Do not index
In today’s action-packed edition of the Rekt Capital newsletter, I share:
- My updated Bitcoin outlook for November,
- Ethereum Market Cycle analysis when I compare ETH’s previous cycle with this one and share key takeaways,
- Insights about the current Altcoin Market Cycle,
- A comparison between DOGE and ETH to illustrate Altcoin lag cycles and how to think about shifting money flow across different Altcoin pairs.
Let’s dive right in…
Bitcoin Continues To Repeat History
For four weeks now, Bitcoin has been able to successfully retest the old major resistance area (red) as new support (green), leading to a U-Shaped reversal from the newly established demand area.
Bitcoin is now fractions of a percent away from eclipsing the old All Time High of ~$67,000 which is the final resistance before BTC enjoy Price Discovery.
Should BTC indeed break beyond this old ATH, the next resistance will be the blue 0.236 Fibonacci curve on the BTC log growth curve channel:
The blue Fib curve at this time represents a price point of ~$71,000.
However, as mentioned in a previous newsletter last week, it is likely that upon contact with the blue 0.236 Fib curve - there will be little rejection.
After all, last month’s rejection picture-perfect rejection from the blue Fib, though expected, didn’t yield much downside.
In fact, this downside should’ve been a little bit more extensive by standards of history, at least bringing BTC down to the black 0.5 Fib Curve for a retest attempt.
So the fact that this retest attempt hasn’t even happened following the blue rejection showcases that this blue 0.236 Fib resistance wasn’t very strong at all, but also that this current price action is going against the grain of history, at least for now.
Is a dip to the black 0.5 Fib Curve possible?
By standards of history, at this point in the market cycle, Bitcoin has exacted a successful retest of the black 0.5 Fib Curve resistance (this Fib represents a price point of ~$57,000 at this time).
So yes - it is possible that Bitcoin can dip there.
After all, this would require BTC to dip -14% which isn’t too easy to come by in a volatile market such as crypto.
(As a side note, there’s no point to be fretting over a -14% dip at this point in the cycle. If it happens, it happens but when BTC is beyond $100,000 it won’t really matter if the entry was at $65K or $57K).
But as I’ve been mentioning in previous newsletter, I have two scenarios that I’m prepared for:
a) I’d be prepared to dollar-cost average on the 0.5 Fib Curve retest attempt, should it happen
and b) if this historically-recurring dip doesn’t happen, then I’ll simply allocate the capital dedicated to that DCA strategy to a BTC breakout into Price Discovery.
If BTC continues to perform this strongly, as it has been thus far, then I’ll simply have to switch to Option B.
At the moment, BTC has successfully retested its black 0.5 Fib resistance as support on the Daily timeframe (orange circle):
In fact, if BTC is able to Daily close above the orange horizontal and flip it into support, then there’s little standing in the way of BTC to levitate to that blue 0.236 Fib Curve resistance ahead:
It is November 8th right now so there are still many weeks left in the month and history allows for volatility at these current price levels so let’s see if that final dipping opportunity presents itself or not.
But overall in the grander scheme of this cycle, whether this final dip happens or not isn’t as important as the fact that BTC is gearing up for a parabolic second half of its Bull Market and that it is just a matter of time before it takes off.
Ethereum - ETH/USD
Ethereum is now enjoying Price Discovery.
But what’s fascinating to see is how closely Ethereum followed the trajectory of the previous Bull Cycle during its corrective period over the Summer:
The orange fractal represents the previous cycle for Ethereum.
ETH briefly outperformed the previous market cycle, while now underperforming relative to it (note: don’t pay attention the the fractal in terms of price targets)
In any case, what we can glean from this is that in the previous cycle when ETH broke into Price Discovery - it really accelerated into a parabolic rally.
With ETH now in Price Discovery and underperforming relative to the previous cycle, will ETH enjoy another parabolic rally in an effort to at least narrow down the gap between cycles?
Ethereum - ETH/BTC
It’s clear ETH/BTC is enjoying concrete re-accumulation at these highs.
The market structure is quite sizeable and price is still nowhere close to the very apex of the structure.
Granted, ETH/BTC doesn’t need to reach the very apex of the pattern to breakout. Indeed, ETHBTC can breakout much sooner if it’d like to.
Instead, I offer this insight to you to illustrate that, should ETHBTC continue to consolidate and postpone its upcoming momentous breakout - it could postpone it by quite a significant amount of time, to even as extreme a time as March 2022.
In any case, a key decider for ETH/BTC will be the DOGE/USD pair:
DOGE is enjoying some re-accumulation as well, inside a wedging structure.
But the apex of its pattern is much closer than that of ETHBTC’s:
If DOGE/USD really wanted to, it could consolidate to as extreme a time as late December before confirming a breakout.
Could DOGE breakout much sooner than that? Absolutely.
The point here is that this breakout point is much earlier than ETHBTC’s which is no surprise - because as I mention at length in my Altcoin Investing course, historically DOGE/USD tends to breakout earlier than ETHBTC but ultimately DOGE leads ETHBTC into a new macro uptrend.
Case in point is that once DOGE breaks out - this will probably accelerate the ETHBTC breakout.
And when DOGE/USD breaks out, it will probably perform a U-Shaped reversal:
In which case, this could prompt (with significant lag) the completion of a U-Shaped reversal for ETH/BTC:
ETH/BTC is forming a Cup & Handle and a DOGE/USD breakout could very well kickstart a new money flow cycle into Altcoin/BTC pairs over time.
Thank you for reading.