Will go through some current FA and TA. Will start with the bear case and then the bull case.
Bear Case:
1. Stock markets got really hot with new investors coming in, probably signalling the top. By many measures stocks are now overbought and hit key technical resistance. If stocks bottom near 2650 and the DXY near 99.5, then BTC would probably bottom around 7200-7800. A correction in stocks doesn't mean a near bear market.
2. At the same time the USD has more room to the upside before it continues lower. For now USD is still technically on an uptrend and could have another spike. It got extremely oversold, it hit old strong support and bounced.
3. There are still more longs than shorts. Lending + funding rates currently agree with that. Premiums on quarterlies shows that most people are still bullish even though much less than the last three times we were at these levels.
4. Most BTC rallies failed. Every attempted to break 10k quickly reversed and many with a violent wick down. It shows that there aren't that many sellers, but no shorts to fuel the rally either.
5. Both BTC and ALTS are already up significantly. Small caps have gotten probably a bit too hot and are due for a correction, while large caps have shown a lot of weakness as they've kept bleeding in BTC terms. The altcoin bottom came on May 14th, just a few days after I had explaned how the real sell the news was from BTC to alts.
6. Technically Bitcoin has left untested 5.4k, 7.2k and 7.8k. The drop to 4k was anomalous, as was the drop to 8k and more recently to 9k. When the price has big differences across exchanges after a pump or a drop, that level tends to get retested or the price gets close. 8k & 9k were somewhat retested, but 4k wasn't. It is true that 2.5k hasn't been retested (VP HVN) and ETHUSD hasn't retested 55$, XRPUSD 0.06-0.07$ and LTCUSD 17$. BTC, ETH and LTC have those weird double/triple bottoms right above a major area that hasn't been retested... So it is totally possible that there is another final drop that wipes everyone out before going higher (totally possible especially if SPX500 tests 1600.
Now some bearish notes to recap or add to the mix: Crypto sentiment has been relatively high for some time, Fear and Greed index oscilating between 39-56 and now at hitting 38. Bitcoin dominance is still higher from where it was February & April and since it's bottom in Feb it seems to be making higher highs and higher lows. Altcoin Long/Short ratios are quite elevated, much more elevated than Bitcoin's. Ethereum is consolidating below resistance and below the Yearly pivot on its BTC pair failing to breakout for quite some time. Right now BTC is finding resistance at Difficulty model price and the Stock-to-Flow model, as with both previous halvings Bitcoin went sideways for some time post halving, and in 2016 it spend most time below the model price. If BTC is moving in 4 year cycles and the halving happened 2 months early, plus the market is much larger (+all the shitcoins) it might take some extra time for Bitcoin to break out as we are only one month post halving. We are essentially moving at the same pace as we were in 2016 and even faster, but this time around with all the quants and institutions, plus the bad financial conditions globally, it might take some time for BTC to break out. Even in 2016 BTC moved sideways for about 2-3 months before going higher.
Bull case:
1. Stocks had a short term correction, but tech is booming. All sectors with debt and which are related to technology, payments etc are booming. Companies without debt are doing well, and most crypto companies have no debt. Pretty much most assets had a V shaped recovery, even though there were and now there are even more issues in the global economy. Bitcoin thanks to the halving pretty much recovered all its lost ground much earlier than all other assets, but is now 10% below its high. It has been going sideways for 45 days already and its current structure looks more like consolidation rather than distribution.
2. The Fed is the main Central bank that has gone in full force and it's doing its best to keep the USD down. So far it looks like it has succeeded, but the USD was extremely overbought anyways. If many assets had extreme capitulation and the USD a blow off top, wouldn't that mean that the cycle has finally turned? Yes there is a lot of USD debt globally, but there are also a lot of investors that hold US assets and since 1971 there have been 3 dollar cycles and there is a high chance this one might have just peaked. With US rates back to 0 and with the Fed printing so fast, why wouldn't the USD drop if the Fed is printing all that USD? If Central banks are ready to do whatever it takes and there are talks for Central Bank Digital Currencies... why can't Bitcoin boom?
3. Funding + lending rates are pretty low, as are quarterly premiums. Both Tether and Bitfinex are following the market and even Bitmex perps have a discount to spot. Since Black Thursday Open interest has remained a bit low and more balanced. No excess leverage other than the spike to 10.4k which was a trap and funding rates spiked (this spike is problematic as the spike was quite significant and such high funding rate spikes are quite bearish)
4. There have been lots of BTC outflows from exchanges while there have been tons of stablecoins flowing into the market. Look at the effect liquidity (QE) and stock buybacks have had on traditional markets... Of course there isn't inflation, as most of the new money goes from the bond market to other markets rather than to the real economy. At the same time we know that 60% of the supply hasn't moved for 1+ years and if people didn't sell when BTC fell 75-85% from its 14-20k highs then they probably won't sell any time soon, let alone alts that are down 90%...
5. There are many things going on for alts that I have explained on my previous ideas. With so many mainnet launches, upgrades, staking and so on (especially over this summer)... Alts are finally having something to show. After having an extreme capitulation, after most of the worthless and badly managed ones essentially getting wiped out, we are seeing a new era. Prices hit rock bottom, their technical fundamentals are better than ever and many alts have been accumulating for 5-18 months. But the key factor here is LIQUIDITY. In 2016-2017 were listed on very few exchanges and they didn't have that many fiat/stablecoin pairs. Currently more and more coins get listed on more and more exchanges, there is more leverage available, more products, more on-ramps and there is a lot more BTC, ETH and USDT on those exchanges than back then. Now people can easily buy and stake most coins which makes things even better. We can clearly see the effect of launches or exchanges listings (i.e Coinbase) have on those coins.
Even though large caps aren't pumping, small-mid caps (those listed on the top 20 exchanges) are up 150% from their BTC bottoms which occured anywhere from August 2019 up until today. That's very significant as these profits could grow even more. Since the Jan 2018 top, alts have had 4-5 mini alt seasons/cycles. As BTC was in a bear market the pumps weren't that large, but there were many notable ones. However now we are seeing some really large ones and many have established some really strong trends and are up 4x or more. There are the pre bottom seasons, there are the accumulation/pre halving seasons and the post halving but pre ATH seasons and the post ATH seasons. Now we are getting where the fun is as several coins have had their halving + BTC, so there is a lot less fiat outflows from the markets. Also all the speculators are leaving BTC to chase better returns. So if BTC has another 1-3 months of sideways, small-mid caps could perform incredibly well as the market conditions are perfect for something bigger than all the previous seasons.
6. BTC has had its 3rd golden cross in 13 months, the 300 DMA is becoming flat and the 50-128-200 DMAs are trending up. The Yearly Fibonacci Pivot turned into perfect support at 8k, which was the exact pivot that was hit before the 50% collapse. Most ALTUSD pairs look like they were just a fractal of BTC in 2014-2015 where they had a massive 10x pump, then formed a double bottom, had a massive long squeeze, took out the low and then started pumping. Now the same way most have that double/triple bottom that could get swept before going higher, BTC has this sort of triple/quadruple top that will eventually get broken. On some exchanges it is more like a double top, on others there was an SFP so technically there isn't that much liquidity there but on Coinbase for example there hasn't been any SFP.
Finally I am off the opinion that there won't be a massive rally when it breaks 10.5k and that this could be the catalyst that fuels the altcoins pumps. 11.2-12k are resistance for me and so far we haven't seen significant strength. 10.5k is a key psychological level too which when gone could have lots of people talking about it. What if the Robinhood traders everyone is dissing come to crypto? If they are pumping stocks, why not shitcoins too?
To sum it all up and and some notes: Clearly not all alts have broken out, but it is clear that something larger is brewing. With so many upcoming events, new major coins launching after a long time in the making (i.e Polkadot) and ETH 2.0 coming I think something larger is brewing. In 2016 XRP and LTC kept dumping while ETH and other coins mooned. Right now it is mostly Defi tokens and some others, which I think are probably just the warm up for the large ETH pump. Many will take their profits into ETH as most of these coins are on Ethereum and are probably even pumping because Ethereum is closer to scaling. Look I think they are all trash and Ethereum is a dumpster fire, but I can't deny how good the pumpamentals are right now. As for BTC it is going to go up hard eventually and I think 20k is going to happen in 2020 or early 2021. It is just a 2x from here and 6.5 months is plenty of time.
I thinking hitting 7.8k is possible and would be the perfect trap if it happened quickly and BTC closed back above the 200 DMA. My reasoning is that 8k was too obvious of a bottom, it was an anomalous one and right above an untested breakout. So why not hit it to trap everyone and then moon? BTC is in a range and we took out the highs at 10k, so why not take out the bottom at 8k? This drop would be the final shakeout for longs, trap shorts and fuel alts even more.
Bear Case:
1. Stock markets got really hot with new investors coming in, probably signalling the top. By many measures stocks are now overbought and hit key technical resistance. If stocks bottom near 2650 and the DXY near 99.5, then BTC would probably bottom around 7200-7800. A correction in stocks doesn't mean a near bear market.
2. At the same time the USD has more room to the upside before it continues lower. For now USD is still technically on an uptrend and could have another spike. It got extremely oversold, it hit old strong support and bounced.
3. There are still more longs than shorts. Lending + funding rates currently agree with that. Premiums on quarterlies shows that most people are still bullish even though much less than the last three times we were at these levels.
4. Most BTC rallies failed. Every attempted to break 10k quickly reversed and many with a violent wick down. It shows that there aren't that many sellers, but no shorts to fuel the rally either.
5. Both BTC and ALTS are already up significantly. Small caps have gotten probably a bit too hot and are due for a correction, while large caps have shown a lot of weakness as they've kept bleeding in BTC terms. The altcoin bottom came on May 14th, just a few days after I had explaned how the real sell the news was from BTC to alts.
6. Technically Bitcoin has left untested 5.4k, 7.2k and 7.8k. The drop to 4k was anomalous, as was the drop to 8k and more recently to 9k. When the price has big differences across exchanges after a pump or a drop, that level tends to get retested or the price gets close. 8k & 9k were somewhat retested, but 4k wasn't. It is true that 2.5k hasn't been retested (VP HVN) and ETHUSD hasn't retested 55$, XRPUSD 0.06-0.07$ and LTCUSD 17$. BTC, ETH and LTC have those weird double/triple bottoms right above a major area that hasn't been retested... So it is totally possible that there is another final drop that wipes everyone out before going higher (totally possible especially if SPX500 tests 1600.
Now some bearish notes to recap or add to the mix: Crypto sentiment has been relatively high for some time, Fear and Greed index oscilating between 39-56 and now at hitting 38. Bitcoin dominance is still higher from where it was February & April and since it's bottom in Feb it seems to be making higher highs and higher lows. Altcoin Long/Short ratios are quite elevated, much more elevated than Bitcoin's. Ethereum is consolidating below resistance and below the Yearly pivot on its BTC pair failing to breakout for quite some time. Right now BTC is finding resistance at Difficulty model price and the Stock-to-Flow model, as with both previous halvings Bitcoin went sideways for some time post halving, and in 2016 it spend most time below the model price. If BTC is moving in 4 year cycles and the halving happened 2 months early, plus the market is much larger (+all the shitcoins) it might take some extra time for Bitcoin to break out as we are only one month post halving. We are essentially moving at the same pace as we were in 2016 and even faster, but this time around with all the quants and institutions, plus the bad financial conditions globally, it might take some time for BTC to break out. Even in 2016 BTC moved sideways for about 2-3 months before going higher.
Bull case:
1. Stocks had a short term correction, but tech is booming. All sectors with debt and which are related to technology, payments etc are booming. Companies without debt are doing well, and most crypto companies have no debt. Pretty much most assets had a V shaped recovery, even though there were and now there are even more issues in the global economy. Bitcoin thanks to the halving pretty much recovered all its lost ground much earlier than all other assets, but is now 10% below its high. It has been going sideways for 45 days already and its current structure looks more like consolidation rather than distribution.
2. The Fed is the main Central bank that has gone in full force and it's doing its best to keep the USD down. So far it looks like it has succeeded, but the USD was extremely overbought anyways. If many assets had extreme capitulation and the USD a blow off top, wouldn't that mean that the cycle has finally turned? Yes there is a lot of USD debt globally, but there are also a lot of investors that hold US assets and since 1971 there have been 3 dollar cycles and there is a high chance this one might have just peaked. With US rates back to 0 and with the Fed printing so fast, why wouldn't the USD drop if the Fed is printing all that USD? If Central banks are ready to do whatever it takes and there are talks for Central Bank Digital Currencies... why can't Bitcoin boom?
3. Funding + lending rates are pretty low, as are quarterly premiums. Both Tether and Bitfinex are following the market and even Bitmex perps have a discount to spot. Since Black Thursday Open interest has remained a bit low and more balanced. No excess leverage other than the spike to 10.4k which was a trap and funding rates spiked (this spike is problematic as the spike was quite significant and such high funding rate spikes are quite bearish)
4. There have been lots of BTC outflows from exchanges while there have been tons of stablecoins flowing into the market. Look at the effect liquidity (QE) and stock buybacks have had on traditional markets... Of course there isn't inflation, as most of the new money goes from the bond market to other markets rather than to the real economy. At the same time we know that 60% of the supply hasn't moved for 1+ years and if people didn't sell when BTC fell 75-85% from its 14-20k highs then they probably won't sell any time soon, let alone alts that are down 90%...
5. There are many things going on for alts that I have explained on my previous ideas. With so many mainnet launches, upgrades, staking and so on (especially over this summer)... Alts are finally having something to show. After having an extreme capitulation, after most of the worthless and badly managed ones essentially getting wiped out, we are seeing a new era. Prices hit rock bottom, their technical fundamentals are better than ever and many alts have been accumulating for 5-18 months. But the key factor here is LIQUIDITY. In 2016-2017 were listed on very few exchanges and they didn't have that many fiat/stablecoin pairs. Currently more and more coins get listed on more and more exchanges, there is more leverage available, more products, more on-ramps and there is a lot more BTC, ETH and USDT on those exchanges than back then. Now people can easily buy and stake most coins which makes things even better. We can clearly see the effect of launches or exchanges listings (i.e Coinbase) have on those coins.
Even though large caps aren't pumping, small-mid caps (those listed on the top 20 exchanges) are up 150% from their BTC bottoms which occured anywhere from August 2019 up until today. That's very significant as these profits could grow even more. Since the Jan 2018 top, alts have had 4-5 mini alt seasons/cycles. As BTC was in a bear market the pumps weren't that large, but there were many notable ones. However now we are seeing some really large ones and many have established some really strong trends and are up 4x or more. There are the pre bottom seasons, there are the accumulation/pre halving seasons and the post halving but pre ATH seasons and the post ATH seasons. Now we are getting where the fun is as several coins have had their halving + BTC, so there is a lot less fiat outflows from the markets. Also all the speculators are leaving BTC to chase better returns. So if BTC has another 1-3 months of sideways, small-mid caps could perform incredibly well as the market conditions are perfect for something bigger than all the previous seasons.
6. BTC has had its 3rd golden cross in 13 months, the 300 DMA is becoming flat and the 50-128-200 DMAs are trending up. The Yearly Fibonacci Pivot turned into perfect support at 8k, which was the exact pivot that was hit before the 50% collapse. Most ALTUSD pairs look like they were just a fractal of BTC in 2014-2015 where they had a massive 10x pump, then formed a double bottom, had a massive long squeeze, took out the low and then started pumping. Now the same way most have that double/triple bottom that could get swept before going higher, BTC has this sort of triple/quadruple top that will eventually get broken. On some exchanges it is more like a double top, on others there was an SFP so technically there isn't that much liquidity there but on Coinbase for example there hasn't been any SFP.
Finally I am off the opinion that there won't be a massive rally when it breaks 10.5k and that this could be the catalyst that fuels the altcoins pumps. 11.2-12k are resistance for me and so far we haven't seen significant strength. 10.5k is a key psychological level too which when gone could have lots of people talking about it. What if the Robinhood traders everyone is dissing come to crypto? If they are pumping stocks, why not shitcoins too?
To sum it all up and and some notes: Clearly not all alts have broken out, but it is clear that something larger is brewing. With so many upcoming events, new major coins launching after a long time in the making (i.e Polkadot) and ETH 2.0 coming I think something larger is brewing. In 2016 XRP and LTC kept dumping while ETH and other coins mooned. Right now it is mostly Defi tokens and some others, which I think are probably just the warm up for the large ETH pump. Many will take their profits into ETH as most of these coins are on Ethereum and are probably even pumping because Ethereum is closer to scaling. Look I think they are all trash and Ethereum is a dumpster fire, but I can't deny how good the pumpamentals are right now. As for BTC it is going to go up hard eventually and I think 20k is going to happen in 2020 or early 2021. It is just a 2x from here and 6.5 months is plenty of time.
I thinking hitting 7.8k is possible and would be the perfect trap if it happened quickly and BTC closed back above the 200 DMA. My reasoning is that 8k was too obvious of a bottom, it was an anomalous one and right above an untested breakout. So why not hit it to trap everyone and then moon? BTC is in a range and we took out the highs at 10k, so why not take out the bottom at 8k? This drop would be the final shakeout for longs, trap shorts and fuel alts even more.
