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Bitcoin’s Outlook in a Monthly Time Frame
Here you see the monthly chart. When you look at it, it is quite simple. Bitcoin is, since its inception, in a massive and strong uptrend. Simply said, you see higher lows and higher highs on the monthly time frame and as long as that doesn't change, don't bet against the trend!
But, only seeing this as one big uptrend is a bit misleading of course. So let's dive in a bit deeper.
A General Overview of All the All-Time-Highs of Bitcoin
In the early days, Bitcoin clearly made a top in 2011.
In 2013, that high was breached and shortly afterwards Bitcoin made an all-time high (ATH), followed by a clear cycle top at the end of that year.
A bear market followed. The bottom of the bear market was also a revisit of the previous all-time-high.
It took some years for Bitcoin to breach the previous cycle’s top, but when it did, things accelerated again in the parabolic phase later that year.
Again there was a pre-all-time-high, which is better visible on the weekly timeframe and that pre-top again marked the all-time-low for the bear market in 2018.
What’s the Current Situation?
Right now, you see a similar scenario. It took Bitcoin again about three years to breach the previous macrocycle top. Shortly after, a new all-time high was printed. Given the state of the market and all the other (on-chain) information available, the all-time-high right now doesn’t seem like a macro top, but as some sort of a pre-top.
Do you notice how in the previous two bull runs there was no ATH retest after Bitcoin went past it? At this current point, you can say that it is quite possible that this is the third time without a retest of the previous ATH.
Bitcoin in its Weekly Timeframe
Let's zoom in on the chart and have a look at the weekly timeframe.
Explaining the Weekly Chart
The thin grey line on the chartyou see is the 21 weekly exponential moving average (EMA). It is quite well known that that specific ema “carried” Bitcoin during the whole uptrend in 2016 & 2017.
The parabola drawn is of course highly speculative. You can use something like this as some sort of a rough path towards a cycle top. Because, in almost every market, sentiment will thrive together with price, which most often results in the parabolic mania phase in the end. Do you think this time is different?
This whole bull run is more extreme than the previous one, both on the upside and on the downside. The bear market bottom Q1 2019 was way shorter, the uptrend that followed afterwards was more extreme and overextended in a short time period.
On the downside, the massive COVID crash was an extreme situation which you won’t forget any time soon.
When Bitcoin broke past the down-sloping resistance a year ago, a big uptrend took us all the way to 65K. In fact, there were no big corrections from April 2020 till May 2021. No ~40% corrections can be observed that were quite common during the previous bull run.
So, with hindsight information today, the 55% correction you saw back in May was needed. The market was overheating at many points and literally, everybody was in (paper) profits.
And how about that almighty 21 weekly exponential moving average that should support Bitcoin again this run? Well, Bitcoin took off and never revisited it. And when it did, in May, the support was never there.
History doesn't repeat itself, but if often rhymes. In the end, every bull run is unique. So solely looking at charts isn’t enough. But more about that later.
Bitcoin in its Daily Timeframe
Let’s have a look at the daily chart. In this section, you will see the previous and current market structures. Later on, you will see why looking at Exponential Moving Averages is beneficial for your analysis.
3 points are marked on this chart, because they are really pivotal.
Number 1 reflects the breakout candle that led to a new ATH. Notice how there was, as mentioned before, no real retest of the previous ATH? Only a breakout candle left many ‘retest buyers’ behind and also partially caused some real FOMO in the later months.
The bullish market structure is marked on the chart with HH’s (Higher Highs) and HL’s (Higher Lows). It was bullish for 4 months straight, until Bitcoin printed its most recent All-Time High in mid-April.
After that, the market structure changed to bearish. The lower-low that got printed, marked a fresh demand zone. Price rallied, printed a lower high, and fell back into that fresh, untested demand zone. Bulls were weak there, therefore, prices fell even lower.
Number 2 is a clean point on the chart. It is the retest of a former HH, the zone where the price dropped from the $40k range to the $20k range in one day.
Price dropped into the D1 demand zone, marked on the chart. After that, the well-known range began its journey. Bitcoin trapped both bears and bulls by printing some SFP’s (Swing Failure Patterns) at the highs and lows.
While more and more investors were getting bearish as the days went by and the price was barely holding up, the market structure changed in favor of the bulls again. Bears were dormant for 3 months, but the bullish MSB (Market Structure Break) convinced the bulls that their bullish bias during the range was good.
Around point 3, again, the price did not perfectly retest the old high while many were waiting for it. Unfortunately, the market tends to trap both sides quite often.
Pivotal point 3 is marked because it was the point where price broke out of the range and went past the down-sloping resistance.
As we speak, Bitcoin is making HH’s & HL’s and is about to reclaim the broken demand zone. In fact, that reclaim is really important and maybe even the last conviction we need to get Bitcoin to a new all-time high later this year.
Bullish EMA Cross
There are four, quite common, EMA’s, Exponential Moving Averages. Those are the 21 (or 20), 50, 100, and 200. Of course, which ones you use is up to you because everybody can decide for themselves. Using common EMA’s helps a lot. Why? Because these are the ones used by most people in the market, thus price reacts to them, as people tend to buy or sell using those certain EMAs.
On the 19th of August, a bullish cross appeared in these EMA’s. A bullish cross is when the last EMA does a bull cross and they are lined up 21, 50, 100, and 200 from top to bottom.
A bearish cross is of course vice versa, but since we’re still very bullish, we will focus on the bullish crosses.
The last time a bullish cross happened was about 15 months ago. Bitcoin’s price was around $8.6k back then. After the cross occurred, it jumped about 6.5 times about its previous level. Longing the dips, especially between the 100 and 200 EMA was very lucrative.
However, you never trade solely on a bullish EMA cross because it is not guaranteed if the number goes up from here.
A failed bullish cross was the one right before the COVID crash.
But most often, these bull crosses are really nice to look out for. The whole 2016 - 2017 bull market started right after these EMA’s crossed bullish. A ~7000% rise followed, without a single bearish cross in between!
Notice that, again, averaging into Bitcoin when it dipped below the 100 and above the 200 EMA was again very lucrative, and quite simple, isn’t it?
Back to the most recent bullish cross. The numbers of a potential rise in the price are obviously highly speculative. But, do you think it is that crazy to witness a ~3x from here on? If you don’t think it is that crazy, and if you also do think we haven’t seen the ultimate mania phase of the bull run yet, then a $150k-$300k Bitcoin is doable.
The 100 EMA is at $42.5k and the 200 is at $40.5k right now. When it dips into that zone, it is a dip you definitely want to buy, if you aren’t exposed enough yet. Invalidation should be close, with still really nice upside potential.
On-chain Activity Confirms The Bullish Bias
The on-chain analysis is a great ‘tool’ for your arsenal if you want to have a glimpse of the sentiment and market behaviour behind the charts.
One metric alone won’t tell you if the market is bullish or bearish. However, when you have a look at all the information available, you will have a good idea about the state of the market.
A Recap of the Most Recent Ranging Period for Bitcoin
When that massive drop occurred for almost every cryptocurrency, around the 19th of May this year, there was panic all over the place. And of course, at first, it looked very scary.
That drop was brutal. The market structure itself changed in the favour of the bears, but the underlying metrics showed early signs of re-accumulation again. Whales (or whatever term you wanna use for them) started to accumulate again after distributing their coins in the strong uptrend earlier this year.
If you like to analyze it more, this is a thread you would like to (re)read.
Two months later, by the end of June, the signs for a statement of a re-accumulation range had grown quite convincingly. Smart money/big (institutional) investors were in a full re-accumulation mode, almost ever since the initial drop in May.
Simply said, the vast majority of them wouldn’t be accumulating if they would think Bitcoin had macro topped. If that was the case, they would still be distributing their coins for the most part. Distribution happens during a whole bull cycle by the way. If a market is in a strong uptrend, that distribution is being absorbed, till the time distribution takes the upper hand and a macro-top gets printed.
So, from May 19 till the beginning of August, the smart money was in a re-accumulation mode. Bitcoin spent like 80 days inside that range.
The market finally broke out and the whole structure changed in favor of the bulls, but the sentiment was so different than the last time we were around $50k.
Contrary to the smart money, the retail crowd turned bearish or lost interest in the whole space during this period.
Remember the growing hype in Q1 of 2021? Well, retail clearly lost interest after the down move. This article is long enough already, so more about underlying metrics in the next one, but just looking at something as simple as Google Trends, we can confirm the statement. Funny to see that people still were most interested in Bitcoin when the drop occurred in May. Most probably ‘they’ will buy our bags later this cycle and be euphoric about that.
The more bullish Bitcoin got in early 2021, the more leveraged positions were opened. Over a time period of 1 year, Open Interest grew ~1800%, from like $1.5b to $27.6b!
Open interest grew because people were longing their longs. Shown on the chart (first box) is the crazy funding rate which carried on for weeks.
Above you’ve also noticed the sharp drop in open interest. Combine that with the sharp drop in funding rate, and you will get a massive amount of long liquidations.
Then, after they got liquidated, more and more turned bearish at the bottom (second box).
That results in disinterest and not a lot of trust in the current rally: disbelief (third box).
Summarizing Everything for the People in a Rush
It’s time to wrap it up. Pretty sure, Bitcoin is still in a bull market and you still have to see the parabolic mania phase in the coming months.
To summarize why:
Bitcoin in a monthly timeframe simply shows higher highs and higher lows
Bitcoin in a weekly timeframe shows that the price has left the range for an upside movement
Bitcoin daily timeframe suggests that the market structure is bullish again.A bullish cross has been observed using the EMA’s. When you look in the past, those crosses are most often the “buy the dip” zones
On-Chain metrics show that the smart money was re-accumulating during the range. Links to threads with more information about that were added.
The retail crowd has either lost interest or is still in disbelief mode. They will come back buying Bitcoin again at extremely higher rates than you see right now.
These are not certain facts.You have to do your own research but it is highly recommended not to take anything written above for granted.
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