In this edition, we’ll look into ten points which indicate that Bitcoin is within the late-stage bear market and/or very early stage bull market.
In this issue
- Bitcoin analysis
- year-open tailwinds
- Latest happenings
- Listening material
Bitcoin/Dollar has taken a momentary pause and consolidated gains for the last two weeks as price stabilises around the $23,000 region.
Last week’s projection appears to be in play, although there are no guarantees that the H12 200-exponential moving average will be tested before the next directional move takes place.
Bitcoin’s weekly range is more or less contained between $21,200 on the downside, and capped at $25,200 on the upside — with a skewed probability for an upwards breakout.
The higher-low — higher-high market structure indicates accumulation at the lower-bound is the most preferable scenario for medium-to-long-term plays.
The trend is up and to the right, and the trend is your friend.
Technical data aside, there’s a growing body of evidence which indicates Bitcoin is gaining traction again. This evidence goes beyond the obviously positive effects of ‘number go up’ technology.
- In January, price exited ‘deep value’ territory as defined by many on-chain metrics covered in previous analyses and blog posts.
- Bitcoin’s energy efficiency is on the rise, and mining is consistently a single-digit percentage of the total market capitalisation. This means that supposed environmental concerns about mining have no substance.
- The price collapse due to the FTX fraud — the top 3 fraud in human history — was eclipsed in just two months, proving there are very few (if any) marginal sellers left. Price could not remain in deep value territory despite the unprecedented level of negative press and financial damage.
- Bitcoin ‘confirmed’ a major technical reversal after reclaiming the most important price-point. The $20,000 reclaim and breakout represents:
-The 2017 all time high.
-The FTX collapse price.
-A critical psychological order block.
-Long-term realised cost basis.
- There was a substantial 40% short squeeze with characteristics that are effectively identical to when China banned Bitcoin in 2021 (and the subsequent bottom).
- A new regime has been established following confluent recovery of multiple long-term moving averages. All the Bitcoin/Dollar moving averages on a daily time-frame are painting a positive slope.
- Bitcoin hit its standard 75%-80% market drawdown before reversing. These discounts tend to come in tandem with periods of severe economic stressors, which washout industry players in spectacular fashion before momentum can rebuild.
- The halving cycle is expected to take place in Q2 2024, and Bitcoin is now in an optimal position in terms of timing following the bottom in Q4 2022. The top crypto bottomed within a 12–18 month time-frame, confluent with prior halving cycles. Litecoin’s halving event is due in August 2023.
- Bitcoin has left exchanges at record levels. Bitcoin’s illiquid supply ratio reached 78% in December, a figure not seen since the cryptocurrency’s first halving cycle.
- Macro economic factors are also expected to materially change within the next 12 months (possibly sooner). The question is not ‘if’, but ‘when’ the US Federal Reserve pauses rate hikes, ultimately leading them to loosen financial conditions (QE variants). As inflation is temporarily tamed, there will be room for more boom-bust cycles until the hyperinflationary end-game ultimately plays out. Bitcoin technology is well positioned for every scenario.
On aggregate, long-term statistics suggest good market health for Bitcoin and the crypto market more broadly. In time, these extensive yet inexhaustive points will be seen as ‘obvious’ reversal signals.
- CBDC ‘Anti-Surveillance State Act’ introduced to limit Fed’s Authority over Dollar.
- Anti-Money Laundering Laws Protect Incumbents, Not Ordinary People.
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Tuesday. I am not perfect and this is not a science — nor is this newsletter analysis a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.
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