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Once bitcoin decisively marches above all-time highs, the spotlight on cryptocurrency will amplify by orders of magnitude, bringing all sorts of characters and experts out of the woodwork. Most of these experts will talk down the crypto. They will also be wrong.
Be that as it may, a bitcoin Santa rally could take the crypto all the way up to $26,000 based on this trend-based Fibonacci extension.
Let’s dig in.
Back in 2017 during the pre-bull market cycle, bitcoin on exchanges continued to dwindle as investors moved their funds to more secure locations.
As trader and analyst Willy Woo pointed out, exchange inventories dropped 11% over a period of five months before bouncing higher in 2017. The trend shift was also accompanied by a monumental parabolic bitcoin bull run which took the all-time-high levels it’s currently trading at.
Today, exchange inventories have dropped 19% over a period of 10 months, surpassing the 2016–2017 trend — though at a slower pace.
These exchange bitcoin depletion cycles are comparable is because of bitcoin’s ‘halving event’, which is a hard-coded monetary policy that literally halves the daily bitcoin supply every 4-odd years.
As the analyst tweeted, “This re-accumulation phase coincides with spot market inventory depletion roughly 2x longer and deeper than the last cycle. It will send BTC”
Should this trend continue throughout December, then the annual ‘ proof of keys’ event on January 3rd might just be the nail in the coffin for this cycle’s bitcoin liquidity crisis.
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Where could bitcoin venture?
Once bitcoin traverses the unknown territory above $20,000, just about anything could happen.
Of course, bitcoin has technically already broken all time highs, having reached $19,957 for a brief moment on Tuesday.
Since then, bitcoin pulled back 9%, swinging sharply to $18,271 before buyers stepped back in.
In any case, a chart can speak a thousand words; so here’s the current technical outlook.
Per the above chart, bitcoin remains above the technical parameters first set out a few newsletters’ ago. As such, bitcoin remains bullish, and continuation is more likely than a reversal.
Assuming continuation, then the next possible target could be the $26,000 level.
From the current price-range of $19,200, that would represent another 17% increase, possibly during this Christmas season.
Perhaps Santa will be kind this Christmas.
The mass-realisation crescendo moment is about to kick off this month — probably.
In my estimation, it seems unlikely that bitcoin will fall short of closing a few days above the all-time high this year. More dramatic corrections will come in the following months, but considering that bitcoin bounced perfectly off the 20-daily ema, then follow-through continuation into all-time-high territory is statistically more likely. This happens in every bull market and while historical precedent is no guarantee, it certainly shifts the odds towards the bull side.
Often enough, investors underestimate just how high an asset’s price can climb before temporarily losing steam, the same way they also underestimate how low prices can go. I have fallen prey to this reasoning more times than I care to mention, and the next batch of investors will make the same miscalculations on average.
Once bitcoin trends above $21,000, it will be time to seriously expect a big draw down with the sole purpose of scaling back in during the avalanche of panic. As always, this sell-side pressure will be accompanied by bad news, arguments against bitcoin fundamentals and a whole plethora of ‘experts’ lining up to testify against bitcoin.
Bear in mind that these ‘ financial experts’ are part of a system that bails everyone out as soon as legacy markets stop trending vertically.
All in all, the paradigm shift will be merciless. Bitcoin is the generational wealth transfer that will continue to absorb fiat currencies until they’re absolutely worthless.
I would not be surprised if bitcoin were valued at $1,000,000 by 2030.
Of course, a lot can and will happen between now and then.
Catch you next time.
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Originally published at https://mailchi.mp.
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