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Bitcoin (CRYPTO: BTC) is reversing down from the October highs, and it's pretty interesting that we're seeing such a deep retracement so far, already more than 30%, despite the fact that the Fed has been cutting rates for the last few months and now even the bets for a December cut are increasing again. What's important to understand is that cryptocurrencies are very sensitive to risk-on and risk-off flows, and we've seen quite a deep retracement on stocks as well, but what concerns me the most is that even during the days when stocks turned positive, Bitcoin was still seen trading lower. So I wanted to zoom out and check where Bitcoin could really be headed. If you look at the monthly chart, you can clearly see that each bull phase lasted around 36 months, exactly 3 years, and this cycle also completed right in October, from where a very interesting reversal started. What's also important from a cycle perspective is that corrections usually last around 12 months, and based on that it looks like the new higher-degree correction can be here and is certainly not finished yet.
From the Elliott Wave perspective, this looks like a higher-degree blue wave four now unfolding, and the big support I see comes in around 60k, which would be the ideal zone for a potential rebound into the next bull phase, which, as said, is a year away.
Another important factor is sentiment. Exchange outflows have spiked significantly lately, meaning a lot of Bitcoin has been moved to private / cold wallets, so the majority of investors clearly want to hold BTC because they believe the price will rise. I agree, that the long-term bull run will stay here, but I cannot imagine that the market will reward that easily the majority of people who are holding Bitcoin from current levels, and everyon will get rich. This is not how it works.
Usually sentiment extremes are what drive major turning points, and based on these outflow readings, this doesn't look like extreme pessimism at all. It actually looks like everyone is trying to take advantage of the dip, which makes sense, but it's not how major bottoms usually form.
Yes, we could see a rally, but I still think there could be another deeper move lower afterward, because from both the cycle and price perspective Bitcoin may be only halfway through this correction before it finally bottoms. Long-term view is bullish, but I'm not convinced that this correction will end very soon.
Posted In: $BTC
