BTC Potential Bear Market Bottoms
Updated
Yesterday's Crypto and traditional market sell off in response to the FOMC 50bp hike is a strong sign that market participants believe there is more downside yet to come in 2022.
As I mentioned in my post yesterday. Link 👇 there are a number of key resistance levels which
BTC had to overcome. The market sent a strong signal yesterday that, for now, those levels will hold.
The key question is when will the market bottom? Here are my thoughts:
1) We will almost certainly now test the Weekly Support (WS) level at £32K.
If this had a long wick down into the £29K levels as seen back in June/July '21 this would be a signal that there are allot of buyers at this level and it could hold as the market bottom, at least in the short/mid term.
This would be a 58% drop from the All Time High (ATH) of 69K. We have traditionally seen bigger (75-90%) drops from ATH for BTC cycles BUT this cycle also has a much smaller percentage increase between cycle tops (from £20K to £69K). Since the market cycles are constricting it would seem probable to see a lower drop from ATH this time.
2) As Peter Brandt noted (twitter.com/PeterLBrandt/status/1520551413968908288) a bear channel invalidation typically results in a drop equal to the width of the channel - this would also indicate a drop in price in the £32K to £28K range.
3) Given that the cycle is constricting and that we can learn something from prior market patterns I have overlayed (in light blue) the price action from the prior cycle top & bottom (Dec 2017 onwards). I have constricted the pattern so it roughly maps over the price action we have seen so far in this bear cycle from the ATH at £69K.
This scenario would see price bottoming out at
25K by Nov/Dec 2022 at ~65% drop from ATH.
4) We could go back down to test the prior cycle ATH of 2017 at 20K which would be a 70% drop from this ATH. This has never happened before in prior BTC cycles and I think it highly unlikely.
Not financial advice, or prediction. Simply providing some data to help us guide our ships through the stormy seas.
I would love to hear views from others particularly if you see things playing out differently.
As I mentioned in my post yesterday. Link 👇 there are a number of key resistance levels which
BTC had to overcome. The market sent a strong signal yesterday that, for now, those levels will hold. The key question is when will the market bottom? Here are my thoughts:
1) We will almost certainly now test the Weekly Support (WS) level at £32K.
If this had a long wick down into the £29K levels as seen back in June/July '21 this would be a signal that there are allot of buyers at this level and it could hold as the market bottom, at least in the short/mid term.
This would be a 58% drop from the All Time High (ATH) of 69K. We have traditionally seen bigger (75-90%) drops from ATH for BTC cycles BUT this cycle also has a much smaller percentage increase between cycle tops (from £20K to £69K). Since the market cycles are constricting it would seem probable to see a lower drop from ATH this time.
2) As Peter Brandt noted (twitter.com/PeterLBrandt/status/1520551413968908288) a bear channel invalidation typically results in a drop equal to the width of the channel - this would also indicate a drop in price in the £32K to £28K range.
3) Given that the cycle is constricting and that we can learn something from prior market patterns I have overlayed (in light blue) the price action from the prior cycle top & bottom (Dec 2017 onwards). I have constricted the pattern so it roughly maps over the price action we have seen so far in this bear cycle from the ATH at £69K.
This scenario would see price bottoming out at
25K by Nov/Dec 2022 at ~65% drop from ATH. 4) We could go back down to test the prior cycle ATH of 2017 at 20K which would be a 70% drop from this ATH. This has never happened before in prior BTC cycles and I think it highly unlikely.
Not financial advice, or prediction. Simply providing some data to help us guide our ships through the stormy seas.
I would love to hear views from others particularly if you see things playing out differently.
Note
So far the price action is responding very well to the ghost bars pattern taken from the Dec 2017 bear market. If it continues to follow this pattern then we will see support at the
29K-32K range, as has happened so far in the bounce today from yesterday's local low. As Twain said “History Doesn't Repeat Itself, but It Often Rhymes”
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