A Comprehensive Update + Why I Love TA
アップデート済
I apologize for not posting as frequently or providing more video updates on the crypto market. I've been incredibly busy with moving and dealing with fallout from the virus, as I'm sure many of you are as well.
Before I delve into the analysis, I'd like to take this time to talk a little bit about why I think TA is so fascinating. Some may say that yes, it can indeed predict likely outcomes. I suppose that's sometimes true. I myself have made some pretty good predictions. Why is this the case? I argue that TA is essentially a visual representation of a general consensus, or a collective belief in something. In this case, it's the collective belief in the price of Bitcoin. Our entire reality is simply based on our collective agreement that things are a particular way. How the world moves on from here will depend on what we all believe SHOULD happen. This is how we avoid utter chaos. How else would we function socially?
I find it particularly interesting that I've been forecasting a second Great Depression for quite a while now, yet there was no way I could have forecasted a pandemic. It's always been a threat, but there was no way anyone could have known that this would be the thing to end the current era. What has been clear to me is that humanity has grown at an unsustainable rate–––so fast that we are not in a position of strength as a species anymore. Our foundation, which happens to be the weakest and poorest of us, has no support. But it shouldn't have gotten to this point in the first place. We shouldn't have THIS MANY people in this position. We should not have a society built on the weak and helpless - people who are in fact forced into these positions for the betterment of the elite.
And of course the reason why we've gotten here is because of extreme growth and greed. The greed fuels more growth until it eventually crashes due to some unforeseen circumstance that exposes the fraudulent nature of such growth. What I hope is that once a bottom is reached (peak in deaths, peak in despair, lowest point for markets), we've learned our lesson. History tells us that we won't, but maybe there's hope this time for us to be a little more self-aware. I don't want humanity to be stuck in these never-ending cycles of greed, prosperity, and death. There must be a more sustainable solution, right?
Now, what does any of this have to do with crypto? Well, if TA is a visual representation of our collective belief in something, then it's time people believe in crypto, or it will fade away. Right now, we're unsure whether or not Bitcoin deserves to continue its long term price appreciation, and that's reflected in our range-bound price action. On this chart, I've illustrated what both narratives could look like for Bitcoin. In pink, I've drawn a curved growth channel with two possible supports, so there are really three curved trendlines on this chart. This probably doesn't even come as a surprise to anyone here. This is keeping it simple. I'm sure many of you are aware - there is a danger here for Bitcoin to drop below the support from December 2018, meaning sub-3K. If the stock market can do it, you can bet Bitcoin can. If that happens, it may find some short term support in the $2.5-2.8K zone, but afterwards, we can expect a decline all the way towards the $1300 level, and maybe lower than that eventually. The speculative broadening formation (green) shows that if stocks bottom around 2025 (that's been my projection for a while), then Bitcoin may be back to 2 digits by then.
For the bullish narrative to materialize, we'd need something extraordinary to happen. Something extraordinary has already happened with global markets, so it's possible. First of all, we'd need Bitcoin to bounce back above 9.1K rather quickly. Although one could throw TA out of the window here, right now markets are in a particularly emotional state. One could say that "Aggressive TA" may apply here. Traders will react strongly, regardless of what happens. Because of this, I think we can expect Bitcoin to make larger swings than normal. This means we can see a move up towards 8.5K before we even head down towards sub-3K. It also means we can go straight to all-time-high from here if banks start failing and the media pushes the crypto adoption narrative. Based on this chart, it seems fairly reasonable even to expect Bitcoin to head up towards the 40K zone if the bullish trend continues (green X). After that, it can fall all the way back to 9K and maintain this trend! It's quite incredible how many possibilities exist.
Another question I must ask - if crypto is meant to go to zero, why hasn't it already? Weed stocks are essentially going to zero. Gamestop basically has. Why aren't we seeing massive panic selling all the way to triple digits? There must be enough people who still believe in it to support prices. Just a thought. This is also shown by way of immense buying volume on the daily chart:
On the daily chart, it's clear that bulls to break and hold above $6400 for a while (previous bottom).
This is the largest buy volume we have EVER seen on the Coinbase exchange. This is a good thing, because it shows real fiat inflow, as opposed to USDT, which has been buoying the market for a long time. This means some individuals are buying large amounts of Bitcoin with real dollars.
What about the rest of the crypto market?
Interestingly, crypto and stocks are beginning to de-correlate again. This could mean one of two things: A) We are near a short term bottom in stocks and people are getting back into "risky" assets. This would mean that stocks will bounce next week and once that's over, crypto will fall again. B) People are realizing that crypto may be a safe place to park their money if banks falter, and if the dollar goes out of control. Either way, there's clearly a small divergence happening now.
Next, Bitcoin Dominance still seems bearish after the wedge breakdown. The weekly UO is close to a resistance level and it still can't get above the 200w MA with multiple bearish crosses looming. If it gets above the 200w MA, there's still the long term downtrend to contend with (red):
If TOTAL can get convincingly back above the 200w MA, I think it's possible that it will test the 280B level at least one more time.
The broadening wedge may break up as well, but as we've seen with ETH recently, this can fail as well. TA patterns don't really seem to matter much at this point...unless we're just in a bigger wedge. ETH tested the precise bottom again recently.
TOTAL2 is back above major multi-year support around 50B. Structurally, it also looks similar to Bitcoin's bottoming behavior in 2015, so alts must hold this level.
XRP is interesting. Look at that bullish divergence! It's also still above the broken downtrend channel. If any coin can benefit from a liquidity run on the banks (even just based on speculation), it's XRP
XLM also exhibiting a massive bullish divergence, but objectively the chart still looks horrible. It's back in the never-ending bearish channel to boot.
In summary:
Reasons to be bearish: Global depression looming, not enough money to support crypto prices, severe technical breakdown.
Reasons to be bullish: Increased fiat inflow volume with strong buying action, bullish divergences everywhere, not making a lower low while stocks do the same (crypto narrative still somewhat intact), possible global debt crisis.
What would a crypto future look like, in my opinion
We would need to see infrastructure in place to accept cryptocurrencies for payments, everywhere. The middle/lower classes will effectively need to run on their own new financial system, while those in charge of banks will need to figure out how to adapt. This could end up being a massive wealth transfer - with the younger generation in charge of making sure everyone has enough cryptocurrency to survive. Ideally, it wouldn't require a phone - but a card, coin, or chip that can be scanned. It would look a lot like socialism, but those who are able to work will work. People would still make more than others, but at least those who make less can uphold the networks that make our lives easier and more trustworthy. That's right, we would have crypto address holders everywhere, and most people wouldn't have to "buy in." It would be like a giant proof-of-stake model, but with higher dividends. It would force accountability. Of course, there are probably numerous flaws with this type of system that would need to be recognized. Obviously, if I get more into this, it just sounds like science fiction...but I did write a post a while ago about cryoto analysis being science fiction to begin with. Alright, enough rambling. I'm done for now. Hopefully I can get a video up soon.
I must emphasize that NO ONE KNOWS WHAT'S GOING TO HAPPEN, PARTICULARLY WITH CRYPTO. This is not financial advice. Good luck everyone, and stay safe! Remember to focus on what's in your control, not something that's out of your hands. We're stuck with this virus, and we have to deal with it. Staring at the screen won't make Bitcoin go up.
Linked below are some of my favorite posts to date, including when I called the June 2019 top, the Jan. 2019 bottom, and the massive drop for stocks well in advance.
Thanks for your support.
-Victor Cobra
Before I delve into the analysis, I'd like to take this time to talk a little bit about why I think TA is so fascinating. Some may say that yes, it can indeed predict likely outcomes. I suppose that's sometimes true. I myself have made some pretty good predictions. Why is this the case? I argue that TA is essentially a visual representation of a general consensus, or a collective belief in something. In this case, it's the collective belief in the price of Bitcoin. Our entire reality is simply based on our collective agreement that things are a particular way. How the world moves on from here will depend on what we all believe SHOULD happen. This is how we avoid utter chaos. How else would we function socially?
I find it particularly interesting that I've been forecasting a second Great Depression for quite a while now, yet there was no way I could have forecasted a pandemic. It's always been a threat, but there was no way anyone could have known that this would be the thing to end the current era. What has been clear to me is that humanity has grown at an unsustainable rate–––so fast that we are not in a position of strength as a species anymore. Our foundation, which happens to be the weakest and poorest of us, has no support. But it shouldn't have gotten to this point in the first place. We shouldn't have THIS MANY people in this position. We should not have a society built on the weak and helpless - people who are in fact forced into these positions for the betterment of the elite.
And of course the reason why we've gotten here is because of extreme growth and greed. The greed fuels more growth until it eventually crashes due to some unforeseen circumstance that exposes the fraudulent nature of such growth. What I hope is that once a bottom is reached (peak in deaths, peak in despair, lowest point for markets), we've learned our lesson. History tells us that we won't, but maybe there's hope this time for us to be a little more self-aware. I don't want humanity to be stuck in these never-ending cycles of greed, prosperity, and death. There must be a more sustainable solution, right?
Now, what does any of this have to do with crypto? Well, if TA is a visual representation of our collective belief in something, then it's time people believe in crypto, or it will fade away. Right now, we're unsure whether or not Bitcoin deserves to continue its long term price appreciation, and that's reflected in our range-bound price action. On this chart, I've illustrated what both narratives could look like for Bitcoin. In pink, I've drawn a curved growth channel with two possible supports, so there are really three curved trendlines on this chart. This probably doesn't even come as a surprise to anyone here. This is keeping it simple. I'm sure many of you are aware - there is a danger here for Bitcoin to drop below the support from December 2018, meaning sub-3K. If the stock market can do it, you can bet Bitcoin can. If that happens, it may find some short term support in the $2.5-2.8K zone, but afterwards, we can expect a decline all the way towards the $1300 level, and maybe lower than that eventually. The speculative broadening formation (green) shows that if stocks bottom around 2025 (that's been my projection for a while), then Bitcoin may be back to 2 digits by then.
For the bullish narrative to materialize, we'd need something extraordinary to happen. Something extraordinary has already happened with global markets, so it's possible. First of all, we'd need Bitcoin to bounce back above 9.1K rather quickly. Although one could throw TA out of the window here, right now markets are in a particularly emotional state. One could say that "Aggressive TA" may apply here. Traders will react strongly, regardless of what happens. Because of this, I think we can expect Bitcoin to make larger swings than normal. This means we can see a move up towards 8.5K before we even head down towards sub-3K. It also means we can go straight to all-time-high from here if banks start failing and the media pushes the crypto adoption narrative. Based on this chart, it seems fairly reasonable even to expect Bitcoin to head up towards the 40K zone if the bullish trend continues (green X). After that, it can fall all the way back to 9K and maintain this trend! It's quite incredible how many possibilities exist.
Another question I must ask - if crypto is meant to go to zero, why hasn't it already? Weed stocks are essentially going to zero. Gamestop basically has. Why aren't we seeing massive panic selling all the way to triple digits? There must be enough people who still believe in it to support prices. Just a thought. This is also shown by way of immense buying volume on the daily chart:
On the daily chart, it's clear that bulls to break and hold above $6400 for a while (previous bottom).
This is the largest buy volume we have EVER seen on the Coinbase exchange. This is a good thing, because it shows real fiat inflow, as opposed to USDT, which has been buoying the market for a long time. This means some individuals are buying large amounts of Bitcoin with real dollars.
What about the rest of the crypto market?
Interestingly, crypto and stocks are beginning to de-correlate again. This could mean one of two things: A) We are near a short term bottom in stocks and people are getting back into "risky" assets. This would mean that stocks will bounce next week and once that's over, crypto will fall again. B) People are realizing that crypto may be a safe place to park their money if banks falter, and if the dollar goes out of control. Either way, there's clearly a small divergence happening now.
Next, Bitcoin Dominance still seems bearish after the wedge breakdown. The weekly UO is close to a resistance level and it still can't get above the 200w MA with multiple bearish crosses looming. If it gets above the 200w MA, there's still the long term downtrend to contend with (red):
If TOTAL can get convincingly back above the 200w MA, I think it's possible that it will test the 280B level at least one more time.
The broadening wedge may break up as well, but as we've seen with ETH recently, this can fail as well. TA patterns don't really seem to matter much at this point...unless we're just in a bigger wedge. ETH tested the precise bottom again recently.
TOTAL2 is back above major multi-year support around 50B. Structurally, it also looks similar to Bitcoin's bottoming behavior in 2015, so alts must hold this level.
XRP is interesting. Look at that bullish divergence! It's also still above the broken downtrend channel. If any coin can benefit from a liquidity run on the banks (even just based on speculation), it's XRP
XLM also exhibiting a massive bullish divergence, but objectively the chart still looks horrible. It's back in the never-ending bearish channel to boot.
In summary:
Reasons to be bearish: Global depression looming, not enough money to support crypto prices, severe technical breakdown.
Reasons to be bullish: Increased fiat inflow volume with strong buying action, bullish divergences everywhere, not making a lower low while stocks do the same (crypto narrative still somewhat intact), possible global debt crisis.
What would a crypto future look like, in my opinion
We would need to see infrastructure in place to accept cryptocurrencies for payments, everywhere. The middle/lower classes will effectively need to run on their own new financial system, while those in charge of banks will need to figure out how to adapt. This could end up being a massive wealth transfer - with the younger generation in charge of making sure everyone has enough cryptocurrency to survive. Ideally, it wouldn't require a phone - but a card, coin, or chip that can be scanned. It would look a lot like socialism, but those who are able to work will work. People would still make more than others, but at least those who make less can uphold the networks that make our lives easier and more trustworthy. That's right, we would have crypto address holders everywhere, and most people wouldn't have to "buy in." It would be like a giant proof-of-stake model, but with higher dividends. It would force accountability. Of course, there are probably numerous flaws with this type of system that would need to be recognized. Obviously, if I get more into this, it just sounds like science fiction...but I did write a post a while ago about cryoto analysis being science fiction to begin with. Alright, enough rambling. I'm done for now. Hopefully I can get a video up soon.
I must emphasize that NO ONE KNOWS WHAT'S GOING TO HAPPEN, PARTICULARLY WITH CRYPTO. This is not financial advice. Good luck everyone, and stay safe! Remember to focus on what's in your control, not something that's out of your hands. We're stuck with this virus, and we have to deal with it. Staring at the screen won't make Bitcoin go up.
Linked below are some of my favorite posts to date, including when I called the June 2019 top, the Jan. 2019 bottom, and the massive drop for stocks well in advance.
Thanks for your support.
-Victor Cobra
ノート
Doesn't appear to be linking my other posts at bottom right now. Oh well. You can always scroll through my charts to find them :) There's some interesting stuff in there!ノート
Still diverging a bit from stocks. As I somewhat suspected, we did see a larger bounce in stocks. The question here is whether crypto heads back down to the deep lows, or if it continues to consolidate and bounce. What would be even more interesting is if crypto even reaches a new high amidst all of this. It seems unlikely now, but anything is possible. ノート
On larger timeframes, the stock market made a lower low, while crypto still somehow managed a higher low. ノート
This is starting to look like a bear trap for alts, as dominance is struggling to hold above the 200w MA (blue), and it got rejected near my downtrend line (red). ノート
TOTAL is just barely holding above the 200w MA, with the ultimate oscillator at bottom. ノート
Interestingly, while Bitcoin has fallen back into its downtrend channel, alts have found it as support, and have not made a significantly lower low. Dominance still looks bearish on the daily and weekly, unable to reclaim the 200 MA on both. The 9W MA has crossed over the 50W MA for the first time since February 2016! This is very interesting to me, particularly given current market conditions. It may give us an idea as to where the money is flowing in the market. There's also still a ton of USDT on the sidelines. Why is that? Wouldn't they want to exit into real USD?
ノート
Still trapped in the bearish channel, but at least we made an attempt today. Alts still look better, holding above their own channel. ノート
Another view of crypto versus stocks. Still looks a bit uncorrelated at the moment. Here you can still see how crypto has outperformed stocks since the end of 2018 (for now). ノート
If Bitcoin can get above the 4H 200 MA, perhaps it can head towards the high 7K zone next. ノート
Bitcoin has broken above the 4H 200 MA but is stalling in the 7400 zone. That's an important level of control Traders seem pretty hesitant at the moment, and our uptrend from the recent bottom is close to being broken. However, On-balance-volume shows that there "could" still be major accumulation going on in this market.Stocks, on the other hand, look more bearish, in the sense that their OBV is NOT increasing along with price. That tells us that this is likely a retail-fueled dead cat bounce. If we look at Bitcoin's performance versus stocks, it seems to be near a major long term decision point. The 100 day MA just crossed above the 200 day MA, but all major moving averages are pretty flat. This suggests a decision will be made soon. That cross has historically produced some major upside, but it may not matter much in current market conditions. Either way, it's pretty interesting.
ノート
Here's the daily SPX chart where you can see the more bearish OBV divergence. 
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