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: 16/09/2019 1010GMT 0510EST

NEXT 48 HOURS

INDEX 48H

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

Vanilla or Flush

The size of the correction since the June top means the move from 3100 to the 14k high was one complete sequence and the price action since is all part of the same corrective sequence. This is important to qualify as there is no real inflection point on the downside (apart from 3100 but that should not come into play). The 9070 low could therefore be flushed without any real change in the view that this corrective sequence should set up a continuation higher. We are therefore looking to buy the dip.

However, there are two alternate views. The vanilla view is that Bitcoin is in a bullish triangle and should soon break higher and rally over 14k. Certainly a break over 10.5k should ignite a rally, but we expect this to run out of steam in the 11.8k area as the markets gets overly bullish but has no active buyers left. More likely is that a break fades in the 11.8k and makes a surprise second leg lower through the 9070 to spark some brief panic. This would be similar to the last major correction in 2018, a comparison we pointed out before but have updated (see evidence). Buying stops  on the capitulation around the 7.5k area would be a good opportunity to get positional long for the next big run up.

 

 

 

EVIDENCE

Gold 1980s comparison
10D E1

EVIDENCE

June Top = 20k Top
10D E1

NEXT 10 DAYS

INDEX 10D

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.

 

 

EVIDENCE

NDX comparison
10D E1

EVIDENCE

Rodrigue
10D E1

NEXT 3 MONTHS

INDEX 3M

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.