The short answer is: who cares?
This article will chronicle the reasons why I believe that bitcoin will range between 3100 and 5900 until late-summer/early-fall next year. Is the absolute bottom in? I have no idea, but I don’t think we’re going much lower than 3000 or much higher than 6000 for awhile.
Before I get started I’d also like to announce that I’ll have a lightning node up and running in the next few days so if you’d like to open a channel with me, leave a comment!
In addition, I would like to encourage you to go out and learn something new about the Bitcoin protocol. Doesn’t matter what it is, just poke around until you find at least one new thing that you didn’t know before. We have a long time before this space is going to get exciting from a price standpoint so use that time to get excited about the technology. It’s truly incredible, it’s accessible, and it’s happening right now. Blockstream is sending satellites into space, Lightning Network is becoming integrated, and I have a feeling we’re going to break back above 10,000 fully validating nodes shortly (do your part).
OK, so we made it down into the low 3k’s, as predicted. A casual swing through cryptotwitter would lead you to believe that this is the singular event that will send us careening into the next bull run. I don’t think that’s the case. I think we just set the bottom of the trading range for the next eight months or so. And now we wait to set the top.
According to my previous article regarding the bitcoin bottom, I set the “breakout” date of the last bull run at October 30, 2015 which was 253 days before the bitcoin block reward halving (July 9, 2016). The ranging market prior to the bull run lasted 289 days. From bottom to halving was a span of 542 days.
IF the “bottom” is in at 3121 on December 15 and the price action follows a similar trajectory in pursuit of the next block reward scheduled for May 2, 2020 then we can use the breakout-to-halving timeline and walk backwards to find the length of the ranging market. It won’t be exact, but I would expect the halving to begin to be priced in in a similar amount of time as the last one.
(As I was writing this I realized that although I was around for the second halving in 2016, I wasn’t around for the first in 2012. So I went in search of commentary on it and it truly was a different landscape back then; it was only 6 years ago too! If you’re interested, go check out the bitcoin talk thread about “2100000 found” -referring to block height- and a few reddit threads where people organized a jackpot to insert into that block for the miner who found it by fluffing up transaction fees. Wonder where we’ll be in 2028 in two more halvings…)
It’s a pretty similar time table between the last halving and this one. My guess would be that the bullish action prior to the halving could begin roughly 220–260 days before the halving, as it did last time. Let’s just go with 253 days to kick this analysis off. Working backward from May 2, 2020, the expected date of breakout would be August 23, 2019. As a reminder, based on the prior cycle, this is the expected date that the bitcoin price will break out of it’s trading range during the accumulation phase of this new market cycle. So, if the next cycle reflects the last, we have until late summer to either trade the range, learn about the protocol, or build something in/on it. I’m hoping to do all three.
In terms of price entries and targets, I’ll be looking for a replication of the action during last cycle until proven otherwise. Price capitulated to 166.5 and then hit 315 almost two weeks later. The reaction moved up 89% from the bottom and I think that’s a reasonable starting point for now as well. If the bottom painted at 3121, then the top of the range should be set around 5905 at 89% higher. In looking at the structure and fib levels, I’d bet the bulk of trading occurs between 4000 and 5800 for the next eight months or so.
This is all hocus pocus TA, but I think it helps set the tone for where we’re at in the cycle. Will it be dead on? Absolutely not. But it helps to narrow down some possibilities. It may also prevent you from FOMOing in at 5800 just to get liquidated.
Another bull trap could be the ICE Bakkt launch on January 24, 2019 — this is the launch of US based physically-settled bitcoin futures. It’s a pretty exciting event and not just because of the “institutional money” trope that could drive prices up. The proliferation of forward contracts will be, in my opinion, a critical part of the transition process for companies to begin using bitcoin. The more volatile the asset, the more commercial enterprise will need to hedge against the volatility in order to operate effectively as a business and not just a storing house for bitcoin with their success or failure directly tethered to the value of the asset.
Remember that all that institutional money will want time to accumulate; they aren’t going to come online with bitcoin severely overvalued and buy retail traders’ bitcoins at a premium. So please don’t let them.
Maybe this cycle is different. But maybe it’s not.
Check out my BlockDelta profile for additional articles.