It’s been a hard month for the crypto industry with Bitcoin dropping ~20% and alts getting destroyed once again. (Micro)Strategy and other treasury companies have been struggling to raise additional capital to pile into the majors. The recent wicks have taken out most momentum strategies causing major funds to risk off. There’s an overwhelming feeling that it’s over for another four years and much of the selloff reflects that sentiment. But is it really over…? Reasons To Be PositiveThe four year cycle has had reducing volatility and less extreme tops and bottoms since inception. As the crypto market matures I expect that will continue to evolve into further reduced volatility on both the upside and downside. The halving doesn’t effect supply as much as it used to. The flow of newly minted Bitcoin to miners is halved every four years which makes the outflows less and less significant. This is one of the strong arguments against a perpetual four year cycle. That being said the four year cycle is a thing until proven otherwise. If in theory it did go away, when would we know? Xmas going into the new year will be the key time where I think anyone who plans to sell will have sold and the market could become bullish again in Q1. In 2017 there was a disastrous period around the new year break which will be remembered as the start of one of the worse periods in cryptos history as the ICO bubble popped and markets crashed almost overnight. Traders and shorter term investors will want to exit before the crash. That is likely some of what we are seeing right now. If we can survive to some degree up to the new year then spring might bring renewed optimism. I can imagine a scenario where the supercycle thesis starts getting discussed more seriously and we see institutional capital rush in once again. Reasons To Be Negative$100k The Mark In The SandBitcoin traded below $100k yesterday for a short period and then bounced back slightly. Currently we are at $101.5k at time of writing and it looks ominous. If I was swing trading this it would be a brave bet to go long and I certainly would struggle to justify placing shallow stops despite it being a major level.
The concern is that if we break below $100k there is a big air gap where there is no real case to make a high time frame bid until you get to ~$70k and the previous ATH from 2021. That’s another big drop and the move down could happen quickly if buyers are exhausted and the rush to the exits kicks in. Overall I’m expecting volatility and drama for the rest of the year followed by a more peaceful period of expansion in Q1. Yours Sincerely, Optimistic Perma-bull 🐂
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