Right now, the market seems uncertain in which direction it would like to go. Lots of people are fearing the upcoming bear market and the end of the cycle. Lots of people are hopeful that there is a final run that will lead to BTC breaking 100K. Here are my scattered thoughts on what promises to be an interesting December.
- Current BTC run: The current BTC run started at around 10/1/2021 when BTC double bottomed at around the 40K range (hitting the first bottom on 9/22/2021). Those of you know that the double bottom patterns arise quite frequently in this market and in many cases lead to a big BTC run. The run went all the way to 69K and now we are in the correction stage. The 50% FIB level is at 53-54K and we have done well to not break this level. We might be forming another double bottom right now which would mimic the previous pattern.
- Previous BTC run: The previous BTC run started at around 7/17/2021 when BTC hit 29K. It went all the way to 52K before dropping like a sack of potatoes. However, again it did not breach the 50% FIB level (~39K) and went back up. So if you compare this current BTC run to the previous BTC run, they look pretty much identical. This is pretty bullish for the upcoming month and one of the reasons why I expect BTC to take off next month to a new ATH level.
- BTC vs alts. Right now, BTC dominance is very low at around 41.7%. Alts have been running very hot but we are near the key support of 53-54K, which means that the next major BTC move should be a volatile one. Two scenarios here: (1) BTC makes a run at ATH level. If we make another BTC run, it will happen fast as usual, BTC does not go up gradually. Last time BTC ran up from 40 to 69K, the alts bled against BTC in the ratio. They eventually caught up but expect something similar this time around. (2) BTC drops below the 53-54K range. This would signal a bear market and would lead to major major sell-off in alts. Basically, investors/traders immediately drop their alt position if they smell that bear market is coming as the more riskier assets are dumped the most. So either scenario (1) or (2) dictate that BTC is the correct play here as relatively speaking, BTC is undervalued whereas alts are overvalued at the moment.
- Altseason or not? Usually, altseason occurs because alts bleed with BTC’s rise. This slowly creates a buying pressure for the alts and it explodes when BTC stalls in its run. Right now, many of the alts are at an all time high level and BTC dominance is low. This does not have the making of the altseason. However, that can change depending on how BTC goes up in December (if it does go up). Again, there are two scenarios: (1) BTC goes up while alts bleed against BTC. Depending on how significant this bleeding is and how high BTC goes up, we can see an altseason. I would like to see BTC dominance go up to 50% and higher before there is a catalyst for an alt run. (2) BTC goes up while alts don’t lose SATs. In this case, there is no stimulus to jump into alts as alts are going up with the BTC. This would be a strange occurrence but in that case, do not expect a separate altseason. Altseason will only occur when you hate your alts.
- So how high do we go up? It’s difficult to say. It is my opinion that the whales/investors would like to raise the BTC up and have retailers go the last mile in extreme FOMO so that they can dump on the retailers at the end of the cycle. Remember, there is a predictable ending to all of this madness. That is, retailers like you and I and our families will be the ones who are holding the bags. So I like working backwards and thinking about what the price levels are where retailers would buy BTC like crazy. Because I did not get the sense that many retailers jumped in last time we broke ATH level in the 64 to 69K range. Putting on my amateur psychology hat, retailers will FOMO in when there is a big significant meaning to the price level. And that would be the $100,000 BTC level. This is where talks about BTC going to 1 million dollars will ramp up and people will jump in. And the level where retailers are most likely to jump in is exactly the level where whales/miners jump out and sell. So my guess is that we will see some significant upward wick at around $100,000 level and that would be the top of this cycle.