First, I want to make an aside: I apologize for throwing so much at you lately, but: it’s the product of a decision I made about a year ago. I promised myself to give the bulls the benefit of the doubt for as long as possible because this market went straight up beyond all rational comprehension. But: when I did that, I also promised myself to never allow myself to become complacent about that. I promised myself that I would remain nimble, and that’s especially important at moments that can evolve quickly, and I believe we are at one of those times now.
The biggest benefit of the doubt to the bulls thesis is: “Hey, maybe we’re replicating the Nasdaq 1999 fractal across the board and maybe Bitcoin will go to $100K or more and who knows what else.” But I refuse to let myself snuggle up too closely to that because waiting too long to get bearish in a genuinely bearish movement is one of the greatest opportunity costs one can endure (just like staying too bearish in a new bullish movement can as well, heh). By the time everyone sees it, it’s actually much harder to play. So, it’s important to see what’s coming as early as possible.
So, what I’ve been doing here in a general way is preparing myself for the possibility of a blowoff, but I also need to look squarely at the most bearish alternatives too, and I want to share them with you so that you’re psychologically prepared as well.
So, in the spirit of planning for any outcome, let’s review Bitcoin. It’s an important asset to watch—even if one doesn’t actively trade it—because as it’s gotten so large, it’s become a lovely indicator of liquidity in the system.
- When we had this recent selloff, I acknowledged that it—at least initially—bore a resemblance to a 2. So, let’s give the benefit of the doubt to the bulls and assume it was probably a 2.
- As its rally from the spiky low developed, it didn’t look impulsive, and so, let’s continue to give the benefit of the doubt to the bulls and assume the 2 is almost in.
- But now let us also not be complacent. If the equity markets are going to fall harder than expected for my E-Wave proposal, we should be prepared and we should know what it would look like if something worse is afoot.
My last count is this: that the intermediate (orange) 2 has another low to make. But, take note of something structural: look at the size of minute (blue) 1 and 3 immediately just behind us. Now, if we’re in minute (blue) 5, it’s becoming very big “in time” compared to the other two waves, and it looks to be subdividing into its own 5 distinct waves:
There is an alternative, and it’s quite bearish, more in line with my original thought that the all-time high in Bitcoin is in. It does look to me that there is a triangle in there, and those can happen in either B-Waves or Fours.
If it’s a four, it would look like this:
And the expected move for the minor (green) 3 is insane:
The good news is: it’s going to be perfectly clear where we’re headed. If we stop around the 78.6% retracement and bounce viciously like our very lives depend upon it, we’re probably looking at a two. But if we go deeper, and stay down there for a while (finishing some fours and fives), the real dark stuff on equities is far, far more probable.
2 thoughts on “Let’s Review Bitcoin”
One thing worth noting is Bitcoin and gold compete for similar flows.
If btc sells off but gold gains, then it may not be a pure risk off signal. More of btc, gold reallocation.
Excellent observation, thank you