Bitcoin is the original and by far the largest cryptocurrency. Since its introduction in 2009 it has grown exponentially and spawned many competing cryptocurrencies. Opinion is mixed as to its true worth, but speculation and huge interest has created a volatile - and potentially very rewarding - trading environment.

Updated: 28/06/2019 1040GMT 0540EST



V= 3 C =4            Conditions:  trending higher
F=1  I=2 T= 3 S= 4  Strategy:  look for longs

Mapping the Correction

The Bitcoin trend is maturing. We can now count 3 complete waves from the major bottom around 3100. In theory this could be the end of the recovery, but we expect a 5 leg sequence and we expect the 5th and final leg to be extended and spike to a new all-time high. This extension is likely both because of the longer-term target of a new high, and because the previous waves were equal and not extended. Indeed, waves 1 and 3 were equal at 13453, so wave 3 only made it slightly past the equality target before reversing at 14k.

We are therefore looking to buy this dip. The channel has already been filled and the bounce back to 11.9k looks promising but is likely to fade again. The way Bitcoin rallied and reversed looks almost exactly like the last major top around 20k (see evidence) and this projects a longer correction. 12k should hold for a long triangle type consolidation above 10.4k followed by a final capitulation spike lower around the second week of July. A proportional move targets 9.5k.

Only a dip below 9096 would be concerning as it would overlap the high of our wave 1 and could warn that the sequence higher did in fact end at 14k.




Gold 1980s comparison
10D E1


June Top = 20k Top
10D E1



V=4 C = 3              Conditions: recovery
F=2  I=1 T=3  S=4   Strategy:  two way trading

Bitcoin has very likely bottomed at the 3135 low in a capitulation much like the early 2015 low and a longer-term pattern similar to gold in the 1980s. While it is unusual for an instrument to recover from a bubble and crash, it does and can happen. Gold and the Nasdaq are good examples, as is Bitcoin itself from earlier periods. All recovered from a crash to trade new highs. Certainly Bitcoin's trend sequence calls for a final wave 5 rally as long a 1169 holds and this should take it above 20k. This should be much slower than the 2017 advance and lead to momentum divergence. We will track the smaller moves on the 48H commentary.




NDX comparison
10D E1


10D E1



V=4 C =2               Conditions: SLOWER  UPTREND
F=2  I=2 T=4  S=5  Strategy: LONG

The eventual path depends on how cryptos develop - if Bitcoin becomes an alternate to gold and a store of value for a new generation, and can hold 1135 got new highs to form a trend sequence above 20k, then the outlook is very bullish. This will have huge implications in the longer term as we could then expect at least another multi-year, proportional rally to the first 5 wave sequence after a long period of consolidation.