Crypto Analysis Is Science Fiction - A Year In Review
Aside from attempting to understand the movements of the cryptocurrency market, I also write a lot of fiction. Sometimes analysis feels like science fiction, because I'm making an effort to predict the most likely outcome, based entirely on how my imagination reacts to various pieces of information. It's a creative process for me - one that often involves searching for signals that others may have overlooked. Having just read Ursula K. Le Guin's Introduction to The Left Hand of Darkness, I was reminded of how great fiction writers are really also just great liars, whose goals are to illustrate some sort of truth. That's really all I'm trying to do with my analysis–––figure out the truth. There are many competing narratives out there. Ultimately, the true outcome will probably be some synthesis of all these narratives, because it seems to me that humanity tends to move in a unified direction based on increasingly global methods of communication.
Now, whether or not what I've written over the past year exemplifies any sort of truth is up for the reader/observer to decide. It's not necessarily the correctness of the analysis that makes it worthwhile for me. It's the process of figuring it out, which allows me to understand both myself and others on a deeper level. The same goes for writing fiction. But what I find really interesting is that price action is something that can tell us a lot about our collective belief in something. What I'm trying to figure out is if humanity's collective belief in cryptocurrencies will sustain and grow, and whether or not these developments will play a significant role in shaping our future. Crypto analysis is science fiction. Anyone who tells you otherwise is probably delusional. But that's my point. We all have our own delusions, some of which are shared.
Despite the above (which might just seem like a massive disclaimer), much of this post will be focused on my analytical successes since I started this account. I'll mostly be naming the big ones. And of course, I'll also mention some of the bad calls I've made, which is something very few people do on here, since it's mostly a numbers game. You have some hits, you have some misses, but....Surprise! Most of them are usually misses. But what's great is that my imagination this year has allowed me to accurately predict the largest moves for the market as a whole, individual altcoin ratio collapses aside. The calls referenced in this post will all be linked at the bottom, for those who are curious.
Firstly, I speculated that if Bitcoin did break below $6K, that it would be short-lived, and that my ultimate target would be in the $13K zone. That target area for the next major top actually didn't change much. After Bitcoin broke down, I did a lot of analysis using linear downtrends. Some people criticized me for it, but coupling that with some detailed analysis on oscillators, sentiment, fractals from the dotcom bubble era, and volume, I was able to discern that we had hit a major bottom (notice that I didn't say THE bottom). I also suggested the likely move towards $300B and above for the total crypto market cap. To top it all off (no pun intended), I called the precise recent top on Bitcoin close to $14K, moments before it dropped over 10% in minutes. I also made a follow-up analysis to that post, in which I explained why Bitcoin could see sideways movement for several months. This was all based on long term trends, and particularly a channel I was watching for signs indicating that a second bubble could occur. Since then, the second bubble idea has not played out, and it seems somewhat more likely that long term trends will be broken sometime in the not so distant future, giving way to a period of slower growth and more "behind the scenes" work on adoption before another potential parabolic rise in prices. Recently though, I made an effort to call the top in Bitcoin dominance and the bottom for ETH/BTC. I also made a pretty epic call on XLM - saying it could head straight to $0.09 from $0.058 and then straight back down before confirming the floor. So far, I've been correct on these recent calls, but things could change.
In addition to predicting more macro swings, I also successfully called the top on the BNB/BTC ratio, the LTC move all the way up to $130 (including the ultimate drop back towards the $50 area), and a few pretty major altcoin runs from early this year (most notably TRX and BAT - where I called likely breakouts AND tops). I failed to foresee certain breakdowns to new lows for particular alts on their ratios (notably NEO, XRP, VET, and ONT), but I always provided the bearish side in my posts. I also kept calling for more downside in XLM unless it broke the downtrend. My short term targets on a lot of alt/Bitcoin pairings were reached regardless of future downside, so I'll give myself that. I must emphasize that I don't trade all my setups. I was transparent in my short term trades on BAT and ENG (through which I was successful at increasing my Ethereum position), as well as my long term entries (several of which are underwater, or close to being so). I'm now back to being at a 50% overall loss, but I don't consider this terrible, since I've invested only in altcoins at this point. As a whole, the altcoin market is still down over 80%, and not many are even 100% up anymore from their December 2018 bottoms. Since I'm treating this as risky long term investment with the knowledge that I can lose most of it, this doesn't bother me so much.
There are a couple of more in depth observations I've made over the last year. I discussed Binance and their negative impact on the altcoin market (BNB is a bit of a vampire coin, in my opinion), as well as suggesting to watch dividend coins such as ONG and GAS for signs of altcoin strength. I've also compared current price action to post-dotcom bubble tech stocks and suggested that alts were closely following Bitcoin's bear market price action from 2015.
Outside of crypto, I've been following the stock market fairly closely, because I've noticed the parabolic nature of the gains on that front. If you look at charts for many tech equities since the late 2000's, it's been pretty much straight up without any major corrections. This has seemed unsustainable to me for a while. The only time in our history where we've had gains of this nature was the period leading up to the Great Depression. I made a fractal analysis on the Dow Jones, which points to a possible blow-off top in the near future before a cascading crash (if it hasn't already topped out). There are reasons why a large correction would be healthy for humanity as a whole. The income disparity is nearing levels that could lead to serious civil unrest, and we're seeing financial catastrophes that have resulted from climate change (look at the power outages in California). I think all this will require us to come together in a way that we haven't before. Blockchain/cryptocurrencies may or may not be a part of that narrative. See? Science fiction.
I think I'll add some analysis about what's currently going on. As you can see on the above charts, I've mapped out the previous cycle and the future cycle (which hasn't happened yet). I've had to adjust timeframes recently due to Bitcoin's inability to hold the long term bullish channel. I made a crazy speculation earlier this year that it could reach $100K extremely quickly, but that was ONLY if it broke above that channel. The way I've drawn my very speculative squiggles is supposed to mirror what happened in the last bull market, but on a longer timeframe. So, if we're in a bull market, we can see Bitcoin drop down to test the 50w MA near the $6800 area. We can also see alts break their long term trend, yet still find support in the $40B area. This would likely result in ETH testing zones closer to its bear market lows. This may also kill off some other promising cryptos that have failed to gain volume and interest. Take Nano for instance. It corrected from $37 to $0.70, and has held $0.70 on three separate occasions during this bear market. If that horizontal level fails, it would be a horrible development. This is why my portfolio is mostly concentrated in the top 10-20. VET and ONT are exceptions. Nano is a risky, but interesting project. My hope is that downside is limited from this point, even if alts lose their long term trend. I've outlined a couple of possible curved trendlines to show what could if growth continues to slow down for cryptocurrencies.
In terms of near term, all we really need to pay attention to are:
The long term trend for alts
Zoomed in, you can see the TOTAL2 has gotten rejected twice at the 200 WEEK MA. Not a great development. On this chart, you can also see the horizontal areas I've marked as important for the altcoin market.
It's clear that cryptocurrencies won't be bullish until those two major resistance zones area cleared - PARTICULARLY the $100-140B zone. That's a big one. That's the area where I think the last fearful bagholders will exit at a profit or small loss. I also think once that area clears, newer investors could finally start jumping in due to news and FOMO. It could take us a while to get there though. Believe it or not, I almost exited at those prices in June, because I was in profit and I considered the possibility of failure, since alts just kept getting rejected there. It would have been a great move in hindsight. I figured many investors (even someone intelligent ones) had broken even at that point. Unfortunately, it seems many sold there without the intention of getting back in.
Bitcoin is below the 200 day Moving Average and the 9 week moving average, trapped in a bearish channel as well.
What's somewhat encouraging is that despite today's drop, ETH has held the important $180 level, XRP has held above $0.26, and XLM has held above $0.06. This may be the bottom of this move. Weekly oscillators are telling us that a bottom could be close. But there are a number of reasons to prepare for a violent breakdown as well. Regardless, my outlook is somewhat bearish until alts and Bitcoin can both break out of their bearish channels.
In terms of Bitcoin dominance, we do have signs of weakness there, which could be good for altcoins. The weekly RSI is starting to slope down after getting overheated, and dominance remains in a short term downtrend. It could be in a wedge as well. I'd really like to see dominance test the uptrend (lower pink trendline) before it makes an attempt to go higher. Unless of course, it breaks down entirely :)
Well, that's it. I've been talking about writing this post for a while, so here it is. It took me a little longer to write today because my cat was sleeping in my lap or trying to groom me the entire time. This is closer to science fiction than financial advice, so please consult a financial advisor before you make investments and trades. This is my forum for expressing my thoughts. I'm glad I made this account, and that a few hundred of you find my analysis entertaining or insightful. There are a LOT of links at the bottom. Some of them are even bad calls I've made, for all to see. Hope you enjoy :) You can follow me on Twitter for pictures of charts and my cat.
-Victor Cobra
Now, whether or not what I've written over the past year exemplifies any sort of truth is up for the reader/observer to decide. It's not necessarily the correctness of the analysis that makes it worthwhile for me. It's the process of figuring it out, which allows me to understand both myself and others on a deeper level. The same goes for writing fiction. But what I find really interesting is that price action is something that can tell us a lot about our collective belief in something. What I'm trying to figure out is if humanity's collective belief in cryptocurrencies will sustain and grow, and whether or not these developments will play a significant role in shaping our future. Crypto analysis is science fiction. Anyone who tells you otherwise is probably delusional. But that's my point. We all have our own delusions, some of which are shared.
Despite the above (which might just seem like a massive disclaimer), much of this post will be focused on my analytical successes since I started this account. I'll mostly be naming the big ones. And of course, I'll also mention some of the bad calls I've made, which is something very few people do on here, since it's mostly a numbers game. You have some hits, you have some misses, but....Surprise! Most of them are usually misses. But what's great is that my imagination this year has allowed me to accurately predict the largest moves for the market as a whole, individual altcoin ratio collapses aside. The calls referenced in this post will all be linked at the bottom, for those who are curious.
Firstly, I speculated that if Bitcoin did break below $6K, that it would be short-lived, and that my ultimate target would be in the $13K zone. That target area for the next major top actually didn't change much. After Bitcoin broke down, I did a lot of analysis using linear downtrends. Some people criticized me for it, but coupling that with some detailed analysis on oscillators, sentiment, fractals from the dotcom bubble era, and volume, I was able to discern that we had hit a major bottom (notice that I didn't say THE bottom). I also suggested the likely move towards $300B and above for the total crypto market cap. To top it all off (no pun intended), I called the precise recent top on Bitcoin close to $14K, moments before it dropped over 10% in minutes. I also made a follow-up analysis to that post, in which I explained why Bitcoin could see sideways movement for several months. This was all based on long term trends, and particularly a channel I was watching for signs indicating that a second bubble could occur. Since then, the second bubble idea has not played out, and it seems somewhat more likely that long term trends will be broken sometime in the not so distant future, giving way to a period of slower growth and more "behind the scenes" work on adoption before another potential parabolic rise in prices. Recently though, I made an effort to call the top in Bitcoin dominance and the bottom for ETH/BTC. I also made a pretty epic call on XLM - saying it could head straight to $0.09 from $0.058 and then straight back down before confirming the floor. So far, I've been correct on these recent calls, but things could change.
In addition to predicting more macro swings, I also successfully called the top on the BNB/BTC ratio, the LTC move all the way up to $130 (including the ultimate drop back towards the $50 area), and a few pretty major altcoin runs from early this year (most notably TRX and BAT - where I called likely breakouts AND tops). I failed to foresee certain breakdowns to new lows for particular alts on their ratios (notably NEO, XRP, VET, and ONT), but I always provided the bearish side in my posts. I also kept calling for more downside in XLM unless it broke the downtrend. My short term targets on a lot of alt/Bitcoin pairings were reached regardless of future downside, so I'll give myself that. I must emphasize that I don't trade all my setups. I was transparent in my short term trades on BAT and ENG (through which I was successful at increasing my Ethereum position), as well as my long term entries (several of which are underwater, or close to being so). I'm now back to being at a 50% overall loss, but I don't consider this terrible, since I've invested only in altcoins at this point. As a whole, the altcoin market is still down over 80%, and not many are even 100% up anymore from their December 2018 bottoms. Since I'm treating this as risky long term investment with the knowledge that I can lose most of it, this doesn't bother me so much.
There are a couple of more in depth observations I've made over the last year. I discussed Binance and their negative impact on the altcoin market (BNB is a bit of a vampire coin, in my opinion), as well as suggesting to watch dividend coins such as ONG and GAS for signs of altcoin strength. I've also compared current price action to post-dotcom bubble tech stocks and suggested that alts were closely following Bitcoin's bear market price action from 2015.
Outside of crypto, I've been following the stock market fairly closely, because I've noticed the parabolic nature of the gains on that front. If you look at charts for many tech equities since the late 2000's, it's been pretty much straight up without any major corrections. This has seemed unsustainable to me for a while. The only time in our history where we've had gains of this nature was the period leading up to the Great Depression. I made a fractal analysis on the Dow Jones, which points to a possible blow-off top in the near future before a cascading crash (if it hasn't already topped out). There are reasons why a large correction would be healthy for humanity as a whole. The income disparity is nearing levels that could lead to serious civil unrest, and we're seeing financial catastrophes that have resulted from climate change (look at the power outages in California). I think all this will require us to come together in a way that we haven't before. Blockchain/cryptocurrencies may or may not be a part of that narrative. See? Science fiction.
I think I'll add some analysis about what's currently going on. As you can see on the above charts, I've mapped out the previous cycle and the future cycle (which hasn't happened yet). I've had to adjust timeframes recently due to Bitcoin's inability to hold the long term bullish channel. I made a crazy speculation earlier this year that it could reach $100K extremely quickly, but that was ONLY if it broke above that channel. The way I've drawn my very speculative squiggles is supposed to mirror what happened in the last bull market, but on a longer timeframe. So, if we're in a bull market, we can see Bitcoin drop down to test the 50w MA near the $6800 area. We can also see alts break their long term trend, yet still find support in the $40B area. This would likely result in ETH testing zones closer to its bear market lows. This may also kill off some other promising cryptos that have failed to gain volume and interest. Take Nano for instance. It corrected from $37 to $0.70, and has held $0.70 on three separate occasions during this bear market. If that horizontal level fails, it would be a horrible development. This is why my portfolio is mostly concentrated in the top 10-20. VET and ONT are exceptions. Nano is a risky, but interesting project. My hope is that downside is limited from this point, even if alts lose their long term trend. I've outlined a couple of possible curved trendlines to show what could if growth continues to slow down for cryptocurrencies.
In terms of near term, all we really need to pay attention to are:
The long term trend for alts
Bitcoin is below the 200 day Moving Average and the 9 week moving average, trapped in a bearish channel as well.
In terms of Bitcoin dominance, we do have signs of weakness there, which could be good for altcoins. The weekly RSI is starting to slope down after getting overheated, and dominance remains in a short term downtrend. It could be in a wedge as well. I'd really like to see dominance test the uptrend (lower pink trendline) before it makes an attempt to go higher. Unless of course, it breaks down entirely :)
Well, that's it. I've been talking about writing this post for a while, so here it is. It took me a little longer to write today because my cat was sleeping in my lap or trying to groom me the entire time. This is closer to science fiction than financial advice, so please consult a financial advisor before you make investments and trades. This is my forum for expressing my thoughts. I'm glad I made this account, and that a few hundred of you find my analysis entertaining or insightful. There are a LOT of links at the bottom. Some of them are even bad calls I've made, for all to see. Hope you enjoy :) You can follow me on Twitter for pictures of charts and my cat.
-Victor Cobra
Komentarz:
The TOTAL crypto market cap is resting RIGHT on the long term trendline. Pretty incredible. It would be equally incredible if it held, but as I've said: I wouldn't be surprised if it broke and growth slowed down.
Komentarz:
Zoomed in, you can see $230B is a very important pivot for the market.
Komentarz:
I did actually forecast a move somewhat like this, even in my slow growth scenario. In both blue and yellow, I expected a powerful bart up like what we saw yesterday. You can see that by the way I drew it, even in the main chart for this analysis. Now, whether or not something like either of these scenarios will play out....that remains to be seen
