Bitcoin: The ugly chart that nobody wants to talk about.

15 janv.

Hello,
it's been a while since I last posted, but I thought it's time to share a feeling that has been growing within me in the last 1-2 years.

I have come to think that Bitcoin's top in 2021 was the top of the first Bitcoin grand supercycle.
Meaning, a historic wave 5 top in the Eliott wave picture.

Now why would I think such an outrageous thing?

Several things point me to that:
1. In a wave 5, only a few market participants make up most of the gains of the market. In 2021, contrary to 2017/18, only a relatively small percentage of coins were seeing large gains, whereas the majority actually performed quite poorly. Typical in a wave 5.
2. Rising price but declining volume. This makes me believe that the rise in 2023 was not the start of a new impulse, but a corrective move.
3. Macro-economics: The yield curve is insanely inverted, and an un-inversion was historically never a good thing for equity markets. Bitcoin is still very correlated to the US stock market, and so a large stock market crash, would also drag Bitcoin down to lows that most people can't, or rather don't want to imagine.
4. Irrational exuberance: In a historical market cycle top, there is an incredible disconnect between valuations and reality. I think the stock market rally of the last year has shown us that this disconnect is quite insane. There too, only a few big stocks make up the large majority of the total gains.
5. Insane Euphoria regarding halving, ETF, etc.: Far too much Euphoria, marking often local tops. The ETF will start playing a role, but quite slowly, and the halving effect is a lot lower now than in past halvings.

All in all, I think now there is a higher likelihood that something like this could happen. It's important to see that these are probabilities here, but you can check my charts since I started posting in 2014, and I've been a permabull all the time, until early 2022. That's when I started switching bearish at some point, and been so ever since, despite this last runup.

I am not saying that this is going to happen, only that I see a much higher probability now, than at any point before 2021.
Just my thoughts here. If such an extreme scenario was to happen, then only if a stock market crash happens. We would go to around the low of wave 4, so around 3000-ish USD, which sounds of course insane now, but it would play out over 2-3 years time.
Then we would see the beginning of a new Bitcoin supercycle, which would bring us to several hundred thousand USD.