Bitcoin is 50% below ATH. This, in and on itself, is not reason for a trend change. We need the chart, medium and long term, to understand if and when the bleeding might end. If anything, our crypto forecast 2022 is still accurate provided 30k is going to hold.
With aggressive selling going on in markets, particularly tech stocks as shown in The Ugliest Charts Of January 2022, it goes without saying that crypto can only go down until markets stabilize.
In the end, Bitcoin was the first asset to start moving lower, mid-November.
In a way, crypto is a leading indicator for the Nasdaq, not the other way around.
However, crypto will need the Nasdaq to end falling before it can turn higher.
Readers should not spend their precious time looking for ‘reasons’ why crypto is falling. It is an unwinding process, in tech stocks and crypto markets. This process might take a few more months.
The one important question is how to handle individual positions. The other important question is whether this market will present us with an epic buy opportunity.
We believe the answer to the second question is YES but we cannot comment on the first question (it’s an individual decision how to handle individual positions).
All we can do is guide through the chart.
The daily BTC chart as leading indicator for the entire space printed an ugly red candle on Friday. Really not good, especially as it came after 40k was violated!
For now, the one but last reversal level (red shaded area) is holding. Whether this will continue to hold is questionable. We are thinking a few months out, we would be surprised if yesterday’s low was an absolute bottom. Probably it wasn’t, unless BTC manages to get back above 40k AND stay there.
The path to 30k is wide open now, and it seems a matter of time until the 29-30k will be tested again. Some altcoins will get hit hard, some might hold up. Relative strength is what we will be looking for.
In order to understand what is going on we really have to zoom out. The weekly chart is the one we need.
After an amazing bull run in Oct/Dec of 2020 we got a really choppy 2021. This is the clue of the story: BTC is either printing a wildly bullish W reversal (which would be the setup that brings it 100k) OR it is going through a big topping pattern in the form of an M. The latter will bring price to the lower 20ies.
It is not easy to make a prediction here, as BTC will be pretty vulnerable once it gets back to 30k. In the end, a move from 30k to 20k is ‘just’ 30%.
On the other hand, 30k has proven to be good support, for many months in 2021. So there is a case to be made that 30k will hold which, IF it happens, will suggest that the bullish W-reversal will be the dominant pattern. It will give green light for long positions with a target of 65k followed by 100k.
For now, though, we have to wait and not over-trade.
Our premium crypto members get more detailed guidance, and will be the first to know if and when we believe an epic buy opportunity for the long term in crypto markets will be there.
