run. It'll be fun to see if the next bubble peak occurs near when I'm anticipating : )
This bear market hit altcoins the hardest, and as such, the bottoming for alts was much more severe, and it arguably hasn't even finished yet for many of them. This makes the recent bear market similar to the 2015 bear market for Bitcoin, not only from a charting perspective, but from a psychological one as well. Here is a chart comparison that I posted on Twitter earlier today:
We'll see what happens! This is not financial advice. This is all speculative. i do this for fun, and to record my thought process as I experience and analyze this crazy market.
-Victor Cobra
Note
Bitcoin has PERFECTLY respected the channel on Coinbase. Moving up towards the 112K major horizontal resistance level. Note
Bitcoin dominance is showing a glaring sell on all indicators. Let's see if it continues to defy and go up towards 77-80%. Note
After getting rejected multiple times at the 112K resistance, it's not surprising that Bitcoin fell back to support. This is in line with what I've been talking about, in terms of weeks of sideways consolidation. Many traders are likely getting frustrated, but the trend is still up. Note
In terms of dominance, I think it could drop any time. Two scenarios in which this could happen:1) Bitcoin confirms more sideways movement. Holding above 10K is important.
2) Bitcoin makes a quick, nasty move towards a new high (16K, potentially). Alts initially slump, but ultimately some break out once Bitcoin tests new highs.
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