If bubble history is any guide, fractals gonna fractal... to 16K
Updated
We just dropped ~60% from the recent 19K peak down to just past the 0.705 retrace. We kissed the 200MA in the process, having fallen through the 100MA. Look familiar?
News of government crackdowns and exchanges being hacked have turned the euphoric parabolic moon-bulls into panicked waterfall dumping bears. Yawn.
For those of us who lived and traded through 2013-2014, this is some serious Deja Vú. But we've heard it all before. Lots mainstream news buzz about lucky bitcoin millionaires and then "security concerns". A flood of new retail "investors" suddenly getting burned after buying the top because their cousin told to them over xmas. There's nothing "new" about any of this drama for us old-timers at all. Only thing that has changed is the scale (price, market). And that's where fractals are so useful, because they appear so similar on multiple scales.
Look at the two peak charts. Just look at them. We had one deep dump and a quick first bulltrap at 17.2K. Then a second series of selloffs that broke support on the 100MA and the 50% fib level.
We're about to rebound back up to that 50% fib and 100MA zone, and once the bulls come out of their bunkers and are convinced (thanks to some good news, maybe the senate hearings, who knows) that we're not just going straight to hell -- they'll rally hard up to 15-16K (the 0.236 fib). Don't forget there's a bunch of futures contracts yet to be settled, and those were bullish this round ;)
As for this last dump to 7900, the long vs. short positions on Bitfinex already show the sentiment has changed. We should end up hugging the 100MA up top as the bulls gradually run out of steam (more slowly this time), and then price fully slumping underneath the 200MA will be the final sign that we're heading into another looooong bear winter (with further retraces to the 0.764 and beyond later).
Are there differences today? Sure. Is the price going to mimic the entire 2014 bubble deflation exactly? Of course not. But the similarities are there too. Ignore at your own peril. The market cap of bitcoin may have changed since 2014, the amount of people trading may have grown -- but bubble psychology is still human psychology, and weak hands get shaken just as easily today as they did back then. The market loves to move in the direction of maximum pain, and that's exactly what these whiplash reversals are good for: breaking the necks of the stubborn who refuse to turn their heads until it's too late :P
News of government crackdowns and exchanges being hacked have turned the euphoric parabolic moon-bulls into panicked waterfall dumping bears. Yawn.
For those of us who lived and traded through 2013-2014, this is some serious Deja Vú. But we've heard it all before. Lots mainstream news buzz about lucky bitcoin millionaires and then "security concerns". A flood of new retail "investors" suddenly getting burned after buying the top because their cousin told to them over xmas. There's nothing "new" about any of this drama for us old-timers at all. Only thing that has changed is the scale (price, market). And that's where fractals are so useful, because they appear so similar on multiple scales.
Look at the two peak charts. Just look at them. We had one deep dump and a quick first bulltrap at 17.2K. Then a second series of selloffs that broke support on the 100MA and the 50% fib level.
We're about to rebound back up to that 50% fib and 100MA zone, and once the bulls come out of their bunkers and are convinced (thanks to some good news, maybe the senate hearings, who knows) that we're not just going straight to hell -- they'll rally hard up to 15-16K (the 0.236 fib). Don't forget there's a bunch of futures contracts yet to be settled, and those were bullish this round ;)
As for this last dump to 7900, the long vs. short positions on Bitfinex already show the sentiment has changed. We should end up hugging the 100MA up top as the bulls gradually run out of steam (more slowly this time), and then price fully slumping underneath the 200MA will be the final sign that we're heading into another looooong bear winter (with further retraces to the 0.764 and beyond later).
Are there differences today? Sure. Is the price going to mimic the entire 2014 bubble deflation exactly? Of course not. But the similarities are there too. Ignore at your own peril. The market cap of bitcoin may have changed since 2014, the amount of people trading may have grown -- but bubble psychology is still human psychology, and weak hands get shaken just as easily today as they did back then. The market loves to move in the direction of maximum pain, and that's exactly what these whiplash reversals are good for: breaking the necks of the stubborn who refuse to turn their heads until it's too late :P
Trade active
First, to the folks who are freaking out about finding the perfect bottom of a panic dump -- just don't. Don't make a trade based upon ANYONE'S exact price target, definitely not mine. I just draw lines and arrows to better understand what possible TA factors might be governing the price action. But this kind of drop we just had is NOT about the market reaching a specific, sacred, cosmically-significant price before reversing. This has been a time-dependent dump, as the senate hearings on crypto were looming and if there's one thing crypto markets love to do, it's sell the speculative fears and rumors preceding a government "event" and buy the news. We could have stopped pretty much anywhere between 6-8K and it would have been a "valid" zone to wrap up this dump. If the hearings had happened a day earlier, would have changed the final moments of the dump, no doubt.But now the hearings are behind us, once again, a non-event. Nobody banned bitcoin (except China, they're still cranky over there), and if anything we got some positive, supportive soundbites from govt officials.
As for the historic comparison, it's still holding up quite nicely. In fact, all things considered, to have both bubble pullbacks end up being about 2/3 of the ATH (67% vs 69%) is hardly a coincidence. You don't have to believe my pink arrows (hell, I change them all the time, they're just projections of what COULD happen), but you can't ignore the similarities of these moves. If nothing else about this correction mimics the 2013 bubble deflating, just this pullback alone was a damn good guide for where to put your bids. Buying anywhere from 6-8k was a a sweet deal. Calling the perfect bottom is for suckers. Smart money was sucking up cheap coins the whole way down the slide...
Trade active
the rebound is real, the bear trap has claimed quite a few victims, and this rally out of the local bottom has been relentless. My short term target of 11,600 was touched today, and we might finally get a minor pullback -- but don't expect some deep dip for cheap coins. This is a just a breather, and if history keeps showing us the way, we have more steep rallying ahead of us still. 
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.