I’ve been drawing this and similar charts for months now:
I actually think this will come to rest around $15,000 and $20,000 but the bottom could be around and even below $10,000. Bear in mind the low, however horrible it will look on the chart, will only last for perhaps minutes while the equilibrium low will be significantly higher. As I write, bitcoin BTC is at $29,300 having earlier hit $25,300 for a few minutes.
Although that certainly looks like a capitulation there is almost certainly a lot more to come, because the driver for this mover is the draining of U.S. liquidity by the Fed and therefore a super rampant dollar crushing all currencies before it, including the euro and U.K. pound. Then there are the forced sellers in the Russia/Ukraine conflict to help push the crypto charabanc off the cliff.
So unless something turns the corner the above chart still holds as a good road map.
This has been my thesis since the initial top and it now seems on its way, having been stalled by the conflict geopolitics of the recent period through the Afghanistan withdrawal to the Russian invasion of Ukraine.
As such, while there will be plenty of bounces, “dead cat” or otherwise, my model says it’s down to $20,000, sideways until the next “halvening” (scheduled for April 2024) and off up to the moon again in what is the crypto cycle.
I’m told the crypto cycle is dead because institutions are in play but my observation is that institutional activity is shallow and to make it more fragile still, institutions are fair weather friends when it comes to investment themes. They are not hardcore like private investors and the legion of crypto fanatics amongst the younger generations. It will likely be the crypto legions of meme loving, beany wearing crypto apes that will stick to crypto through thick and thin and it will be them that catch the upside when crypto moons again.
The thing to remember is that crypto is the future, but that doesn’t mean the tokens in vogue yesterday will be the ones that are giant in five years time. Like stocks, goliaths come and go, and it is the skill game of selecting the right candidates that remains the key to success. If you can pull off market timing then you are in great shape. The bottom looks near at least in time, so soon it will be time to dollar cost average in because there will be plenty of time to pick up great bargains.
This is where I produce my favorite chart:
This is the way to approach re-entering a crashed market. Unless a market has the Federal Reserve to pump it up, markets do not make sharp V bottoms. The bottom is when everyone who can sell has sold and no one wants to buy. The equilibrium sticks around for some time and a W forms and with luck up goes the instrument into a bull market. If you dollar cost average you can avoid fine timing your entry but you also risk buying in above another leg down that looks impossible at the time. Catching the early bull rally by getting in “too late” avoids this risk.
However, in general simply buy when everyone else is weeping about their losses and the media is talking about the end of that market and the haters are loudly gloating. Another way to look at it, it is probably safe to buy two weeks after the crash was on the main terrestrial TV news.
It’s annoying but it’s true, buy low, sell high.
The good news is low is on the way.