No one could argue that 2022 will be anything but a bear market. After bitcoin hit an ATH in November 2021, we saw the bear market develop in classic fashion by losing support at key technical levels. While the bear was developing in a somewhat predictable manner, the market was caught off guard by the events that led to the FTX crash in November 2022. Because the FTX contagion had a devastating ripple effect felt by the largest institutions with exposure to cryptocurrencies. Like the banks, he expected prices to fall further.
At the time, fear and fighting among institutional players such as Galaxy, Gemini and Grayscale (under DCG), which were among the biggest institutional victims of SBF, added to the concern that the price would drop to as low as 10,000, although somewhat remarkably and perhaps not so coincidentally. January 1, 2023 bitcoin began to recover. What were initially considered weekend whale plays evolved well after the weekend, and in fact during the first quarter of 2023 I identified an entity on FireCharts that I nicknamed “Notorious BID” that was accumulating large blocks of supply liquidity to drive up the price. There was a pattern to the behavior that made it somewhat predictable and marketable. Those moves were well documented on my X feed during that time period. Once the price reached $25,000, that entity disappeared. Even without the help of that manipulation that drove up prices, and even though the macroeconomic situation was horrible, the geopolitical situation went from bad to worse and the political situation in the United States evolved from a dysfunctional shit show to an all-out circus. rule, the market continued to recover.
Now, almost 12 months and >150% since the day the rally began, the debate between bulls and bears over whether this is a confirmed bull market or a sequence of bear market distribution rallies continues literally today. While it is understandable that someone could look at 150% and immediately assume a bull market, it requires a deeper understanding of what distribution and accumulation look like. From my point of view, that is still not as clear as one would hope. Historically, the class of purple whales with orders in the $100,000 to $1 million range have had the most influence over the direction of btc price. The order flow data I've been monitoring on Binance shows that for most of the year they (along with the larger MegaWhales) have been buying on dips and distributing significantly more than they bought on those dips into uptrends. that followed.
Only recently have we seen a rally which could be an indication that the trend is changing. In parallel, some on-chain data providers are showing an increase in the number of wallets holding btc, which is also an indication that we might be moving from a distribution phase to an accumulation phase and I'm looking for clearer evidence of that. . . One of the things I look for to get an idea is the liquidity of the offer. I believe “Liquidity = Sentiment”, and it's no secret that order books have been tight on both sides of the price for most of the year; However, in the last 3 weeks, we have started to see more scales of institutional-sized offerings. in the order book and that fact supports a bullish thesis, as long as they don't unravel at the next pump.
Given all of the above, there are certainly twists and turns that investors should pay attention to. Sure, we're starting to see some improvements in America's inflation and unemployment numbers, but something about those reports doesn't jibe with reality. For most low- and middle-income Americans, credit card debt is reaching new highs, rents have skyrocketed, homeownership is unattainable, grocery prices are high, and a drive-in Metallica's “Standing Room Only” costs $575. So, in my opinion, we still have a macroeconomic problem that is percolating and the US geopolitical and political issues seem to be getting worse by the day.
Other than that, the RSI has been overcooked for an extended period of time and we just had 8 consecutive weekly green candles. Both factors have historically led to corrections. I could give you the “History doesn't have to repeat itself…” spiel or I can show you what happens historically after moves like this and let you decide.
Another possible twist to consider is that the current PA bears a striking resemblance to the first leg of the 2019 rally that turned out to be a Fib retracement, which was ultimately rejected from the top of the Golden Pocket at .618 Fib. That led to a 53% correction before the Covid crash took it down over 70% from the .618 Fib.
At this point, I would be surprised to see such a deep downside move without the help of a Black Swan, but we are currently having some interaction with the Golden Pocket that looks familiar to me. While it is reasonable to expect some resistance entering and exiting the Golden Pocket, there is a very strange twist to what we are seeing and it is a strange pattern that I have noticed occurred around December 17th. Every year since 2017 there has been a move on December 17 that had macro implications. The only exception to this was last year when it occurred on December 20th. Each time, the price action led to a macroeconomic breakout or breakdown. It is too early to say if this move will validate the pattern on the day of writing (December 19), but on the 17th we saw btc get rejected from the lower end of the Golden Pocket and also lose the 21-day moving average . The price has been flirting with both levels since then, so we will have to wait to see how it develops over time. Aside from those things, I'm watching the upcoming ETF window very closely. I think the market is desensitized to the SEC's delays in these decisions, but there is so much anticipation that we will see an approval this time, that an outright rejection has the potential to be the catalyst that triggers a correction.
Regardless of your position on whether or not we are in a confirmed bull market, we are seeing plenty of evidence that if we are not in it, we are close to it. If you're a long-term investor and haven't started building a position yet, it's a good time to identify a few goals to start building into one. Of course, this depends on your time horizon and risk appetite, but if you have a long-term outlook and 6-figure goals for btc, it's still early enough to get in, but it's also a good idea to save some dry powder for a correction because in my opinion, it is not a question of if it will come, but when.
Q: Right now, we are seeing bitcoin hit new highs. Do you think we are in the early days of a full bull run? What has changed in the market that allowed for the current price action? Is it the bitcoin Spot ETF or the US Federal Reserve hinting at a losing policy or the next Halving? What is the big narrative that will continue in 2024?
Despite the ongoing debate between bulls and bears as to whether or not we have been in a bull market, I can say that despite the uptrend, there has been no clear confirmation that we have been in a bull market for most of the anus. However, the fact that we have recently started to see more ladders of institutional-sized offerings entering the order book along with on-chain data indicating more wallets being held longer and recent purchases following the R/ S at $40k are signs that we may be on the verge of a breakout.
I have no doubt that much of the momentum we have been seeing is related to the upcoming ETF decision window opening January 5-10 and the April 2024 halving. FED pausing rate hikes and hinting at a pivot to cuts in 2024 certainly added fuel to that momentum that pushed the price above $40,000. In typical crypto fashion, we also got some help from late October to early December when I noticed some familiar patterns in the order book. I cannot confirm with absolute certainty if it was the The notorious BID forger we saw in the first quarter returnsbut it was the same play I identified during the first quarter and there is no doubt that it helped push the price up to the $35,000 to $40,000 range before it disappeared.
(…) As much as I would like to see a correction before we get there (bitcoin spot ETF decision), the market doesn't care what I want. I would expect it to arrive before the halving. It remains to be seen whether it will occur before or after the ETF's decision window closes. In the meantime, I will continue to watch the order book and order flow data and trade with what I have in front of me.
Q: Last year we talked about the most resilient sectors during crypto Winter. Which sectors and currencies are likely to benefit from a new Bull Run? We are seeing the Solana ecosystem flourish alongside the nft market; What trends could benefit in the coming months?
