Is the Bitcoin Pump a Clue?

To cut to the chase: I don’t know. But let’s discuss it.

Let’s do a quick review. I’ve been tracking it, and until tonight, it’s been tracking well. My assumption for the time being has been that it is in primary (pink) 5 (down), and that that wave should unfold in 5 intermediate (orange) waves. I believe the FTX blowup dump was wave 1 of those 5 waves, and I believed we were in orange 2. From the FTX dump, we had a rally for Green A, a decline for Green B, and a suitable rally that I suspected could be Green C (of Orange 2)—you can see the main gestures via the red arrows:


And some kind of 3-wave move is what we needed, and that’s what we had, as we started to decline again.

That should have meant we would fall again in Green 1 (of Orange 3, etc.) and importantly, we need the 11/9 low to fall. Now, if this had worked, things would have lined up well, with risk assets in a sort of harmony: Orange 2 on Bitcoin would have coincided with our big Pink “B” on the S&P (tops on both already in), and as Bitcoin fell into its green 1, the S&P could fall into the tip of its own Green 1 (its leading diagonal).

And in fact, I liked this a lot because after one sort of steep fall in Bitcoin, it should congest for a while, and not see another swooning decline for a while, and that fits with the contraction I expected to see in the leading diagonal idea for the S&P.

But now Mr. Market gave me the big middle finger and took out all the prior highs. And so if Bitcoin’s Orange 2 isn’t in, it is now possible that the S&P’s Pink B also isn’t in.

One possibility is that it’s only just now, right here, putting in the top of Orange 2, like this:


If it starts falling right away, it can still fall in its Green 1, and we may still see no changes to the Green 1 (leading diagonal) on the S&P. But, until we actually see that decline, it is possible for Orange 2 on Bitcoin to go much higher, too.

What if it is in Blue 3 of Green C, like this:


Maybe it needs to go check in on the big bear flag from beneath?

If this is a momentary risk-on environment, I would seriously doubt the S&P’s ability to fall two more times in a leading diagonal (remember, it still needs waves 3 and 5 to complete that proposed structure, both sharp declines). And that would be a little odd.

The fix for this on the S&P is very straightforward. If Bitcoin keeps rallying like the Devil’s on its heels, and if the market responds positively to Darth Powell tomorrow, we’re probably looking at something more like this:


There’s some wave balance here, and a date with the 200-day SMA is not unreasonable. So, as long as Bitcoin stays strong, this possibility has some renewed force to it, in my opinion.

I am afraid I will have a hard time predicting this now, with Bitcoin becoming unexpected. I already have some puts; I will probably add some calls, so that I have something of a strangle on. Let’s see what things look like tomorrow.

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