The Three Fates of BTC
Updated
I think at this point we can very clearly define the areas of bear risk and bullish breakout in BTC.
I've seen various calls for pullbacks to the 50K area and then bullish continuation. While that does make a lot of sense in ways I find that hard to expect given BTC has never done that previously. In all instances where BTC has made a bullish breakout the breakout has held the retest of the high and then boomed.
There's only one instance that didn't happen and that was the last high. There a false breakout was made and it dropped 70%.
Now, that was very interesting because that was a change in the behaviour of the BTC. A big change. BTC had always extended from new highs and it'd never broken the previous low. Both of these things happened for the first time. It was this observation prompted the post questioning if the BTC uptrend had broken in 2022.
Initially, I'd really only wanted to make this observation on the trend structure but in the comments of that post I ran into various recurring objections and people telling me I had to do my research. So I did. That's resulted in a huge string of BTC related post in which I called it a speculative mania and implied a mega crash when that popped.
I don't really want to talk any more about BTC theory and from now on just want to focus on TA, which is what I really use to trade anyway. Theory is for dinner chat.
People Have NO FEAR of False Breakouts
The more common pattern of breakouts in crypto (And in stocks for the most part) has been once the break is made a strong trend move follows. People are highly conditioned to expect this. Indeed, not expecting this would lead to missing the more so many times in the past people feel like it's essential they are in for the breakout.
Breakouts are great, but false breakouts are the most horrific thing in the world to be on the wrong side of. It really is valid to be extremely cautious during the early phase of a possible breakout. If you get caught on the wrong side of one and are stubborn and slow to accept you're wrong, you can get crushed really bad.
A lot of the pattern based analysis from bulls has its merit. It's certainly the case more times than not buying the breakout in BTC was a good idea. However, a lot of analysis overlooks the extreme risk there is to the pattern failure. Once a pattern has become well observed, accepted and broadly expected; if it fails, it does so spectacularly.
There's quite a narrow zone in which a false breakout is most liable to form. People push the FOMO hard that if you miss this incredible entry opportunity right now you'll be poor for the rest of your life. It's really not the case. There's small windows in which the bear risk is highest and if those areas fail it's usually simple to buy a retest of them.
If BTC is making a false breakout, the high is either in or the next spike will fail and be the terminal spike of the rally.
Any type of false breakout will setup a rug pull. That's what happens. The sketchiest of moves come off false breakouts.
People who have no fear of false breakouts do not yet have adequate experience of them.
At this point we can define different basic roadmaps:
If we break down under 60K, we might be Elliot wave 3 and we should expect a consistent down trend growing in momentum.
If we make a really strong spike but stall out at the 1.61 extension of the BC leg, we have a really strong case for a butterfly top and consistent downtrend.
If we break over the 1.61 extension of the full range of the recent drop, this is most likely bullish continuation and signs of a real breakout.
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The risk of a false breakout I think is highly under respected.
People expect the exact same patterns on 5.5% rates as they seen on 0.5%.
Most analysis is BTC-centric and does not consider the risk on corelation with indices.
No consideration is in the models used for exogenous risks and fat tails.
While a false breakout is statistically unlikely based on BTC's trading history, it's also fair to say there was a rug pull in 100% of the times it happened.
And if there's a rug pull after the intensity of that momentum up, it'd probably be the most significant bear event BTC has ever seen.
If the bull breakout is going to come, there'll be plenty of meat on the bone later. This really is the spot where it's most worth being cautious.
A bearish rejection could be very unforgiving.
I've seen various calls for pullbacks to the 50K area and then bullish continuation. While that does make a lot of sense in ways I find that hard to expect given BTC has never done that previously. In all instances where BTC has made a bullish breakout the breakout has held the retest of the high and then boomed.
There's only one instance that didn't happen and that was the last high. There a false breakout was made and it dropped 70%.
Now, that was very interesting because that was a change in the behaviour of the BTC. A big change. BTC had always extended from new highs and it'd never broken the previous low. Both of these things happened for the first time. It was this observation prompted the post questioning if the BTC uptrend had broken in 2022.
Initially, I'd really only wanted to make this observation on the trend structure but in the comments of that post I ran into various recurring objections and people telling me I had to do my research. So I did. That's resulted in a huge string of BTC related post in which I called it a speculative mania and implied a mega crash when that popped.
I don't really want to talk any more about BTC theory and from now on just want to focus on TA, which is what I really use to trade anyway. Theory is for dinner chat.
People Have NO FEAR of False Breakouts
The more common pattern of breakouts in crypto (And in stocks for the most part) has been once the break is made a strong trend move follows. People are highly conditioned to expect this. Indeed, not expecting this would lead to missing the more so many times in the past people feel like it's essential they are in for the breakout.
Breakouts are great, but false breakouts are the most horrific thing in the world to be on the wrong side of. It really is valid to be extremely cautious during the early phase of a possible breakout. If you get caught on the wrong side of one and are stubborn and slow to accept you're wrong, you can get crushed really bad.
A lot of the pattern based analysis from bulls has its merit. It's certainly the case more times than not buying the breakout in BTC was a good idea. However, a lot of analysis overlooks the extreme risk there is to the pattern failure. Once a pattern has become well observed, accepted and broadly expected; if it fails, it does so spectacularly.
There's quite a narrow zone in which a false breakout is most liable to form. People push the FOMO hard that if you miss this incredible entry opportunity right now you'll be poor for the rest of your life. It's really not the case. There's small windows in which the bear risk is highest and if those areas fail it's usually simple to buy a retest of them.
If BTC is making a false breakout, the high is either in or the next spike will fail and be the terminal spike of the rally.
Any type of false breakout will setup a rug pull. That's what happens. The sketchiest of moves come off false breakouts.
People who have no fear of false breakouts do not yet have adequate experience of them.
At this point we can define different basic roadmaps:
If we break down under 60K, we might be Elliot wave 3 and we should expect a consistent down trend growing in momentum.
If we make a really strong spike but stall out at the 1.61 extension of the BC leg, we have a really strong case for a butterfly top and consistent downtrend.
If we break over the 1.61 extension of the full range of the recent drop, this is most likely bullish continuation and signs of a real breakout.
===============================================================================
The risk of a false breakout I think is highly under respected.
People expect the exact same patterns on 5.5% rates as they seen on 0.5%.
Most analysis is BTC-centric and does not consider the risk on corelation with indices.
No consideration is in the models used for exogenous risks and fat tails.
While a false breakout is statistically unlikely based on BTC's trading history, it's also fair to say there was a rug pull in 100% of the times it happened.
And if there's a rug pull after the intensity of that momentum up, it'd probably be the most significant bear event BTC has ever seen.
If the bull breakout is going to come, there'll be plenty of meat on the bone later. This really is the spot where it's most worth being cautious.
A bearish rejection could be very unforgiving.
Note
I think the Elliot thesis would be confirmed by the break spoken of in this post: 
Note
Breaking the last low at 60K would invalidate the potential harmonic setup and be strongly supportive of the possible forming Elliot wave 3. Note
The breaking of 60K may put us in a spot similar to this forecast of the previous drop to 15K. 
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