Gann Theory shows Bitcoin is worth remembering every December, BBITSTAMP:BTCUSD
Many people proposed a target of US$100,000 at the time, Xiao Long pointed out whether Bitcoin would fall after a double-topped harmonious trading pattern, and we used technical analysis to analyse the recent Bitcoin crash. In Gann Theory and Cycle Analysis, we found the fixed cycle or Gann Turning Time of Bitcoin. In Gann's theory, time is the most important factor in trading. Gann's rule of timing is used to reveal the pattern of price reversals that occur.
As you can see above, December is a memorable time of year for Bitcoin, dating back to the first time it reached over $1,000. By the following December, it had quickly dropped 80% to below $200 and reached a bear market bottom. Two years later, in December 2017, the price of Bitcoin topped out again, ending the bull market rally and starting another bear market. This was followed by another bear market until December 2018, and December 2019.
As you can see above, December is a memorable time of year for Bitcoin. As you can see above, December is a memorable time for Bitcoin every year.
After December 2020, Bitcoin bounced back again for a short period of time, before rising to all-time highs. In December 2021, Bitcoin is now in a double top position, so beware that December 2021 could be the top for Bitcoin. Using the Harmony Trading method, if it falls below $36,000, the other big support level is at $28,000. That is, if it falls below $36,000, it will more than confirm the wave of Bitcoin's decline.
The trend in Bitcoin may be related to the Fed's tapering. In the last round of tapering, the Fed allowed some securities ($10 billion) to expire without renewal each quarter starting in October 2017, in $10 billion increments each quarter until the end of 2018. As you can see in the chart above, the last bitcoin peak was in December 2017 and then the bottom was around December 2018 and December 2019, which may be related to the Fed's tapering.
The peak in December 2021 coincides with the US Fed's hawkish comments and the possibility of interest rate hikes.
Xiao Long has said that inflation in the US has rarely been above 5% in the past, and that whenever inflation rises above 5%, the US Fed basically reacts very quickly and raises interest rates.
The first cycle of rate hikes was from 1983.3 to 1984.8, when the benchmark rate was raised from 8.5% to 11.5%.
Second: 1988.3-1989.5, with the base rate rising from 6.5% to 9.8125%.
Third round: 1994.2-1995.2, with the benchmark rate rising from 3.25% to 6%
Fourth round: 1999.6-2000.5, with the base rate increased from 4.75% to 6.5%.
Fifth round of rate hikes from 2004.6-2006.7, with the base rate rising from 1% to 5.25%.
Sixth round: 2015-2018, with the base rate rising from 0.25% to 2.5%.
Therefore, as Xiao Long said, most people think that the US "has too much debt, so it dares not raise interest rates". In the past, inflation in the US was rarely above 5%, and whenever inflation rose above 5%, basically the US Federal Reserve would react very quickly and raise interest rates. The author's greatest worry is that the US will raise interest rates from 5-6% to 20% in a short period of time, just like the stagflation in 1970.
As Xiao Long once said, the US stock market had a seven-year down cycle:
-In 1966, the US went through a "credit crunch". In August of the same year, the US treasury market suffered a severe "liquidity crisis".
-In 1973, seven years later, the world was hit by the "first oil crisis", which caused problems in the stock market and the economy, and the first stagflation.
-Seven years later, in 1980, Wall Street forced the Hunt brothers to stop stockpiling silver, which allowed some banks and securities firms to avoid bankruptcy.
-Black Monday in October 1987, when the Dow fell 22% in one day.
-Seven years later, in 1994, the FED raised interest rates six times in a row, pushing rates from 3% to 6%, causing the most famous bond massacre in history.
-Seven years later, in 2001, the Black Swan Incident of 9/11 triggered a global stock market crash and the US declared an emergency stock market closure from 9/11 to 9/14. The Dow Jones Industrial Index was killed at 8,883, down 7%, and the stock market fell by 14% in one week.
The seven-year cycle came in 2008, when the financial tsunami saw Hong Kong and US stocks plunge.
-In 2015, the Hong Kong and US stock markets crashed.
-2022:?
So 2022 will be a very critical year, a convergence of cycles, so keep an eye on this column. More on that next time.
