BTC and ETH Current Wave Count and Ranges

Bitcoin Technical Analysis

Bitcoin’s range is defined by a compression triangle drawn from connecting the lows reached on June 18th and July 13th and extending forward in time, the same method is used for the resistance trendline using the highs of June 6th and July 30th.

BTC triangle

As you can see on the chart above Bitcoin has been hugging close to the upper trendline since July 30th. The descending upper trendline and the ascending bottom trendline create a compression triangle for BTC in which the bottom of the triangle or wedge pattern coincides with the 78% retracement just above the $20,000 level. However, there are several support levels above that price comprised of the 50-day SMA at around $21,300 and the 38% Fibonacci retracement at approximately $22,500.

According to the Elliot wave count for the daily timeframe is a bull count where the most likely scenario involves a bounce off of the 38% retracement which would complete a 4th wave. If this indeed comes to fruition, the following fifth impulse wave would certainly blast BTC out of the wedge towards higher prices.

BTC Wave

Ethereum Technical Analysis

As for Ethereum, it currently resides towards the bottom of a parallel trend channel that began on July 13th from the lows near $1,000. Ether does have resistance inside of this channel that has almost precisely marked the highs of the last 7 days, the resistance I am speaking of is the 100-day SMA.

ETH Channel

The Ethereum wave count on a daily time frame is looking forward is extremely bullish, which lines up to the fundamental outlook as well as my personal opinion. Ethereum is still in a bear count however it is in the corrective phase so in other words it is in the bullish phase at the end of a bearish cycle. We completed our A wave to the upside on July 28th when it reached prices not seen since early June.

Now we are in the midst of a B wave to the downside which could go as low as $13,500, but it doesn’t necessarily have to go that low. If the B wave were to conclude with today’s higher pricing (which is entirely possible with the “Merge” set to happen next month) the wave count is forecasting for the final C wave to bring Ethereum at minimum to $2,100 and as high as $3,000 which is the 1.618% Fibonacci extension of Wave A.

ETH Wave

What Is the Best Trading Strategy?

Ethereum remains more promising as it has been for the last few weeks, expect that to continue. Since the B wave in ETH has yet to finalize we recommend traders who follow us and took our trade recommendation to go long Ethereum on July 18th should keep protective stops loose to avoid getting stopped out and missing what is adding up to a massive rally in Ether.

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Is There More Upside in Ethereum’s Recent Run-up?

After a huge boost in the value of Ether, (Ethereum’s native) last month gaining over 50%, traders who are up on their long Ethereum trades might be asking themselves if now is a good time to pull their profits. At the moment (5 PM ET) ETH is down by 5.76% on the day and trading hands at approximately $1,620 and starting the week as its unfinished weekly candle is currently the first red one Ethereum has seen in over a month, but I feel there is a good chance that this weeks candle flips to the color of money and forms its fifth green weekly candlestick.

Merge is getting closer

There are technical reasons that lead me to lean towards more upside but more importantly, it is the fundamental events that have me believing the current rally isn’t finished. That’s not to say that Ethereum couldn’t see a pullback before moving higher from its current price.

The main reason I expect that Ethereum could move higher this week is on the announcement that the final test before the merge named Goerli will be launched between August 6th – 12th. This is to be the last test net launched before the final transition to PoS from PoW and will be the only test net that will be maintained for the long run. This puts the timeline for the merge, the most anticipated event in crypto since Bitcoin’s and Ethereum’s inception, somewhere in mid-September.

Ethereum’s technical outlook

It is hard to talk about post-merge ETH without mentioning ETC (Ethereum Classic) which is the original Ethereum after the hard-fork that followed the infamous DAO hack in 2017. During last month ETC gained almost three times what ETH did over the same period, rallying by 137% last month. Some of this recent attention to the Ethereum hard-fork is since once the merge is finalized all the miners that were mining Ethereum will likely choose to mine a new coin and speculators are betting that coin will be Ethereum Classic.

As we just mentioned ETC has had one hell of a run over the past few weeks but on a technical basis may have hit resistance. In an article by Yashu Gola published on Cointelegraph, the author points out “On the weekly chart, ETC’s price has reached a resistance confluence, awaiting a breakout as the euphoria surrounding the Merge grows. The confluence comprises the 0.786 Fib line (~$43) and a multi-month descending trendline.”

Ethereum weekly chart

Ethereum’s weekly candlestick chart doesn’t exhibit an imminent top in the market at current levels. It is close to the middle of its multi-month descending trendline and about $800 below its 100-day SMA and $400 beneath the 61.8% retracement just above $2,000.

These price points are the next resistance areas Ethereum has to contend with meaning that there is no real technical resistance until $2,000. Ethereum’s current print of $1,620 puts ETH in a good position to move higher still.

Ethereum weekly chart

For these reasons we are recommending that traders who went long ETH on our July 18th trade recommendation from approximately $1,492 should stay long the market, but we will look to move protective stops higher over the next few days.

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BTC Holds 200-week SMA While ETH Steals Spotlight Again

Bitcoin Technical Analysis

Bitcoin is currently trading flat on the day at approximately $23,160 as of 4:30 ET and still holding above the crucial 200-week SMA. Current prices also are above the 50-day SMA after dipping below this indicator earlier in the trading session. The dip was likely brought on by Tesla’s second-quarter holdings revealing it had liquidated 75% of its BTC from its balance sheet.

Bitcoin dominance chart

Nonetheless, BTC still is holding onto its freshly minted bullish sentiment and technical outlook. BTC has also entered into the “cloud” or Ichimoku cloud to be exact which can symbolize a shift or pivot from bearish to bullish.

Bitcoin chart

Ethereum Price Action and Future Road Map

It was Ethereum yet again that took the lead in churning upmarket excitement. Ethereum is trading up by 5.7% on the day and a whopping 42% on the week, compared to Bitcoin’s 14% increase in the same period.

The creator of Ethereum, Vitalik Buterin gave insight into Ethereum’s future road map and went on to list benchmark goals that go way beyond the merge to Proof-of-stake. Buterin spoke to a crowded main room at the EthCC conference in Paris on Thursday on how Ethereum is undergoing numerous big improvements that would eventually benefit the system in the long run.

Buterin stated that after the Merge, Ethereum will be around “55 percent complete” concerning the Proof-of-Stake update, also known as EIP-3675.

He gave more details on the four goals for Ethereum developers that he outlined earlier this year labeled as the Merge, the Verge, the Surge, and The Purge. Once these milestones which once completed Ethereum will have the potential for completing 100,000 transactions per sec. (compared to 10-15 per sec.).

Merge details

He went on to paint a picture where Ethereum evolves past the need for so many everchanging upgrades to a point in which it will be able to avoid overhauls and reach a place of stability and “settle down”, “It’s similar to Turing Completeness… if you have a computer that’s powerful enough, you can build almost anything on it.”

This stability could lead to price stability for the number two cryptocurrency as it races to try and take the top spot.

Ethereum chart

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Cryptos Finally Get Some Positive Publicity, Sparking Gains Over the Weekend

The Collapse of the Last Few Months

Over the past few months, the cryptocurrency sector has been plagued with headlines of huge corporations going insolvent and losing their investor’s funds. Such as Three Arrows Capital, a Singapore-based hedge fund that held a huge presence in the crypto space going insolvent while still in substantial debt.

Then there is the collapse of Terra’s Luna, which was among the top three stable coins prior to its death spiral. Although the collapse was due to its algorithmic mechanism that was in charge of keeping it pegged at a 1 to 1 ratio with the U.S. dollar. Tether and USDC keep their peg in a different manner and actually have reserves backing their coins.

Other large institutions fell to a similar fate when their business model of paying huge yields on Bitcoin and other cryptos proved unsustainable in an extended bear market leading Celsius, Voyager, and others to halt withdrawals from their platforms due to not having the capital needed to reimburse their over-leveraged balance sheets. But help from the regulators in Washington might change both investor confidence and safeguard investor capital in the future.

SEC and Future Crypto Regulation

Just recently the head of the SEC, Gary Gensler announced that he would be willing to help companies in a sector he has called “the wild west” of finance. Just like in Dancing with Wolves the frontier will soon be colonized and anyone involved in the sector is Kevin Costner basically, and could be glimpsing the last days of a true untamed and wild financial frontier.

“There’s a potential path forward,” SEC chair Gary Gensler said during an interview with Yahoo Finance in comments that point to how the SEC could work with the crypto industry going forward and adding the agency has the authority to give exemptions to certain regulatory and disclosure requirements. “I’ve said to the industry, to the lending platforms, to the trading platforms: ‘Come in, talk to us.’”

Ethereum on Twitter Last Week

Another headline that has ignited bullish sentiment amongst traders is the timeline tweeted by an Ethereum insider on Twitter last week.

ETH Tweet

Bitcoin and Ethereum Bullish Reactions

Since this Tweet Ethereum has shot up by 40% in less than a week, climbing from just above $1,000 on July 13th to nearly $1,500 as of 6 PM ET.

Bitcoin has risen by 10% in the same time period. The merge to PoS has got to be the most anticipated event in crypto and has been for well over a year.

BTC daily chart

The news of the merge possibly being completed by the week of September 19th has given Ethereum the shot in the arm that it needed and could bring about an end to the crypto winter currently underway.

BTC Weekly chart

It is worth noting that while BTC has yet to challenge its 50-day or 200-week moving averages, ETH has successfully taken out resistance at its own 50-day SMA signaling that ETH may have the greatest potential for gains in the upcoming weeks and months.

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Bitcoin Bottom May Yet to Be Hit

Bitcoin Technical Analysis

Although BTC has found temporary support at approximately $20,000 the odds are stacked against the world’s oldest cryptocurrency finding a true bottom at this price point. Currently, as of 3 PM, ET Bitcoin is trading at around $20,600, which is where we entered our last trade, which unfortunately ended in a loss last week when on Friday Bitcoin’s intra-day high exceeded $22,000.

The highs of last week also confirmed resistance at the 200-week simple moving average. This makes this the first occurrence of resistance at this moving average which in the past has served as support during the bear markets of 2015, 2018-19, and 2020.

 

Bitcoin weekly chart

MLIV Pulse Survey

Another obstacle BTC faces is investor sentiment. According to Bloomberg’s latest MLIV Pulse survey, 60% of the 950 surveyed investors expect Bitcoin to post another drop of around 45% to reach $10K. But the remaining 40% think bitcoin could soon go back above the $30,000 important psychological support level.

Speaking to Bloomberg, Tribe Capital’s Jared Madfes noted that “it’s very easy to be fearful right now, not only in crypto but generally in the world,” adding that the expectations for another significant Bitcoin retracement reflect “people’s inherent fear in the market.”

Ruchir Sharma on Bitcoin

In an article published by AMBcrypto today Managing Director and Chairman of Rockefeller International, Ruchir Sharma, echoed the same fears laying out a major point as to why Bitcoin may be doomed to trade lower still.

“Sharma also predicted significant declines in Bitcoin and other digital assets during the following six months, at least in part as a result of the ongoing slump in U.S. stocks. He pointed out that equities often drop by 35% during bear markets, which last around a year. The S&P 500 has only plummeted by 20% during this less than-a-year-old bear market.”

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BTC Price Bottom Likely at 2019 Highs

Bitcoin Technical Analysis

Bitcoin has resumed its downward trend and as of 4:45 PM, ET is trading lower by almost $1,300 or (-6.38%) at $18,880. It broke through support which was the 2017-2018 high of $19,660 and seems destined to trade to the 2019 high at $13,880.

The 2019 peak price of just under $14,000 is a very convincing price target for Bitcoin in the current crypto winter. In our last article, we spoke about how each of the four previous cycles in Bitcoin the retracement reached was less than the previous,

“One last aspect of the last four cycles, particularly the three that occurred around one year after a mid-halving point, as our current cycle appears to be that we can use to hint at where BTC finds its bottom at if indeed it does head lower is how each of these three cycles retraced a little bit less than the previous.

For instance, in the first cycle, Bitcoin retraced 95%, in the third cycle Bitcoin retraced 92% and in the fourth cycle, it retraced 86%. If this indeed is a pattern that continues, we would see a retracement of less than 86%, which is at roughly $13,000. As such I am calling for $14,000 as a likely bottom, which was the highest monthly close before November 2021”

As it is now a certainty that the old ATH at around $20k will not be a strong support level as it had attempted to be and the only support level standing in the way of $14k is the 78% retracement at $17,800. As the quote above explains if the pattern of higher retracements signaling the bottom continues, we would have to form a bottom somewhere above $12,988 the 86% retracement level.

If BTC were to revisit the highs of 2019 and find support there it would be an 84.5% retracement, this falls in line with being less than the previous cycle’s retracement. This all points to the 2019 top at around 14k as being the most likely price point for Bitcoin to find a bottom.

Bitcoin long term chart

Trading Strategy for Bitcoin

As such we sent out a trade alert yesterday at 11:15 PM ET, to sell Bitcoin at the market which was then priced at $20,600. If you wish to be notified whenever a trade recommendation is issued sign up using the link below.

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BTC’s 3 Truths Remain Unbroken

Bitcoin Historical Analysis, a Technical Point of View

“We are in the midst of the fifth of these parabolic cycles. The first rule has already been met when in December 2020, we traded above the previous record high ($20,00), and the monthly candle doubled in size. However, the final two characteristics point to the possibility that Bitcoin has yet to fully correct from the current record high in the market.

For these constants to continue to hold the truth they held since Bitcoin’s emergence into our world, both financially and philosophically, we would expect to see the current correction that has been underway for over three months to conclude at a price no higher than $18,000 and no lower than $3,000.” – Excerpt from “Bitcoin’s Three Unbreakable Truths” published February 22nd of this year.

Bitcoin Monthly Chart

My point for the excerpt above is to underline the fact that Bitcoin has been historically and recently following a very predictable pattern and also that Bitcoin has hit the minimum retracement level “technically speaking” and therefore could have made its bottom on June 18th when it made a low of $17,600.

But more importantly, that would be the most optimistic case for Bitcoin, and in no way does it signal the bear market is over, simply it has met the minimum retracement to continue to complete the fifth cycle of a pattern that has existed since its inception.

From looking at the previous four cycles we can glean some hints at how long Bitcoin will remain near its bottom before entering the next bull market. All of the previous cycles except for one hit their bottoms anywhere from nine to fifteen months following the mid-halving date.

We have just made it two months past the most recent mid-halving date, from this data we can estimate that we have another seven months before we would typically see our true bottom.

Time between mid-way and price bottom

Another aspect of the four previous cycle bottoms is that each time BTC spent more time trading and consolidating near its bottom before rallying. This trait of Bitcoin’s parabolic cycles also suggests that we are at least six months away from exiting a bear market that has further to fall or a sideways market that continues to consolidate at best.

Bottom time intervals for Bitcoin

Bitcoin Price Forecast Using Historical Cycles

One last aspect of the last four cycles, particularly the three that occurred around one year after a mid-halving point, as our current cycle appears to be that we can use to hint at where BTC finds its bottom at if indeed it does head lower is how each of these three cycles retraced a little bit less than the previous.

For instance, in the first cycle, Bitcoin retraced 95%, in the third cycle Bitcoin retraced 92% and in the fourth cycle, it retraced 86%. If this indeed is a pattern that continues, we would see a retracement of less than 86%, which is at roughly $13,000. As such I am calling for $14,000 as a likely bottom, which was the highest monthly close before November 2021.

Bitcoin Price Forecast

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When Could Bitcoin Find a Bottom?

Bitcoin Technical Analysis

Bitcoin is simply doing what it has always done, after every parabolic rally going back to 2011 when BTC shot up from roughly $0.50 to $32, there was a correction that followed which wiped out at least 78% – 86% of the gains before another bull cycle began.

One interesting aspect of this behavior is that each time Bitcoin did this it took longer to reach a bottom. If you look at the time it took for Bitcoin to reach this level of a correction and multiply it by 1.618 you get a number that is very close to how long it took for the next parabolic rally to hit this zone. For instance, if you look at the date when the 78% – 86% retracement was hit after the first parabolic rally (August 1st, 2011) and mark the distance in time for the next occurrence you get a total distance of 511 days.

If you multiply 511 by 1.618 you get 826 which is within 40 days of how long bitcoin took to bottom out after the next parabolic rally. However, this equation gets sloppier the further you go for instance the next time frame for this occurrence is 1,211 days but the equation used above would give you an answer of 1,393 which is 182 days off of the actual number.

Bitcoin chart

When we do this equation to try and determine when Bitcoin will find a bottom in this current correction, we get 1,959 days which puts the bottom occurring in April 2024 close to the time of the next halving event.

Regardless of if this is the date for Bitcoin finding a bottom, the one thing we can say for sure is that each time it took Bitcoin longer to find a bottom, and we have surpassed the last time frame from bottom to bottom which was 1,211 days. I do not think we have reached a bottom since we haven’t hit that critical retracement area of 78% – 86% which in dollars is $17,769 – $12,947.

Biticoin chart

Although we may easily find some temporary support at current pricing as it matches up to the tops of the previous cycle reached at the end of 2017 at $20,000 but I do not believe it is where we will truly bottom out at.

Macro Analysis and Stock Market Correlation with Bitcoin

The macroeconomic factors which are pointing to a possible recession not only in the United States but worldwide and with central banks globally racing to try to gain a handle inflation by raising rates.

According to The New York Times, “Within hours of the Fed’s move, Brazil, Saudi Arabia and others announced rate changes. Switzerland and Britain followed suit on Thursday morning. So far in 2022, at least 45 countries have lifted rates, data from FactSet shows, with more moves to come.”

Global interest rates

With lower GDPs across the globe equities are going to follow suit and the correlation between equities and Bitcoin means that it too will be dragged down in price. This “cleansing” will wash out a lot of the weak hands and institutions who will pull their capital out of Bitcoin leaving only the true believers to withstand the storm and profit from the next bull cycle which we are predicting to occur in Spring or Summer 2024.

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Bitcoin Analysis – What Doesn’t Kill You Makes You Stronger

We have all heard this saying before, often told to someone who is faced with a setback as words of encouragement. The idea behind the phrase is that simply pulling through an issue of any sort will make you come out of it better adapted on the other side. This saying in my experience is almost always true, so does it apply to Bitcoin and its current bear market?

Bitcoin as a Living Organism

Before we answer ask that question let’s first define what criteria must be met for this notion of “what doesn’t kill you makes you stronger” to be factual. First of all, the “you” or subject of the statement must be a living thing. This is because a living entity can adapt to better tackle obstacles from a physiological down to a cellular level. The most direct example of this is how bodybuilders gain muscle mass or strength. When you lift weights or perform other physically strenuous activities, muscle fibers tear slightly.

This is what causes sore muscles after an intense workout. When the torn fibers heal, they grow back even stronger and larger than before. The same can be said about mental strength, whenever one is put through a stressful situation and overcomes it, they have a greater ability to handle a similar conflict due to the confidence and fortitude gained from the experience along with the knowledge of how it was overcome to guide them through future obstacles.

So, is Bitcoin a living entity? Technical analysis and its cornerstones are based on the idea that markets are in fact living things. Fibonacci ratios can be found in some things we consider to be inanimate it is more widely expressed and easier to spot in biological sources.

Elliot wave theory which has evolved into what scientists today call the herding principle is only applicable to living things. It concludes that progress and regression seem to be hard-wired deep within the psyche of all living creatures, but that neither will ever develop in a straight and steady linear fashion. So we can say that Bitcoin and its open market are living things, or at least so directly influenced by living things that the saying can apply to it.

Permanent Damage

Another aspect of “what doesn’t kill you makes you stronger” that needs to be met for the statement to bear truth is that the damage inflicted cannot be too severe, otherwise it could cause permanent damage. So simply surviving something doesn’t guarantee that strength will be gained.

Examples would be a car crash that leaves you paralyzed, or the de-pegging of USD to UST that led to the demise of the popular crypto Luna, in both cases the damage caused was too severe for the victims to be able to recover and surpass their previous ability.

Can Bitcoin Recover from Bear Market?

So, has Bitcoin sustained so much damage it is unlikely to ever recover? Considering that Bitcoin has had worse corrections of 85% or more a total of four times, and weathered several bear markets suggests that this kind of damage is not going to debilitate the world’s first cryptocurrency.

So in conclusion, the current bear market will likely not kill Bitcoin and only make it stronger.

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Bitcoin Exhibits Fortitude Amongst Cryptos

Last Bottom as a Key Reference for BTC

Although our current prognosis is that BTC will likely trade sideways in the short term, that should not be perceived as a negative. In short, Bitcoin simply continuing to do its thing is a positive aspect for the coin. The price may be up or down on the day, the week, or the month as long as price remains above the low of the previous parabolic move, we can call that progression towards what many BTC bulls are visioning the future to look like. That picture contains in it a larger adoption base, more practical uses and price stability overtime.

For me Bitcoin could fall to $5,000 and still be bullish long term. The main thing I look for is a bottom in price above the last bottom, regardless of the highs. For instance, in 2018 when BTC hit a low of approximately $3,000 dollars it was still higher than the previous bottom of around $250 reached in 2015. Once more in March of 2020 when Covid brought havoc amongst all financial markets Bitcoin’s bottom was $3,500, so $500 higher than the bottom before that.

BTC Dominance

Another factor that bodes well for Bitcoin’s longevity is how its dominance has been on the rise recently. Although its to early to say for sure it does seem that BTC dominance is having a comeback, or that Bitcoin simply is held onto through bear markets rather than sold off compared to other coins.

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Bitcoin Holds on to True Triple Bottom

Bitcoin technical analysis

When we do a Fibonacci retracement from the lows preceding the last two parabolic rallies (2017, 2020 – 2021) and compare them to the highs achieved in the second ATH made from that point, we get some very interesting numbers. The first retracement in black has its 61.8% level right at the recent lows of $25,211. The second retracement in blue gives us a 61.8% at $28,862, the price which we are labeling as a triple bottom.

May 27 tripple botom

A bounce off of a 61.8% retracement can be seen as a bullish sign. Visa-versa, a rejection at a 61.8% level can serve as a bearish signal. For that reason, BTC’s defense of this key Fibonacci level and the triple bottom is the most critical battle for Bitcoin bulls. The fact that this support has remained intact is one of the few technical arguments for Bitcoin remaining in a bullish mode. Despite the swift beating that Bitcoin has taken recently, only one day since 2021 has BTC closed barely below this critical support of $28,860.

As of 4:20 ET, Bitcoin is currently trading at $28,900 after recovering from lows of $28,300 earlier today. Even on May 12, when we hit the lowest price since Dec. 2020, the small body of the candle actually closed above the $28,886 retracement/support level. Also, let’s not forget that this level did serve as a bottom in the Summer of last year before rallying to a new ATH.

Storm clouds on the horizon

It’s not all sunshine and roses when we zoom in on a daily chart. The Ichimoku Cloud tool is forecasting lower prices as being highly likely due to the size of the cloud and that it is above pricing.

May 27 cloud

“The Cloud is an integral part of the technical indicator as a whole and helps traders and investors identify the specific calculations made to the chart. Price below the cloud indicates a downward trend, whereas price above the cloud indicates an uptrend. These trend signals can strengthen if both the cloud and the price are moving in the same direction. Similarly, the signals can weaken if the cloud is moving in the opposite direction.” -Trading View

My cloud charts do not include some of the normally included lines, such as the baseline and the lagging span. This is done on purpose to make the chart less chaotic and easier to decipher. The one line I do leave in beside the two that form the clouds is the conversion line that is shown in blue and this short-term moving average of sorts has proven to be resistance for BTC for the last three days.

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Will Bitcoin Have Another May 19th Sell-Off?

Last year May 19th was a terrible day for a Bitcoin bull like myself. I remember it well because that date is my birthday. I didn’t get what I wished for that year, but this year a continuation of the massive sell-off in the market is exactly what I am hoping for.

Bitcoin Price Historical Analysis

From 2015 to 2020, May generally was a good month for Bitcoin. In that six-year period, Bitcoin had twice as many monthly candles end up green. Some years, notably in 2017 and 2019, Bitcoin achieved huge gains in May. But last year is probably the one that everyone remembers, when in a one-week period, from May 12th to May 19th, Bitcoin shed about 50% of its value, hitting the same lows we are trading at today of around $29,000 after starting the month out near $59,000.

Bitcoin Price Forecast

The difference between this year and last year is that I am actually hoping for a massive decline instead of praying for a return to a bull market. What changed my attitude? The change in my birthday wishes for Bitcoin represents a change in my sentiment. While last year I was worried if Bitcoin crashed or didn’t continue making new all-time highs that, the adoption of BTC would be at risk.

This year I am confident that Bitcoin isn’t going anywhere, as I explained here,  regardless of price volatility. I want BTC to drift as low as possible so that I can buy some myself at a better price. This year for my birthday, I hope we have another $12,000 decline on May 19th so that I can scoop up more of it, ideally when it bottoms.

So, when and where will it bottom? When is a little harder to answer, but sometime in the next three to twelve months is my guess. Where it will bottom at, I believe, will be around $17,000 – $18,000 based on my current studies.

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Bitcoin Holds Support, Will the Levy Break?

Bitcoin Price Action Comparison With Last Year

The Price of BTC moved back above the critical support level of $29,000 last Friday (May 13th) after dipping as low as $25,500 on the previous day. While BTC has yet to show signs that a recovery is on its way, the pause in the major selling pressure after an extended low seems to mirror the action seen exactly one year ago.

Last year in mid-May, Bitcoin fell roughly $30,000 in just two weeks, losing about 50% of its value in that short, brutal time frame. What followed two months of loose consolidation at prices comparable to the current market print before rallying to a new ATH. While it is indeed much too early to say that a base has formed at the $29,000 – $30,000 level, the price action is shockingly similar to what we saw precisely one year ago.

What Is Different Now?

The big difference between then and now is that the underlying macro fundamentals in markets with a strong correlation have changed. As such, those markets, mainly big tech which can be viewed through the Nasdaq Composite, have an uphill battle with the Fed’s monetary tightening already straining the industry.

This is happening when the Fed funds rate still remains historically low. The effective Fed funds rate currently at 0.83% is still lower than any other time than the recent pandemic over the last 64 years, matching the lowest rate pre-pandemic on record from May 1958.

If we look back over the past 70 years and compare what the Fed funds rate climbed to in order to battle the many rises in inflation, you will notice that nearly every period of rampant inflation required a Fed funds rate that was equal to or greater than the year over the year inflation rate. We are a very long way away from reaching that threshold. In fact, over the past seventy-plus years, has the difference between those two metrics been farther apart. Inflation on a yearly basis still outweighs the Fed funds rate by nearly 7%.

What Does This Mean for BTC?

Unfortunately, it is this fundamental difference that will likely be the cement shoes that drag Bitcoin down to the depths of the economic ocean. The Nasdaq will likely only continue to fall, and with it a lot of institutional investment dollars will be moved out of Bitcoin and big tech or simply mass liquidated by institutional investors.

The same investors that we all praised for helping Bitcoin’s previous rallies are the same investors who will bring about a new extended bear market. So unlike the previous two times bitcoin was trading at this price level (January and Summer of 2021) Bitcoin will likely not have a major rally from this point, but instead this is likely a stopping point on the way down.

BTC Technical Analysis and Price Forecast

For now, Bitcoin is holding on precariously above $29,000 support but with the equities sell-off likely just beginning how long will it last? Bellow $29k, the next support level is $24,500, below that major support lies at $18k, which is where I believe this correction could lead us to over the next six to twelve months. Current resistance is at $32k and above that major resistance at $37,500.

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Bitcoin Needs to Hold Support to Avoid Severe Sell-off

Bitcoin Spot vs Futures Pricing

As of 4:45 EST, Bitcoin is trading up by roughly 3% on the day at $31,030 (Coinbase). Confirming the bearish market sentiment BTC futures are trading lower than their spot counterparts at $30,990. When future pricing of a commodity or asset is below the spot or live pricing, it is signaling that market participants believe overall that the asset or commodity is likely to decrease in price in the future.

Bitcoin 1h chart

BTC Technical Analyisis

If we do a Fibonacci retracement from pricing a week ago at around $40,000 to the lows of yesterday at around $30,000, it is clear that Bitcoin failed to move past the 23% retracement level, at roughly $32,130 on its bounce higher today. This is indicating lower prices are likely still.

If Bitcoin fails to hold support at $29,000, then $20,000 is certainly on the table. I believe that Bitcoin will hold $10,000 even in the worst-case scenario, but if we were to get that low, that would entail a further decline of over 60%. That is why Bitcoin needs to hold onto current support to avoid a further bloodbath, opening up to prices not seen since 2020.

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Bitcoin Hits New Two-month Lows, Actually Closer to 10-month Lows

Currently as of 4:20 PM EDT, Bitcoin is trading at $35,880 a decline of 1.8% on the day in the spot markets.

Bitcoin Long Term Chart Analysis

This marks the sixth consecutive weekly decline for the cryptocurrency, and the largest weekly decline since the first week of April. Since the first week of April Bitcoin has shed well over $10,000 in value.

While on an intra-day basis we are only at a two-month low, on a closing basis if we close anywhere at or below current prices, we have only one day of pricing lower than current market print between now and July 25, 2021. That means that we are really closer to a 10-month low than a two-month low as we only have one closing price lower between the current market print and the lows of summer 2021 that reached as low as $29,000.

BTC Forecast and Technical Levels

We are predicting lower prices ahead, with support levels at $33,000, and below that at $29,000. Resistance is being marked at $37,500, our old level of support, and $40,000 above that.

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Bitcoin Relief Rally Fails to Close Above $40,000

FOMC’s Rate Hike Impact on US Stock Markets

With the Biggest rate hike in twenty years happening today, with the Fed announcing a 0.5% rate hike today, the broader markets were relieved that Powell did not initiate a larger hike and pretty much alleviated the possibility of a .75% rate hike in the near future. This was perceived as less hawkish and sent the equities markets into a rally. At the time of writing, the S&P 500 is trading up by nearly 3%, and the Nasdaq Composite surpassed 3% gains on the day. These single-day gains in U.S. equities are some of the largest witnessed in some time.

S&P 500 daily chart
NASDAQ 100 daily chart

Bitcoin Correlation with Nasdaq

Naturally, with the correlation between the Nasdaq and Bitcoin being as high as it is, one would expect the rise in the Nasdaq Composite would bring about a rise in Bitcoin. However, Bitcoin’s rally began many hours before the rise in equities or the Fed’s announcement. By the time of the Fed announcement, Bitcoin had already rallied from just below $38,000 to above $39,000. The hour of the announcement brought Bitcoin above $40,000 but only briefly. However, the gains after the Fed’s announcement occurred with a much higher trading volume than last night and early morning’s moves.

Has The Bear Market Ended for Bitcoin?

Today’s gain in Bitcoin of over 5% failed to break out of the broader trading range of $40,000 – $37,500, so today’s move, while welcomed by the bulls, was not successful in signaling that the bear market has ended.

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Crypto Winter on the way?

Although we did see Bitcoin and other cryptocurrencies gain value during some moments of the day, the overall trend has been to the downside for the entire sector. Bitcoin is trading up by about 1.5% on the day but down 2.5% from a week ago and lower by nearly 17% compared to a month ago.

Heatmap Weekly
Heatmap Monthly

It is no secret that Bitcoin and nearly every other crypto has been in a defined bear market, but I think most believe that we will see a turnaround sometime shortly. But I will explain why I believe that there may not be any huge rally in BTC for a long time. Going back to the halving cycles and the fact that we have just hit the midway point for this four-year pattern, let us compare how BTC was trading exactly four years ago.

What Happened on MAY 1ST 2018?

On May 1st, 2018, Bitcoin was trading at around $9,200 after coming down from its all-time high of nearly $20,000 in December of 2017, five months earlier. It took BTC over one year before it would regain the price point of $9,000. Those five months were miserable. Bitcoin practically free fell from the ATH to $6,000 before having a slight recovery to where it was on May 1st, at $9,200, a 50% drop in price in five months, and it was destined to go lower.

What About May 1st, 2022?

May 1st precisely four years and two days ago, and since hitting a new all-time high at around $70,000, we have lost 50% in value. The decline was a basic free fall and did include a slight recovery before continuing lower, just like four years ago.

Winter on the way?

Since the start of 2022, Bitcoin and the Nasdaq composite have moved nearly in tandem. In fact, they both show a decline of approximately 17%-19% from the start of the year. The macro picture and larger fundamentals aren’t in favor of a turnaround in the tech-heavy index. Rather they support a further decline. To simplify my thoughts, I would say that we will see a period of stagnation or further decline of both the Nasdaq and Bitcoin. The Nasdaq correlation has the potential to turn the weather into a cold and even long crypto winter.

NASDAQ vs BTC

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Key Support Level Flipped to Resistance for Bitcoin

Bitcoin Technical Analysis

The 600-day simple moving average which had been acting as support for Bitcoin for around 100 days may be flipped into resistance today if we get a close below it on the daily charts.

Bitcoin daiily chart

At time of writing (4:35 PM ET) the bears and bulls are actively defending and attacking this price zone of the 600-day SMA at $40,019. The current pricing on Coinbase is $40,018 and has been shifting to a few dollars above to a few dollars below the 600-day every 10 to 15 seconds signaling very fast paced market conditions.

The ERC-20coin That Has the Blockchain That’s Going Bananas – Apecoin

Meanwhile Apecoin continues to gain value at a rate far greater than any other coin. This exponential growth will of course end at some point, however taking into consideration that the very young crypto just made new all-time highs last evening it seems probable that we will see more swift upside price action and likely reach the $30 per coin status before a correction ensues.

Apecoin has a market value of roughly $24 per coin at time of writing, and although I was and remain skeptical of its ability to have a lasting presence, I have been flowing its price very closely since launching at the end of March. Based on its ability to gain value consistently at a much higher rate than all other coins, as well as limiting losses to a minimum down day, The momentum is reminiscent of Dodge during the week before Musk joined SNL and it ran from $0.24 at the end of April 2021 up to around $0.69 on May 7th 2021.

Even the author of this piece was amazed at the additional similarities between Dodge and Apecoin that were revealed to him once he (I) made an overlapping line chart for comparison. Both coins seem to have the same slope of their ascents, but they both rallied at the exact same time, only one year apart.

Suppose Ape Coin delivers on half of the announced projects, including a series of full-length movies with an unknown “Hollywood” director, the launch of their long-awaited metaverse, and other web three functions and products yet to be fully detailed. In that case, Apecoin has the potential to possibly match the growth that Dodge experienced this time last year.

From March 17th to April 28th, Dodge had grown by 5x. That is the time frame that Apecoin has existed and so far, it has grown by close to 2x in value. Dodge went on to more than 10x by early May so if Ape does follow the same trend, it would reach $100 in the next few weeks.

I am not making that call, but it would not surprise me when I’ve seen coins with less promise go parabolic once they gained a cult following. Ape coin and the Bored Ape Yacht Club (BAYC) certainly have that sort of a devoted army of loyal followers, so I think $30 in the next week is an extremely conservative estimate.

Most of us know how that turned out for Dodge with the coin plummeting the same night the SNL episode aired. Dodge has yet to return to those all-time highs or even close to the heroic status that made it a household name, yet it remains the 11th largest coin by market cap currently trading around $0.13.

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Bitcoin Hits New Low for April

Bitcoin Fundamental Analysis

As of 3:10 PM ET, Bitcoin is trading down by approximately $2,000 or around 4.8% at $38,500, according to Coinbase.

The equities markets were riddled with fears ahead of earnings for tech giants Microsoft and Alphabet. Concerns surround more than just the Hawkish Fed and the war in Ukraine. For the tech juggernauts, it is the resurgence of Covid in China that has the real potential for supply chain shortages to re-emerge from A country that is integral for producing many of their products.

According to Reuters, “The S&P index recorded no new 52-week highs and 34 new lows, while the Nasdaq recorded 18 new highs and 464 new lows.”

BTC Technical Analysis

Bitcoin reacted expectedly and broke back below the 600-day moving average, which had been a level of support for the world’s first cryptocurrency several times going back to January. The break below this key support level along with the grim outlook for U.S. equities re-affirms our expectations for lower pricing in Bitcoin, and our short trade is still active.

Trading Strategy for BTC

We came extremely close to getting stopped out of the short trade we recommended on Thursday, April 21st. Our protective stop at $40,850 was narrowly avoided. If hit, traders would have been stopped out with only a $50 loss per Bitcoin after lowering protective stops last Friday to closely match our entry price. Our target for exiting the trade remains at $37,500.

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Bitcoin Breaks Below Support, Will BTC Also Close Below Support?

Bitcoin Technical Analysis

Today we got a confirmation of our ‘three-river drowning cat’ pattern with Bitcoin trading lower by over 2% or $800 as of 5:15 PM, ET. Today’s confirming candle is textbook with a lower low and lower high and appears as though we may get our first close below the 600-day SMA (simple moving average) in almost precisely two years.

The last close below the 600-day SMA was on April 21, 2020 exactly two years and one day ago! Disproving many analysts that were making the claim that the four-year cycles in Bitcoin were no longer relevant. I have been disagreeing adamantly with that conclusion and believe these cycles that revolve around halving dates is very much still alive today.

Fundamentals and NASDAQ Correlation

Forces that helped BTC trade lower include the decline in the Nasdaq ahead of the Fed’s raising of interest rates. The correlation between the Nasdaq and BTC are at 0.7, a 1.0 correlation would mean that they mirrored each other’s movement exactly, and a 0 meaning the moved opposite to one another.

Trading Strategy

With today’s confirming candle we can now lower our protective stops to just above our entry price of $40,800 as the high of the day was literally right below or above that price point depending on which exchange you trade on. All traders who took our initial call to go short and sell Bitcoin at the above-mentioned price should now lower their protective stops to right above our entry price to lock in a no loss trade at worse.

Take protective stops from $42,000 down to $40,850. Our target for this trade is $37,500 and traders can either watch the market closely or simply add a limit to your trade at $37,500 so you effectively will automatically pull profits if that price point is reached.

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