BITCOIN - Retrospective study + EW + prediction
Updated
My outlook on Bitcoin, and by extension the crypto market as a whole:
After the bullish run and buying climax of the last couple of months, I am expecting a bounce off of the 10k range --which has shown to elicit bullish motif in the past-- leading into an upthrust towards the 15-16k range followed by a final correction wave down to one of the lower support areas, possibly around 8-9k (ABC Correction shown on chart). This will form a pattern similar to what we have seen from a bullish bitcoin multiple times (Highlighted in grey boxes) and in EW terms complete an expanded flat correction. This sort of thing makes sense to me based on my perspective of market sentiment. Lots of late comers are still waiting for an attractive price, and are more nervous about missing the next run than they are about buying a local top. This sort of fomo makes me think investors will be too eager to jump into bitcoin, pushing btc to another high --or at least close to it's recent high-- prematurely before getting shaken about.
These conclusions are partly drawn from my reversion to the mean theory which I have followed since last year (posted in private forums, proof available if necessary). The reversion to the mean theory is made up of two logarithmic trend lines defined in 2017 creating a channel which I believe to represent the natural exponential growth of Bitcoin when it is trending in it's organic manner, as opposed to the extremely exaggerated hyperbolic trend Bitcoin expresses when it is in a bubble. So far this theory and the lines that define it have predicted multiple highs and lows in bitcoin, through 2017 when they were formed and tested, and this year predicting the yearly low (TBC - seems pretty likely though). This theory supports the idea of a 1-2 month correction and retest of the upper log trend line, exactly as was experienced at the end of 2017 (grey box on chart).
I am taking profits on BTCUSD Short trades and looking at taking short-term long positions on BTC and alts.
After the bullish run and buying climax of the last couple of months, I am expecting a bounce off of the 10k range --which has shown to elicit bullish motif in the past-- leading into an upthrust towards the 15-16k range followed by a final correction wave down to one of the lower support areas, possibly around 8-9k (ABC Correction shown on chart). This will form a pattern similar to what we have seen from a bullish bitcoin multiple times (Highlighted in grey boxes) and in EW terms complete an expanded flat correction. This sort of thing makes sense to me based on my perspective of market sentiment. Lots of late comers are still waiting for an attractive price, and are more nervous about missing the next run than they are about buying a local top. This sort of fomo makes me think investors will be too eager to jump into bitcoin, pushing btc to another high --or at least close to it's recent high-- prematurely before getting shaken about.
These conclusions are partly drawn from my reversion to the mean theory which I have followed since last year (posted in private forums, proof available if necessary). The reversion to the mean theory is made up of two logarithmic trend lines defined in 2017 creating a channel which I believe to represent the natural exponential growth of Bitcoin when it is trending in it's organic manner, as opposed to the extremely exaggerated hyperbolic trend Bitcoin expresses when it is in a bubble. So far this theory and the lines that define it have predicted multiple highs and lows in bitcoin, through 2017 when they were formed and tested, and this year predicting the yearly low (TBC - seems pretty likely though). This theory supports the idea of a 1-2 month correction and retest of the upper log trend line, exactly as was experienced at the end of 2017 (grey box on chart).
I am taking profits on BTCUSD Short trades and looking at taking short-term long positions on BTC and alts.
Note
My advice for the unsure investor's or trader's cat:Regardless of anyone's prediction, if I was a cat I wouldn't risk getting left in the dust, it is probably best to keep a positive delta on BTC and play volatility in the alts, as well as hedging BTC holdings with futures/margin positions. The biggest effect on profitability is stress, which is affected by exposure/in-exposure (FEAR/FOMO) to the market (among other things). A cat can limit it's stress by ensuring exposure is proportional to it's own reasonable foresight and is rarely 100% either way.
However, this volatility is definitely worth playing at whatever capacity cats feel comfortable with, we haven't had 20-40% swings for a while. I don't think it's worth worrying too much about getting the best price on long term holdings though, there's never really a bad time to buy btc, only bad times to sell.
As Bitcoin consolidates, low MC alts that might enter price discovery over the next 1-2 months will be good plays. Also old favourites should get a decent bounce and recover some levels, I wouldn't get too attached though.
Cover all bases and remember what the last couple of years have taught all our cat's at one point or another, we can be dead wrong when we think we are dead right!
Note
Chart depreciated. See newer published charts for current outlook
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