BTC big picture Friday (2013 and Now)

TGIF! If you're trading traditional markets, you're headed for a weekend of R&R. If you're trading crypto, you're cracking into an eight ball.

We're in some chop on the hourly time frame and I don't really see a great entry for one last scalp today, but conditions could change and I'll update accordingly. Let's zoom it out and see where we're at in the cycle and potential ways price action could play out.

Bitcoin price action has been forming a beautiful textbook falling wedge since January, rattling down to 6200 where we're sitting right now. I personally enjoy scalping on the lower time frame charts, but when the train leaves the station on the next run-up, you don't want to be caught on the wrong side so it's worth it to back things out from time to time. It looks like we have a few months to go before the next bull run begins, but how long exactly?

For those yearning for the tides to turn, I decided to do a comparison of this market cycle to 2013 and it may shed some light on the timing of a trend change. Keep in mind that as with all market analysis, there are no absolute correct answers. I cannot possibly be wrong in anything I've written below. gfy.

Let's dive in.

The 2013 run-up began on July 6, 2013 when the daily candle closed at $64.90. Over the course of the next 146 days, the price of bitcoin multiplied 17.64x to a daily candle close on November 29, 2013 at $1145. In total, bitcoin realized a 1664% gain - blistering growth which set up the subsequent bear market. Also, take note of the check bounce at $181, you'll see that number in a moment.

On November 28, bitcoin would begin it's long procession down to a low of $181 on January 15, 2015, taking a total of 412 days to complete the swing for a total price decline of 84%. During this time, bitcoin formed a falling wedge, bouncing from support to resistance until it hovered momentarily at the 786 fib support and suddenly crashed through support at $296 to $181, a price decline of 38.85%. In the weeks prior to this final dump, price action and stoch put in hidden bearish divergence.

Also, take note of the drastically increasing volume as the capitulation bottom hits.

Zoom to now.

The year is 2018: there are more genders than shitcoins and I'm watching my trading account dwindle on a 4K screen. Rad!

The first thing I want to identify is the bounds of the run-up during the first portion of the 2017/2018 market cycle. In the end, I decided to hold time as a constant and back out of the peak on December 17, 2017. Using the approximate length of 146 days, we can see a significant swing low on July 17, 2017 (153 days prior) to a price of 1925. Let's anchor the fib retracement here and see what we get.

The first thing we notice is that BTC did a near-perfect 10x from 1925 to 19209. Beyond that, the only important thing here is setting fib levels in order to help with the predictions on the back-side of this peak. As mentioned earlier, we're hovering around 6200. This roughly coincides with the 786 fib level of 5324 (if you recall, the 2013 cycle was also slightly above the 786), and price action and stoch have again put in hidden bearish divergence on the daily chart.

If we are to use the 2013 cycle to predict the timing of trend reversal for the 2017/2018 cycle, we should expect the price to hover in this zone for a little while longer with a possible gnarly-ass whipsaw (seriously, look at that thing) before plunging down 38.85% from the 786 support level at 5623.80: a price of 3439. This would theoretically be a decline of 82% from the high; recall the 2013 cycle saw an 84% decline - is that spooky enough for you on this Friday the 13th? Additionally, if you recall in the '13 cycle, the capitulation event crashed down to a level that served as a level of support for the check bounce on the way up. Again, we see that could happen again if we follow the same path. It took approximately two months from the confirmation of bearish divergence for BTC to put in a bottom on the backside of the '13 cycle. We may be able to use that to estimate when we see the bottom of this cycle.

In summary: if my analysis is correct we should see more chop in the coming month followed by a capitulation bottom sometime in mid-September to ~3500 which would put in the bottom for this cycle and start the bull run of the next one.

When will then be now? Soon.