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Monthly Bitcoin Price Bubble Popping: Wake Me Up When 2018 Ends!

Like The Fool On The Hill

The present article follows our previous call from 22 December 2017 in Like The Fool On The Hill:

At this stage, please note that the monthly oversold pressure (framed on the monthly price chart here below) has NOT been released and we still expect more downside for the reasons explained in our previous post, so that we take the risk to propose the following scenario:for the Bitcoin price to drop to $7,000 and possibly even lower to $4,000 as shown in Chart 1:

2017-12-22_BitcoinUTMOverbought

CHART 1: Monthly Bitcoin Price Chart in USD (Kraken) – 22 Dec 2017

We expect the Bitcoin price to correct down to $7,000, possibly even lower to $4,000.

$7,000 was reached two months later (Feb 2018) before the Bitcoin price moved back up to $11,700 and reverted lower from that level when we reported on 7 March 2018 in Bitcoin Bear Returns Below $12,000:

While the weekly trend is now turning neutral there is still vast space for the price to move lower and as long as the $12,000 price level holds odds favor a bear market resume.

We Have Seen This Movie Before

On a semi-log price chart the rise from $152.40 in Jan 2015 to $19,666 in Dec 2018 shares similarities with the previous increase from $2.22 in Oct 2011 to $1164 in Nov 2013 (Bitstamp price history) with both waves looking like impulses in a larger bull market.

The initial impulse [1] marked a advance of 52,400% in two years and was followed by a wave [2] zig-zag retrace that corrected to $152.40 or 79.5% of wave [1] in 14 months or a time fraction of 58% as shown in Chart 2:

CHART 2: Monthly Bitcoin Price Chart in USD – Semi-log scale

So far wave (1) marks a progression of 12,800% in three years, which pales in comparison with the previous wave [1] and therefore the suspicion is high that it is only the first wave of a longer lasting and higher reaching wave [3] that should decompose into now completed impulse wave (1), developing zig-zag wave (2) and to be followed with impulse wave (3), corrective wave (4) and final impulse wave (5).

On the monthly Chart 2 we also observe that the Bitcoin price is breaking below a longer term trend line, an event that should portend more bearishness to come.

If history is a guide correcting 79.5% of wave (1) provides a Bitcoin price target of $4,150 and the correction should last approximately 21 months at a similar time fraction of 58% until a bottom is reached as shown in Chart 3:

2018-06-16_BTC-UTM-2013 vs Now

CHART 3: Monthly Bitcoin Price Chart in USD – Semi-log scale – 2014 compared with now

This also means that for one more year approximately the Bitcoin price should remain range bound but going not much lower than $4,000 and possibly not higher than $7,000 to $8,000.

Bearish Pattern Developing

So far the corrective wave (2) appears to develop as a larger zig-zag retrace with the zigzag [A] and contracting triangle [B] subwaves now finished and zig-zag subwave [C] in progress following a break below the lower triangle trend line, which polarity reversed and that is now acting as a resistance at the $7,500 price level as depicted in Chart 4:

CHART 4: Daily Bitcoin Price Chart in USD – Bearish pattern developing

Longer term the price retrace is expected to countertype the previous 2014 correction and from this perspective investors could progressively return to accumulating Bitcoin and other altcoins the closest we come to the price and time targets, expectedly during the first half of 2019 and near $4,000 as shown in Chart 5:

CHART 5: Weekly Bitcoin Price Chart in USD – Price and Time Targets

Bitcoin Bubbles Popping

The above scenario is shored up when looking at volatility patterns. Remember our call for the weekly Bitcoin bubble to close (Chart 6) posted on 5 Feb 2018 in Is Bitcoin in a Bubble? Of Course It Is!:

2018-02-05_BitcoinBubble

CHART 6: Weekly Bitcoin Price Bubble Popping – 5 Feb 2018

The very next day, on 6 Feb 2018, Bitcoin made a price low at $ 5,920 corresponding to our first target shown in Chart 6. Fast forward to mid of June and the volatility envelop has now closed as proposed in Chart 6 with the lower boundary making a contact with the last weekly Bitcoin price candle as presented in Chart 7:

CHART 7: Weekly Bitcoin Price Bubble Closing and Bearish Trend Line Break

It now remains for the price to make the next move down in direction of the $4,000 level meaning than it should break below the lower weekly volatility band at some point in the future.

This is more than a soft probability as we should expect more of the same bubble popping and volatility closing on the monthly scale as shown in Chart 8:

CHART 8: Monthly Bitcoin Price Bubble Popping

This is a perfect fractal reproduction at the longer monthly time scale of the weekly pattern presented in Charts 6 and 7.

Bouncing Up and Down Until Dissipation of Residual Bear Potential

Short term the Bitcoin price seems oversold as shown in Chart 9 and may soon develop a relief rally that traders may want to exploit but that is possibly a premature decision for long term investment:

CHART 9: Daily Bitcoin Price Chart – Oversold Condition

Expect more up and down swings all along the way to the bottom and during the following stabilization phase during which bull energy will be recharged until the Bitcoin price takes off again for the next major bull run (wave (3) of [3] in Chart 2) and that could easily take it up in the $100,000 price area.

So Wake Me Up When December Ends!

Disclosure

All price and time targets are best guesses and should not be construed as definitive amounts.

Conflict of Interest: none.

I am / We are so far no longer invested into cryptocurrencies but could consider trading Bitcoin and other altcoins at any time but preferably to the upside on relief rallies.

 

 

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