Where’s Bitcoin’s Bottom?

in #bitcoinlast year (edited)

Bitcoin has (just barely) broken down through all support for the rising triangle:


BTC/USD, 4H, linear, click to enlarge

If there’s bullish reversal to ~$6.4k form a shoulder on the right, then it could end up a bearish head-and-shoulders (H&S) pattern with the neckline at ~$5.9k and the top of the head ~$7k. So that would project down to a ~$5k to $5.4k bottom.

On the daily, linearly-scaled, it’s still plausible for a bullish reversal perhaps back up to test ~$7k again or fill the gap to ~$8.1k:


BTC/USD, 3D, linear, click to enlarge

Note that’s the 200 WMA shown on the above chart.

Yet overall sentiment for the markets is very bearish this week.

Stocks poised to extend losses Monday as coronavirus deaths could reach 200,000:

President Donald Trump late Sunday extended the national social distancing guidelines to April 30 as U.S. fatalities from the pandemic climbed above 2,300. The announcement comes after Trump said last week he hoped to open up the country by Easter.

And per what I wrote in my prior blog Bitcoin the Phoenix Rises in a Wake of Dystopian Ashes — The Totalitarian Trojan Horses:

The Directional Changes on the updated end of March Forecast Array added a Directional Change in April, allowing for a final bottom in April. Volatility plummets in April and action doesn’t pickup again until May. Privately Armstrong has recently blogged that the lowest for the DJIA could be 15,000 in first week of April. He may have also mentioned the first week of April in his public blogs.

So here’s the weekly, linearly-scaled Bitcoin chart with key moving averages that may offer support for a retest of the bottom:


BTC/USD, 1W, linear, click to enlarge

Support levels

PriceDescription
~$5.6k200 WMA
~$5.3k50 MMA (monthly moving average)
~$5kKey uptrend line off the 2018 bottom that is the bottom of the major long-term bullish wedge
~$4.6k250 WMA
~$3.9k300 WMA and a double bottom
~$3.1k2018 double bottom and horizontal bottom of the posited major, very long-term bullish triangle
~$2.6kbottom of a posited very, very long-term, bullish, declining channel
~$1.5klast line of support for any hope of an eventual bullish outcome

Following chart is similar those I published in recent blogs wherein the uptrend “highs 11” and “highs 16” lines are projecting to $100,000+ Bitcoin price later in 2020 — and on the logarithmically scaled chart possibly as high as $1 million although that extreme may be delayed to 2021 or after 2024:


(click to enlarge)

I’m favoring a higher-low for this bottom retest perhaps the ~$5.4k, $5k or $4.6k because of what I wrote in my recent blog Whither Bitcoin in a Global Liquidity Contagion?, first because of my analysis of the Directional Changes in Armstrong’s Forecast Array for Bitcoin and the likelihood that this crash is opportunistic for the whale mining farms to create a major bottom and not the posited SegWit donations attack (although note the major bottom scenario could imply a double-bottom at ~$3.1k or a lower-low bottom ~$2.6k yet these would seem to be inconsistent with a massive, bullish reversal into May/June, yet volatility is skyrocketing in May on the Forecast Array):

An April crash for Bitcoin on the into the abyss and end of cryptocurrencies would be inconsistent with what we expect for gold. It would mean that cryptocurrency had been identified as a failure to be a hard asset at a critical juncture. Instead I believe the powers-that-be would want to sucker all the greater fools into chasing Bitcoin up to some new ATH with FOMO “Bitcoin is a savoir hard asset in these times of great crisis” and then totally fuck them all because they hodl in non-legacy address even though they were warned many times not to do so. IOW, Bitcoin must not fail to be a hard asset. Instead the users must fail to believe in immutable, hard assets and instead chase egalitarian unicorn fantasy “we can scale Bitcoin for all of us because we have good intentions.”

[…]

So stated more coherently the March Directional Change could be the shift to a bullish phase from the bearish market Bitcoin has been declining in since the July 2019 peak (or even since the late 2017 ATH because July 2019 didn’t make an all-time-high aka ATH). That would be monumental. But then there’s this pesky Directional Change again in June. If that is to be a shift to bearish, then would that be U.S. Treasury Secretary Mnuchin’s plan to tighten the AML and KYC noose on crypto? Or would it be the posited SegWit donations attack?

The alternatives to the June 2020 SegWit donations attack scenario:

  1. March Directional Change is bearish, so June 2020 will shift to bullish.
  2. March Directional Change is bullish, so June 2020 will shift to bearish because of U.S. Treasury Secretary Mnuchin’s crackdown.

We can probably eliminate #2 by delving further into the theory I cited in my above quote about the miners dumping their Bitcoins exacerbating the crash. I know for a fact that many Bitmain S9 were turned on as the price rose last summer and reactivated this past February as the price climbed back over $8.5k. And right before the crash as the price had declined to $8k, I was being offered S9 at firesale prices. So some miners were in a cash flow squeeze.


Bitcoin Mining Sell Pressure Waning, Supply Shock To Drive Massive Price Increase

Thus Socrates’ Bitcoin Monthly Forecast Array can’t be bearish after June! So either #1 applies or it will be only Bitcoin Core—not legacy Bitcoin—which will be bearish after June.

And secondly because I noted Bitcoin has been more bullish off the flash crash bottom than the DJIA:

Note Bitcoin has been rising off its bottom while the DJIA has continued to decline although the rise did correlate with a slight bounce in the DJIA and Bitcoin did decline on Friday along with the DJIA. But Bitcoin declined to bullish support. Whereas, the DJIA declined to a lower low.

And the same reasoning in my recent blog COVID-19 Accelerates Totalitarianism; Hard Movable Assets Rising, although the chart shows I might be identifying some pattern of volatility noise which isn’t relevant:

That egregious failure in March is a bad omen. That’s not on the gold chart!




Novogratz Is Buying Bitcoin Again, Despite A More Than 20% Plunge In March)

“If there was ever a time -- debasement of fiat currencies, monetization of trillions of dollars of debt, this is the time for Bitcoin.”

[…]

However in defense of Novogratz I will note on chart above that Bitcoin bottomed before the DJIA did and as the DJIA declined further to its low, Bitcoin only dropped to its bullish uptrend line. So although a decline to 15,000 for the DJIA would call for a proportionality decline to $2600 for Bitcoin if counting declines from bottoms, instead Bitcoin may only make a higher low because it will be decline from a higher percentage bounce. Roughly that computes to a retest for Bitcoin ~$4.7k.

And that “bad omen” can be obviated significantly by drawing the overhead resistance downtrend line more conservatively:


BTC/USD, 1W, Bitstamp log-scaled (click to embiggen)

Note that Bitcoin bottomed on the flash crash 10 days before the DJIA. So Bitcoin could bounce today (Sunday) as if often does, then decline early in the week as the DJIA does to make its final bottom even if the DJIA doesn’t final bottom until April 6 as Armstrong is projecting.

Bitcoin is bottoming earlier than the DJIA so it should retest bottom earlier and turn bullish earlier as well. By May Bitcoin should be in another raging bull market if my interpretations are correct.

I also wrote in that blog :

Bitcoin Strategy

Here is the way I suggest playing it. Take losses at $7.2k or $8k so no taxes due (might bounce to $8+k but I’m feeling nervous and anxious). Anything purchased lower than that price consider hodling that in legacy addresses through any SegWit attack. Or as much legacy hodlings as you want for your risk tolerance based on the potential of being blocked from cashing them out later.

Plan to repurchase if the price finds solid support above $3.1k especially support above $4.5k. Otherwise it’s a rout so cash out and purchase silver, gold and/or stocks at their coming April lows. If ever it bottoms ~$2k, then can consider selling those other assets and repurchasing.

Given the volatility that seems to increasing for Bitcoin and the likelihood that the retest will be above $4.6k, I would not advise hedging by selling to fiat at any price lower than $7k.

Bitcoin could decline below $4k and we should have enough cash to handle near-term cash flow for that scenario. But trying to sell to buy back lower seems like a strategy fraught with being fooled by the zigzags of the volatility.

P.S. I added some significant and possibly very important and insightful information to my prior blog.

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