I suspect that this post will evoke intense thoughts of anger and resentment. It won't be popular but that's fine because my analysis does not concern itself with popularity. On the contrary, I am presenting the case for a bearish crypto market as I see it. Of course, I may be dead wrong. After all, I am only human. I feel it necessary to warn my crypto friends regarding the possibility of a very bearish BTC market. And, as we all know, if BTC is super bearish then it follows that all alt coins will plummet to their knees and give homage to their fallen king.
So, why am I so bearish? Let's take a step back and think about what has transpired with respect to Bitcoin's price since 2013. Here's a quick summary. Bitcoin plummeted to $.01 from $100 and then embarked on a journey to $1,175. A severe correction followed which brought the price to $162. With a show of glory, Bitcoin boarded a rocket at $162 and landed on the moon with a valuation of $19,891. Then, the price tanked to $6,000. At this point, most investors concluded that Bitcoin had finished its correction and the price launched to $11,788.
But notice, we didn't break the downtrend that we have been in since our all-time high. Furthermore, wouldn't it be logical to conjecture that our correction should be longer and more severe than $6,000 since we went from $162 to $19,891? What happened in the past when BTC was worth $1,175? Well, we decreased in value by 11.75 times when we fell to $100. Therefore, what if we have a similar correction from $19,891? Bitcoin would fall to ~ $1,693 if we decline 11.75 times in value. But, if the price tanks to $1,693 that would break our support at ~ $1,826 which would imply further downward movement towards the next support at $1,175.
As it turns out, $1,175 was our previous all-time high in December of 2013. That same price became a point of resistance in January of 2017. We broke above $1,175 in February of 2017 but got rejected below it in March. Finally, in April we found support on $1,175. We haven't touched that support since then. Therefore, it is plausible for the Bitcoin to retest that same support during this correction. If it does, then Bitcoin will have dropped ~ 17 times in value from its all-time high of $19,891.
Have we arrived at a logical conclusion? I'll leave that to your judgement. This scenario would only be possible if we broke the following key supports:
$6,000
$5,400
$3,000
$1,826
You'll notice in my EW counting (in the broadening wedge), I did not count the first touch on the green support as wave 1 since wave 4 would bleed into it which is not allowed. In the current setup, wave 3 isn't the shortest wave and wave 4 does not bleed into one. EW 5 culminates at $1,175.
Lastly, if BTC plummets in this fashion, then we should expect alt coins to get absolutely slaughtered. I expect dead bodies in the streets. I predict that alt coins will hit the floor since they follow Bitcoin's lead. For example, look at the chart of DGB. I charted BTC first and then DGB so that it would mirror the movements of BTC. Notice how BTC and DGB both fall out of their ascending triangles which makes sense because these triangles are bearish as they approach the apex. DGB is also in a descending broadening wedge formation.
Also, I have structured the chart in a way which has DGB falling to its floor which is reasonable since the price starts at the top, descends to the bottom, and then reaches the top again at ~ $.15.
Now don't get it twisted, if you think I don't believe in the fundamentals of DGB then you haven't been paying attention to my activity on Twitter. In fact, I'm long on both BTC and DGB. This analysis has nothing to do with fundamentals because DGB is solid and technologically superior to other digital assets. Further, I envision a crypto space where all UTXO digital assets survive into the distant future. Most alt coins will die off but not DGB.
I welcome your constructive criticism!
So, why am I so bearish? Let's take a step back and think about what has transpired with respect to Bitcoin's price since 2013. Here's a quick summary. Bitcoin plummeted to $.01 from $100 and then embarked on a journey to $1,175. A severe correction followed which brought the price to $162. With a show of glory, Bitcoin boarded a rocket at $162 and landed on the moon with a valuation of $19,891. Then, the price tanked to $6,000. At this point, most investors concluded that Bitcoin had finished its correction and the price launched to $11,788.
But notice, we didn't break the downtrend that we have been in since our all-time high. Furthermore, wouldn't it be logical to conjecture that our correction should be longer and more severe than $6,000 since we went from $162 to $19,891? What happened in the past when BTC was worth $1,175? Well, we decreased in value by 11.75 times when we fell to $100. Therefore, what if we have a similar correction from $19,891? Bitcoin would fall to ~ $1,693 if we decline 11.75 times in value. But, if the price tanks to $1,693 that would break our support at ~ $1,826 which would imply further downward movement towards the next support at $1,175.
As it turns out, $1,175 was our previous all-time high in December of 2013. That same price became a point of resistance in January of 2017. We broke above $1,175 in February of 2017 but got rejected below it in March. Finally, in April we found support on $1,175. We haven't touched that support since then. Therefore, it is plausible for the Bitcoin to retest that same support during this correction. If it does, then Bitcoin will have dropped ~ 17 times in value from its all-time high of $19,891.
Have we arrived at a logical conclusion? I'll leave that to your judgement. This scenario would only be possible if we broke the following key supports:
$6,000
$5,400
$3,000
$1,826
You'll notice in my EW counting (in the broadening wedge), I did not count the first touch on the green support as wave 1 since wave 4 would bleed into it which is not allowed. In the current setup, wave 3 isn't the shortest wave and wave 4 does not bleed into one. EW 5 culminates at $1,175.
Lastly, if BTC plummets in this fashion, then we should expect alt coins to get absolutely slaughtered. I expect dead bodies in the streets. I predict that alt coins will hit the floor since they follow Bitcoin's lead. For example, look at the chart of DGB. I charted BTC first and then DGB so that it would mirror the movements of BTC. Notice how BTC and DGB both fall out of their ascending triangles which makes sense because these triangles are bearish as they approach the apex. DGB is also in a descending broadening wedge formation.
Also, I have structured the chart in a way which has DGB falling to its floor which is reasonable since the price starts at the top, descends to the bottom, and then reaches the top again at ~ $.15.
Now don't get it twisted, if you think I don't believe in the fundamentals of DGB then you haven't been paying attention to my activity on Twitter. In fact, I'm long on both BTC and DGB. This analysis has nothing to do with fundamentals because DGB is solid and technologically superior to other digital assets. Further, I envision a crypto space where all UTXO digital assets survive into the distant future. Most alt coins will die off but not DGB.
I welcome your constructive criticism!
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Daily chart:
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A bullish scenario:
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Inverse head and shoulders formation on BTC & DGB charts:
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Inverse head and shoulders formation on BTC & DGB charts:
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A bearish scenario for BTC & DGB if BTC hasn't finished its ABC correction:
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Head & Shoulders formation on DGB USD log chart:
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@damdamm,
Sorry for the late reply. Thank you for your constructive criticism. I really appreciate it.
You make a valid point regarding the support which has been respected 3 times. My only fear is that BTC may get rejected when it reaches its downtrend line. If that happens, we may see BTC fall back to either its neckline or the bottom of the broadening wedge. As you know, all alt coins follow BTC's lead.
I've posted some bullish and bearish scenarios for the sake of remaining objective.
Sorry for the late reply. Thank you for your constructive criticism. I really appreciate it.
You make a valid point regarding the support which has been respected 3 times. My only fear is that BTC may get rejected when it reaches its downtrend line. If that happens, we may see BTC fall back to either its neckline or the bottom of the broadening wedge. As you know, all alt coins follow BTC's lead.
I've posted some bullish and bearish scenarios for the sake of remaining objective.
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If this BTC idea plays out then the alts will get slaughtered:
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BTC buy zone based on Fibonacci levels: $4,384 - $1,819
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BTC bullish pennant scenario:
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Questions for your consideration regarding Bitcoin:
