Introduction
It has been a while since I posted on $BTC-USD here on Substack, and it is time for an update and new analysis since the low of December 14th, 2022.
My recent analysis of Bitcoin was published in December 2022 in the Fiorente2 Stock Market Outlook 2023. Most of the subscribers may have seen this analysis. Although Bitcoin has recently corrected from its low in December 2022, I have yet to change my mind about the longer-term trend.
In the last update, I wrote: “$BTC-USD may be heading towards a possible 4-year cycle low mid-December 2022.” There is limited cycle history to confirm if there is a 4-year cycle in Bitcoin, but Bitcoin may well have started on a 4-year cycle.
The current rebound may be only a countertrend in a longer-term downtrend. After many years of a bullish signature, expect at least a 1-2 year correction. Time is more important than price.
The Geometry in the below chart tells me Bitcoin has squared out in price and time on December 14th from its high in April 2021. A square out from the all-time high (November 2021) is not expected before August-September 2023. This is at the end of the circle (cycle) drawn on the chart. So, the downtrend may still be ongoing.
Bitcoin has recently found a bottom and is trading above the lower Anchored Volume Weighted Average Price(AVWAP: $20571). This is a good sign. It is early days, and the next AVWAP, which may form resistance, is at $33110; before we get there, we need to cross the Over Balance Point (OPB)1 from below.
The Elliott Wave theory tells me several other scenarios are still possible, as annotated on the chart. The longer-term trend is still to the downside, as it may still be early for a Wave II, of a more significant degree, to have been completed. It may be premature to conclude that the December 14th 2022, low will not be crossed to the downside.
So, from an Elliott Wave perspective, Bitcoin may either be in a Wave B of a more significant ABC wave (not shown on the chart) or in an alt Wave IV of some degree, after which the downtrend may continue. From a Geometry and Gann perspective, this scenario is my bias. This could bring Bitcoin back to 61.8% from the top in a bullish environment, which is a 38.2% retracement.
Measured moves (grey arrows) in time may indicate Bitcoin may be close to a change in trend. The blue vertical dashed lines on the chart are midpoints of past and future Solar and Lunar eclipses. They often act as a hotspot to which a stock, currency, commodity or index is drawn. So, the upcoming period may become quite volatile. On these midpoints, Bitcoin could make a change in trend or even invert.
Our premium subscribers can read further on this analysis in the post I’ve included below.
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Disclaimer: This analysis is intended for general informational & educational purposes only. Hypothetical or simulated performance based on past cycles has many limitations. Cycles can contract, extend and invert. Hence, past performance is no guarantee for the future. Trading futures, options, and stocks is a high-risk business. Fiorente2 Newsletter does not offer trade advice. Please take a look at our full disclaimer.
Disclosure: Indirect Positions at the time of writing