When Does the Bitcoin Bull Come Back?

Bitcoin Data Newsletter

Hello everyone!

As you have probably seen by my posts on X, I have shifted to a bearish perspective with the break in healthy bull market supports.

I am specifically referring to indicators like the 20 Week Exponential Moving Average, the 111DMA of the Pi Cycle Top, and short-term holder realized price.

Fortunately, I have identified this as part of the cycle, a bull market fake out. This was the most convincing one yet with the trigger of every last bull market signal.

In this newsletter I want to talk about what it will take for the bull market to come back, and some shorter-term thoughts on the next price direction.

Of course, we’ll also be making some comments on the market to observe what others are thinking.

Finally, in today’s investor psychology portion, we’ll be talking about the important difference between facts, and stories. You cannot be a successful investor without this realization.

Let’s dive in!

This Newsletter Will Cover…

• Short-Term Thoughts - Which way next?

• Market Comments - Over-confidence reigns

• Long-Term Analysis - What it takes to return to bullishness

• Investor Psychology - Stories vs Facts

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Short-Term Thoughts

Which way next?

2019 vs 2023

I still think that the 2019 run up is much different than our current, you can see this clearly by how powerful the move was from the lows in 2019.

However, they are becoming progressively more similar in market structure.

As I talked about in my most recent premium newsletter, some analysts on X have commented on the non-break in market structure. This is true, market structure is not broken. In order for this to have happened, price would have to come below $24,760. This would confirm that Bitcoin has entered a downtrend.

However, I think this is foreshadowing the breakdown to come. You can see where the exact same market structure took place in 2019.

At the blue arrow then, price retested the pull back from the high labeled (B). Bitcoin made a small push higher, before taking its next and final correction lower. (minus the 2020 black swan).

I have outlined 2 possible paths for 2023. The black trend labeled 2 is the one I see most likely. This mimics the price action of 2019 with a small push higher before continuing lower. But the other path outlines an even more bearish scenario, where price breaks directly into new lows.

These are the shorter-term scenarios I see most likely based on larger long term data observations. The hope of course is that I am completely wrong and price makes a full U turn and new highs. That’s better for everyone, including me! But being below healthy bull market supports implies further bearish price action.

Market Comments

Over-confidence reigns

As I have said in the past, observing the thoughts of crypto X is not always useful to determine short-term moves. But it can provide interesting insight and evidence to back data-based claims.

With Bitcoin below bull market supports, I see an overwhelming amount of confidence in these lows amongst the bullish community. I noticed this even before I had decided that Bitcoin could be bearish.

One chart that you may have seen going around which I again commented on in our last premium newsletter was Daily RSI. “Look how low it is!”… lowest since the COVID crash in 2020.

This is true, but they make this comparison to say that since RSI is so low, it compares with the worst crashes in Bitcoin history, implying up could be the next move.

But they fail to compare these instances with others. Daily RSI this low comes in periods of weakness. This was also seen in our exact position in the 2019 example above with an RSI value of 19. Let’s look at it here:

2019 vs 2023 Daily RSI

I would love to say that very oversold RSI is a good thing but the only thing I can see is weakness. This is combined with being below healthy supports, and early reversal signs in market structure.

At the real bottom, I believe even the most bullish analysts will be questioning themselves.

I remain optimistic to be proved wrong, but also realistic based on long term data.

Long-Term Analysis

What it takes to return to bullishness

20 Week Exponential Moving Average

I have been covering this moving average a lot recently, but I believe it is critical for Bitcoin to regain its bullish status.

Not just price getting above, you can see where this first happened in the 2019 example (circled in red). Price surfaced the moving average but couldn’t hold it. It is very important that Bitcoin both rises above and retests the 20 Week EMA as support. The product of this happening is circled in green.

Another way to regain bullishness is just to move to new highs, this resumes the uptrend an implies even more higher prices to come.

You can see the red path I have outlined for my rough expectations of how this will take place.

Now is the time to be patient for this phase to play out!

Investor Psychology

Stories vs Facts

One of the most frequent questions I get regarding Bitcoin price surrounds what ifs?

What if Blackrock wants cheaper prices to buy in at and will use their power to send the Bitcoin price to new lows? What about the recession? What about the macro conditions?

Usually, it is a long intricate story involving many pieces. What if this happens, and then this, and then Bitcoin is at 0. Might as well take the story to the extreme! What if the entire world collapses and you can’t access your Bitcoin?

Anyways… In my time in crypto, I have learned a very valuable lesson that has never let me down. Don’t listen to stories, any of them!

There will always be one to explain why price goes up or down, and you will always look to find reasonings as to why something happens in the future. The crypto news outlets are huge perpetuators of this.

Think back, if you can to how many of your concerns realized… how many times did the scenario that you expected, happen? If you’ve been in crypto any length of time, the answer is likely 0.

These are stories, they will make you lose. Before you know it you’ve created this fantasy world in your head where everything has gone down the sink.

The facts (long-term data) will tell you everything you need to know.

This applies to life too. In my own life, I avoid hypotheticals completely! I do not entertain “what if’s”. You would be amazed how many problems you can avoid when you do this. I deal with things only when they are present in my reality.

Of course, the game of analysis is what ifs and hypotheticals, but I look at things in the present and determine the most likely next step. I do not think about any story or catalyst beyond that. If they are to come, they will come.

You will not predict or stop them.

Using this frame of mind, will give you peace of mind. Worries quashed. Try separating yourself from stories completely and see the freedom it gives you!

That’s all for today’s Bitcoin Data Newsletter! Be sure to leave a like if you enjoyed and any comments or questions you may have.

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Have a wonderful week and I will see you next time!

Best wishes,

CryptoCon