Bitcoin and The Road Ahead: Part II

已更新

Since my analysis from yesterday, we have dropped hard. I did say this was a possibility, and to pay attention to the capitulation going on, since it would likely present a good buying opportunity. I said I had a feeling we could go lower, and we did. The 200B market cap line did not hold either, although I was hoping it would. Oh well. The market doesn't HAVE to do anything. The best thing we can do is adapt our thinking.

Today, Bitcoin has surpassed its yearly lows on all exchanges. However, we have finally touched the bottom of our giant triangle. Yes, we are back inside it, not below it. Technically it doesn't end until the beginning of 2019, when I expect will be the final chance for a bull run in the foreseeable future. You can check out my other analyses to see why. I don't want to write too much for this one.

Yesterday's market analysis:

Crypto: The Ultimate Test of Patience - Buying Opportunity Soon

You can also see that on the Bitfinex chart, we are testing the broken triangle resistance as support, which is more bullish:

XRP and XLM continue to remain strong against Bitcoin, as I expected would happen since they are real cryptocurrencies with functional products (both faster and cheaper than Bitcoin, and being used to facilitate global payments already). However, if Bitcoin continues to drop from here, the next minor zone of support is the 4600-4900 zone, and form there it's a long drop to 3000. If this happens, it's likely XRP and XLM will not sustain either, although I could be wrong.

As you can see, we are at a critical point right now. We can:
1) bounce up here very soon and ignite a bull rally, forming a doji on the daily and weekly charts. ONLY if we get back above 6330-6400 will this bounce be legitimate. This seems unlikely, as the bounce hasn't been super convincing so far. Could surprise us though. Alts are bouncing nicely, but there has been more demand for alts than BTC at low levels for a while now. They are likely to slide back a bit if BTCUSD doesn't bounce.

2) Drift sideways in the triangle until late December/January 2019 as volatility flatlines yet again, but this time for alts as well, as they sink back to their bottoms. This is the scenario that I've been imagining recently, as it aligns with my historical analysis of BTCUSD (and my comparison with NANOUSD), as well as the extended bottoms/triangles of most altcoins. This is also when the Bitcoin triangle ends.

3) Continue downwards. In this scenario, Bitcoin can either rebound eventually or simply die off, to be overtaken by other coins.

Another thing to note is that shorts are rising again, but I think they are likely to close soon (desperate hand pattern):

Longs haven't really closed, which seems a bit odd. In fact, they are rising a bit. This tells me we may have further downside (shorts would close on this next drop).

Let's see where the market takes us!

This is not a recommendation to buy or sell. This is just my view on the market as it is. Pretty neutral/a bit bearish/waiting on the sidelines for now. I've pretty much exhausted my spare cash, so I don't know if I'll be adding any more fiat.

Previous BTC analysis:

-Victor Cobra

註釋

I think 2.5K-3K is the lowest target for this breakdown. It could easily bounce before then, which is why laddering buys is important. This bottom fits nicely with the long term market structure. Bouncing off this area would be the next major level of converging support, where we have an uptrend line that was formed by breaking through massive resistance in 2017 (lower red line).

註釋

As long as the top red line continues to hold, we should be bouncing sooner rather than later. Good night and good luck!

註釋

The red line continues to hold and many alts continue to bounce hard or at least hold support. XRP and XLM are clearly leading the alts again. As I've mentioned before, I believe these two coins have the best chance of overtaking BTC's market share in the foreseeable future.

註釋

My "desperate hand" pattern works pretty often. See the shorts dropping as expected. If the drop sustains, we may see a bit of a squeeze up in price as some more longs have opened since yesterday.

註釋

Note the decrease in Bitcoin dominance on this drop. The higher low is set on this chart. coinmarketcap.com/charts/
BTC dominance has a high probability of dropping much further in the coming months.

註釋

We've held this red line spectacularly well so far. Let's see what happens over the weekend. Probability that we don't drop lower is increasing slightly. If we don't drop lower, I think it's more likely we have some sideways action than a big bounce up. Not many shorts to be squeezed and there isn't much buying pressure, even at these levels.

註釋

We need to close back above the red line in order to avoid testing lower levels, simple as that. 4900 has been one of my long term buy targets. Unfortunately I'm mostly out of spare fiat, but this was one of the levels I was looking at for a potential add. Unfortunately, I think many retail investors are in the same position I'm in (bought too much at the 6K support), so this is why we don't see much buying happening yet. We need BIG buyers to show up very soon to avoid the 2900-3000 level. We do have some support in the mid/low 4K area, but the chart is looking very dangerous. The big buyers might be waiting until that 3K area to go in.

註釋

On the Bitfinex chart, you can see that we are below the long term log trend line. This is the last point of support if BTC wants to reverse any time soon, in my opinion. This further emphasizes that we need to have a strong rebound in this zone.

註釋

Making a little bit of a reversal attempt here, as I said should happen. Really needs to be much bigger. XRP and XLM are still looking much stronger than Bitcoin, as I also said would probably continue to be the case.

註釋

It's really looking pretty weak. Probably too early for a reversal. The 4600 area is the place to watch.

註釋

The log trend line actually seems to lie in the 4K area on the Coinbase chart:

註釋

Nice little bounce in the 4600 area.

註釋

We're on last chance supports for a lot of alts, so it would be an extreme sign of weakness for the market if we don't see some decent buying action here.

註釋

Now this is what I like to see. Some decent buying action going on right as we got close to the log trend line. Finally a good sized bounce. If we can get all the way back above the red support line around 5200 and close there, it will be a very bullish sign. That would be a conservative buying zone.

註釋

This doji candle has turned green, and already has more buying volume than the previous red candle had selling volume.

註釋

Buying is already letting up as the sellers are still pretty relentless. Really need to consolidate above 4700 and make that push to 5200 for any hope of a reversal.

註釋

Interesting to note, but the bounce happened a little bit ABOVE the log trend line. This means one of two things:
1) Big buyers stepped in early to force the people with orders set around 4100 to FOMO in higher.
2) We still are not done dropping.
We'll see.

註釋

Lack of follow through. We will likely stall in this area. If we drop below the log line around 4100, it's basically straight to 3K. However, we can grind along the log support, as we have done before, until the bull market returns.

註釋

After dropping below 4100, we bounced back up at 3400, but have since failed to break back above the log trendline. It's still possible that we could follow something similar to my red line on the main chart. Will post updates every now and then.

註釋

If we do follow my red line, it will be critical what happens in the 5K area. We will likely test the unbroken triangle resistance. This would tell us where the market wants to go longer term. If the bear market doesn't end by February, we will likely have at least another year to endure.

註釋

Since we failed to retake the log trend, we have dropped, which isn't surprising at all. However, this drop seems a lot less panicky (lower volume). It could be the perfect recipe for a short squeeze that gets us back at least to retest the broken log trend line.

註釋

This could be the start of a potential squeeze. Nice rejection candle with good volume.