Picking the Bitcoin Bottom - Long term trade idea
Updated
So its that time again. Everyone is predicting that Bitcoin is dead, its a myth, its going to zero!
Luckily for savvy crypto investors, this provides an opportunity to buy at bargain prices. No matter the market type buy when fear enters the market.
Some people find bitcoin scary/unpredictable/not worth the risk. However with some research and basic trend analysis we can find some very predictable patterns emerging from an asset so juvenile in its early stages.
Firstly I look at seasonality with my trades. Second is fundamental analysis. Thirdly technical analysis.
So lets briefly look at seasonality. There are a lot of great charts showing the seasonality of bitcoin (I encourage you too look at some). Bitcoin seasonality hinges on one thing.... BTC halving. So every 4 years (or there abouts) we have three seasonal periods, upswing, downswing and accumulation phase. So breaking down these three phases helps us predict where we are on the BTC price rollercoaster. Luckily for us these phases have relatively constant timeframes if we look at past performance. Upswings last anywhere from 14-18 months, downswings last anywhere from 12-14 months and accumulation phases last around 16 months.
As we are trying to predict the bottom we will be concentrating on the downswing for the current cycle. BTC began this downswing in November 2021. Currently we sit around 8 months into the bear market. This means we are getting close to hitting the seasonal bottom. Within reason.... we can predict the bottom the eventuate around November 2022, give or take a month or two either way. NOTE BTC has retraced around 85% in the past two cycles. This is significant when looking at the charts.
If we now move to the charts we can see our long term trend channel in blue, our medium term channel in green and a short term wedge in black. Lets start with the long term blue trend channel. I don't believe we will break this trend channel. If BTC does in fact retrace to these levels, this will act as major support. Looking at our medium term green trend channel, we can see BTC is in a descending channel. I believe that we will remain within this channel until the bottom is met. Interestingly this channel also intersects the long term channel at around the 6k mark in November 2022. 6k is a level not many people are talking about, however it has acted as support in the past. Obviously there are many support levels before we hit 6k. Personally I think 12k is the next big support level that BTC will retrace too. The question is, will it break this support and go lower? 12k and 6k are the two levels I am watching and predicting as our bottom, or somewhere in between. Supporting this case is the fact that a typical 85% retracement (mentioned above) has us around the 10k mark.
When long term trends, medium term trends and seasonality all line up in this way, it gives us confidence that we are on the right track.
Personally i'm looking at buying opportunities at 12k and lower. One thing is for sure, anyone buying BTC at the levels mentioned above will be happy they did so come 2025!
Special Note: 12k is major support that a lot of people cannot see being broken. This always has me weary as BTC almost never changes from bear to bull markets or vice versa, at levels the public are predicting... food for thought. Will it go lower?
Let me know your thoughts, all questions welcome. Discussion is how we all learn.
Luckily for savvy crypto investors, this provides an opportunity to buy at bargain prices. No matter the market type buy when fear enters the market.
Some people find bitcoin scary/unpredictable/not worth the risk. However with some research and basic trend analysis we can find some very predictable patterns emerging from an asset so juvenile in its early stages.
Firstly I look at seasonality with my trades. Second is fundamental analysis. Thirdly technical analysis.
So lets briefly look at seasonality. There are a lot of great charts showing the seasonality of bitcoin (I encourage you too look at some). Bitcoin seasonality hinges on one thing.... BTC halving. So every 4 years (or there abouts) we have three seasonal periods, upswing, downswing and accumulation phase. So breaking down these three phases helps us predict where we are on the BTC price rollercoaster. Luckily for us these phases have relatively constant timeframes if we look at past performance. Upswings last anywhere from 14-18 months, downswings last anywhere from 12-14 months and accumulation phases last around 16 months.
As we are trying to predict the bottom we will be concentrating on the downswing for the current cycle. BTC began this downswing in November 2021. Currently we sit around 8 months into the bear market. This means we are getting close to hitting the seasonal bottom. Within reason.... we can predict the bottom the eventuate around November 2022, give or take a month or two either way. NOTE BTC has retraced around 85% in the past two cycles. This is significant when looking at the charts.
If we now move to the charts we can see our long term trend channel in blue, our medium term channel in green and a short term wedge in black. Lets start with the long term blue trend channel. I don't believe we will break this trend channel. If BTC does in fact retrace to these levels, this will act as major support. Looking at our medium term green trend channel, we can see BTC is in a descending channel. I believe that we will remain within this channel until the bottom is met. Interestingly this channel also intersects the long term channel at around the 6k mark in November 2022. 6k is a level not many people are talking about, however it has acted as support in the past. Obviously there are many support levels before we hit 6k. Personally I think 12k is the next big support level that BTC will retrace too. The question is, will it break this support and go lower? 12k and 6k are the two levels I am watching and predicting as our bottom, or somewhere in between. Supporting this case is the fact that a typical 85% retracement (mentioned above) has us around the 10k mark.
When long term trends, medium term trends and seasonality all line up in this way, it gives us confidence that we are on the right track.
Personally i'm looking at buying opportunities at 12k and lower. One thing is for sure, anyone buying BTC at the levels mentioned above will be happy they did so come 2025!
Special Note: 12k is major support that a lot of people cannot see being broken. This always has me weary as BTC almost never changes from bear to bull markets or vice versa, at levels the public are predicting... food for thought. Will it go lower?
Let me know your thoughts, all questions welcome. Discussion is how we all learn.
Note
Sorry guys, I forgot to mention the black descending wedge pattern. It shows clear direction in the market, however I don't think we will remain in this channel until the bottom. I am of the opinion that BTC will reach the upper green trend line (possibly in the near future) before reaching the bottom. It never goes down in a straight line.
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