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Bitcoin: Something Big is Brewing (BTC-USD)


Message summary

Bitcoin (BTC-USD) has barely moved over the past few weeks. However, historical evidence suggests that we could see some extreme price swings this week. This can come in the form of a relief rally, a final surrender event, or even a rush High indicates that the bottom is inside.

Something big is brewing

Bitcoin has been dormant over the past few months. The currency experienced low volatility, and the price was almost flat. In fact, bitcoin has outperformed the broader market since bottoming in June. While S&P hit new lows in the market, Bitcoin maintained support.

S&P and BTC

S&P and BTC (TradingView)

Sentiment is at an all-time low for both cryptocurrencies and stocks, which could mean a bottom is near, which will be confirmed by a strong reversal. However, there is also the possibility that we will get one last blackmail.

Anyway, Bitcoin appears to be nearing a big move, and that’s backed by history. Below, we can see the bitcoin price and the bitcoin volatility index since 2018.

Bitcoin volatility

Bitcoin Volatility (TradingView)

As we can see in the chart, when volatility has reached these lows in the past, a large price movement is often followed by it. In October 2018, we got a sale that took the value of Bitcoin below $3000. Something similar happened in the 2020 COVID incident.

On the other hand, we have also seen periods of low volatility, setting us up for big moves to the upside, which is what happened at the end of 2020.

Looks like this could be an important week for bitcoin, but are we selling or going?

Breakout or collapse?

I will simply mention it. For now, I think we should see Bitcoin crash and one lower. This mostly depends on Fibonacci extensions and the number of current Elliott waves. But also, many analysts point to this scheme as evidence that collapse is imminent:

BTC 2018 vs 2022

BTC 2018 vs 2022 (TradingView)

We can appreciate that Bitcoin forms a very similar structure today, as it did in the massive sell-off of 2018. We have a triangle shape, and volatility is reaching a similar level as it did in 2018. If history repeats itself, Bitcoin will collapse as soon as it reaches the top of the triangle.

Where will the price fall? The main support area is Delta Price, which is currently around $13,500.

Now, let’s zoom in on the current price action to see what happens firsthand:


BTC EWT Count (TradingView)

Since around March 22, Bitcoin has been completing a five-wave structure to end a correction to a larger degree. The most likely scenario is that the June low was a wave 3 low, and now we are either ending wave 4, ending wave 5, or starting wave 1 of the bullish cycle.

If we are going to finish wave 4, Bitcoin could now rise to $277,822, which is a 50% retracement of wave 3. This already means that Bitcoin is preparing for a big move, but I still expect a crash after that.

Alternatively, wave 4 could have already reached the top at the end of August, which in the chart is called wave W. We can then make the argument that we complete five waves of the bottom of the last wave 5, which now puts us in wave 3 This means that we could see an intense sell-off, typical of wave 3, which is taking us towards the $14,200 area. This is the 1.618 extension of red wave 1 measured from the top of wave 2. The implication of this is that we will be settling somewhere around this area, but maybe even below $12,000. This would be void if we spread above the top of wave 2.

Finally, it can be shown that five waves have already completed, and we are ready for a reversal. However, this is the least likely scenario because it would mean that we have a truncated bottom of wave 5, which means that wave 5 did not make a lower bottom, which is unusual.

BTC bull case

BTC Bull Status (TradingView)

However, we saw a strong reversal on Thursday. If we can now maintain the $18,500 level and rally strongly above $20,000, then this scenario will gain some more possibilities.

last thoughts

Whatever happens next, I think we can expect some increase in volatility and extreme price volatility. We should get a lower dip in Bitcoin, but I should also consider the possibility of a dip. While the Bitcoin chart does not indicate this, I do get some evidence of a bottom in other charts, such as Ethereum (ETH-USD) and S&P 500 (SPY). I also see the Dollar Index (UDN) close to the top, which could lead to a rally in the cryptocurrency.

#Bitcoin #Big #Brewing #BTCUSD

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