Investopedia [defines] https://www.investopedia.com/terms/b/bearmarket.asp a bear market as a 20% decline from 52 week highs.
Bitcoin has been in a bear market 6 times in 2017 alone, literally every other month we've absolutely hit the 20% metric for being a bear market. They go one to state it is over a 2 month period. Well traditional markets trade Monday - Friday from 9:30 am to 4:00 pm EST (except holidays). Crypto trades 24-7 365.
Crypto trades 4 times more than traditional markets, using that same math we'd only need to be 20% for 15 days in order to confirm it is a bear market.
2017 Price Action
(Dec/Jan) 700 - 1100
1100- 750 (38.2% Fib retracement)
750-1400
1400- 900 (38.2% Fib retracement)
900-3000
3000-1800 (38.2% Fib retracement)
1800-5000
5000-3000 (38.2% Fib retracement)
3000-8000
8000-5000 (38.2% Fib retracement)
5000-20,000
20,000-10,000 (?)
This pattern has repeated itself over and over this entire year.
But that's no big deal in cryptolandia, bear markets are just what we do, especially if we are going to make 3,000%+ moves, we gotta give a little back to confirm it was real.
After the anything but gentle rise of the crypto currency space in 2017, the last couple of weeks of the year were far less exciting. Bitcoin nearly reached the $20,000 level and almost immediately turned down and fell for 5 days straight bottoming out (at the time of this writing) at the 10,700 level.
Take that everyone who got in on the Thanksgiving parabolic lift off, expecting more of the same around the holidays at the end of the year. Welcome to crypto!
This correction is nothing new, it's a fundamental part of technical analysis, a Fibonacci level. This is a healthy move for markets, this strengthens the market, it tests support, though painful for many these moves are the foundations for the next legs up.
In order to be prepared for what the crypto markets could do I like to create a "playbook" for myself, walking through the possible outcomes and identifying markers along the way to confirm or deny what is happening and what will potentially happen going forward.
New Year Profit Taking
In calendar year based tax regimes around the world that tax on capital gains (investment profits), a lot of people would be looking to take profits after a 1,000%++ run up of crypto this year. By waiting until after 2018, they won't have to pay taxes on the gains until they report their taxes in April 2019 (USA). That's a whole year of deferred tax payment vs if they sold in 2017.
The first week of the year could have increased selling as people look to diversify their assets and reallocate their assets to a more diversified mix.
Conversely, many investors could sell off their equities, which have had a pretty great run themselves in 2017. If investors wait until 2018 to sell equities to buy crypto, they are faced with the same tax advantages of not having to pay taxes on that until spring of 2019 (in the USA).
This is a qualitative approach and really a commentary of some factors that might come in to play. This is not info that I feel comfortable trading on, merely a factor that could effect the crypto markets.
On to the technicals...
BTCUSD
BTCUSD has played out pretty text book, moving from around 1,000 to about 20,000 and pulling back to the 10,000 level (a 50% Fibonacci retracement). Typically this is where a lot of the consolidation happens and we can expect 11,000 - 17,000 as the trading range until we move to put in new highs.
The current price of BTCUSD is absolutely following the same pattern it has put in all of 2017. Move to new high, pull back 30-50%, base/consolidate, then double again. In fact we could even drop down to about 8,000 and still be within this bullish trend.
I have no reason to believe this pattern has ended and would expect the price to put in another 30%-50% higher than it's recent all time highs of 20k bringing our next cycle high around $26,000 - $30,000.
This is set in Jell-O, meaning we will update the analysis as new information arises.
This analysis is circulated for informational and educational purposes only. There is no consideration given to the specific investment needs, objectives or tolerances of any of the recipients. Additionally, actual investment positions may, and often will, vary from its conclusions discussed herein based on any number of factors, such as investment restrictions, portfolio rebalancing and transactions costs, among others. Recipients should consult their own advisors, including tax advisors, before making any investment decision. This report is not an offer to sell or the solicitation of an offer to buy the securities or other instruments mentioned. The research utilizes data and information from public, private and internal sources, including data from actual trades. While we consider information from external sources to be reliable, we do not assume responsibility for its accuracy. The views expressed herein are solely those of the author as of the date of this report and are subject to change without notice. The author may have a significant financial interest in one or more of the positions and/or securities or derivatives discussed.
