We've since flagged up a second time and are now wedged around an average value of $27000 for Bitcoin. Volume is still looking good on Coinbase being 20k+. Great volume would be 30k+, but I'll take it.
Even at these crazy all time highs, the market still looks pretty stable with good support. It's pretty weird if I'm being honest. There is no out of control FOMO, and hype on the street is relatively quiet. I assume this is due to a lack of an alt market, but I guess that's to be expected considering where the money is coming from.
This latest flag up was a lot weaker than I thought it would be. We may only get one more flag up before this market starts crashing into the mountain. The first flag went from $19.5k to $23k ($3.5k gain) and this second flag went from $23.5k to $27k (another $3.5k gain). These flags are extremely measured and seem to lack FOMO. These are the moves of strong-handed institutional investors. The market is being tested with steady hands. What a lovely change of pace.
According to the Rule of Three, this run might only have one more flag left in it before we head downward. If it's another $3.5k flag that puts us at a peak of around $31k, which I find interesting because that was my prediction from like a year ago.
All good things must come to an end, and indeed it does look like the market will peak sometime in January. The question is... will it be early January or will it be late January?
If there are problems transitioning to the Biden administration, it's almost guaranteed that the market will not react favorably to that uncertainty. If everyone has been worrying over nothing, there may be a huge pump on Jan 20th after a smooth transition of power and everyone starts solidifying their positions while expecting taxes to be raised by the new Democratic takeover. Surely, some will decide to park their value in bitcoin and possibly wait out this administration and/or take only long-term capital gains with Bitcoin.
I think it's almost guaranteed at this point that February is gonna be a pretty poor performing month. Everything is going to be burnt out as this economy starts to unravel. Some TAs are expecting the parabolic move to continue through Feb... I think that's enthusiastic at best.
Sometimes the Rule of Three fails and we get that sexy 4th flag up before everything crashes into the mountain. Should their be FOMO into the markets due to an administration change and the fear of unbridled money printing in addition to tax increases... Jan 20th could very well be the date that the market peaks at large.
Never underestimate the fact that Trump is the most hated president of all time for half of the population. Emotions will run high when he leaves office, and this emotional state will be reflected in the markets should a smooth transition occur.
When Bitcoin flags up again for the 3rd time, I'll dare to do something I rarely accomplish: take my own advice. I'll cash out 5%-10% of my position just in case that really is the top. However, I'm starting to think we still have more gas in the tank... or maybe I'm just kidding myself.
Big signs that the volcano top has blown will be crazy volatility in addition is a wild gap in liquidity (at least $100 gap between buyers and sellers) with price sloshing back and forth the likes of which we haven't seen since Summer 2019. Also, timing the top of the volcano will not be necessary, as the dead cat bounce that normally comes a few weeks after that should take us back near all time highs; the perfect time to take gains.
Again, no matter how high we go from here, be it $30k or $50k, I think we are "doomed" to return to this $20k support line eventually... probably in the summer time. Don't sign any yearbooks this year: It's not going to be a great summer.
