The volcano is an extremely rare TA pattern.
Looking at the charts we can see it's only happened a few times.
- 2013 - main bull market
- 2016 - halving pump/dump
- 2017 - main bull market
- 2019 - Bakkt institutional overhype
- 2020/2021 - precursor to the bull market
- Now
Of course technical analysis is a guessing game and akin to professional gambling. By all accounts if we are correct even 60% of the time this will lead to professional-grade returns. However, that still means we can be wrong 40% of the time. That being said I'm pretty sure we are creating this exact pattern and will forge a blow off top within the next 3 weeks. March 15th is the target.
The most classic example.
Summer 2019 created the ideal volcano shape. It played out perfectly, and I think a lot of the reason for that is there wasn't much else going on except for the one speculative thing (Bakkt futures). There wasn't any other chop in the liquidity back then.
It's a very simple pattern that starts slow and ends in violent supply shock, just like we are seeing today. The gains made on the last day will often be more aggressive and powerful than an entire week combined. Be ready for this.
All things considered we can see that the volcano is almost impossible to trade during the current stage that we are in (either stage one pressure or even before stage one because these are 6-h candles). In fact we can clearly see that even if we completely miss the peak of stage three and sell into the literal bottom of the impending dump... that would still be a better outcome than trying to pussyfoot around now in stage one. HODL.
Zoom it out a bit to 1-day candles.
As I pointed out recently I believe we have JUST STARTED the 3 week countdown on this thing, and by all accounts this volcano is potentially one of the biggest ones we've ever seen, based on the current buy pressure. The reason for this is three fold.
- ETF fundamentals are better than anyone's wildest dreams.
- Retail is in disbelief and selling their BTC to Blackrock like idiots.
- The halving event is creating absurd irrational short-term hype.
$70k is no longer on the table
The peak of this volcano is not going to be a double top at all time highs. It's simply too strong and volume isn't high enough to justify a blow-off top, yet. Once the price of BTC gets above $69k that's when retail is going to realize just how badly they fucked up. A switch will flip and everyone is going to stop selling. This is what will create the supply shock, and a spike to $117k to the doubling curve next month (two weeks) seems to be the most likely place that the price goes, as crazy as that sounds.
Is 2019 a good template for this run?
The answer to this is 'no'. The Volcano of late 2020 and early 2021 is probably what we are going to see this time around. So it will still be volcano shaped but when the volcano ends we aren't going to bottom out and trade sideways forever, but instead it will just be a precursor to the real bull market in 2025.
I was so fucking close to trading this correctly.
If we go back and look at my blog posts during this time in early 2021... man I almost had this thing dead to rights. However, I based my predictions off of 2019, which wasn't a great call. I was very worried about a retrace to the previous all time high at $20k. That never happened. All we got was a normal 25% dip to $30k and then Elon Musk and Michael Saylor started buying in like madmen possessed. The ETF buying pressure is even stronger than a couple of billionaires aping in.
Corporate Sharks try to bait bears into trap
I posted this on January 10, 2021 when volume plummeted on Coinbase and price was just about to dead-drop. It was the ultimate top signal and I spotted it perfectly. What did I do with this information? I DELUDED MYSELF into thinking the price was going to keep going up like a fucking jackass. God. So bad. So so so bad.
Here's what the chart looked like that day:
I should have MURDERED this trade.
Instead I mid-curved it along with everyone else.
Very sad.
At the same time it's very easy to forgive myself because timing the top is one of the hardest and most profitable things a trader could possibly do. Missing the top is MUCH BETTER than taking gains early, as I have already pointed out above. Rather, what we do is sell the first dead cat bounce and that is the move that will outplay 99% of the market.
So where is the first dead cat bounce?
Well it's usually a little bit less than the previous top.
- In 2019 it was $13.5k to $10.5k to $12.4k.
- In 2021 it was $41k to $30k to $40k.
So what will it be this time around?
I'm thinking Max Pain Psychic Vampire will actually create a dead-cat-bounce that's a little bit higher than the original top. Make people think we are about to keep going up before rugpulling. In fact that's exactly what happened in the 2017 mega-volcano. The dead-cat-bounce can be bigger than the original peak when momentum is stronger than average, which I do believe the current run fits this description.
Of course it is foolish to trade this way and best to exit a bit earlier just in case this guess is wrong. Just don't worry if the price keeps going up is the point. If anything: DCA and sell a little more, or even leverage it up and borrow a little BTC to dump on the market (not recommended but still fun). Anything more than x2 short is woefully overextended.
Look at the volume
On a relative scale we haven't even come close to supply shock. The market refuses to sell and the price keeps going up on low volume just as it has been doing since late March. Volume has to go at least x4 from here before we even begin to worry that selling pressure will overpower the bulls. However these things can happen very fast and I'll have to keep an eye out and report on it thusly.
1 2 3 1 2 3 1 2 3
The rule of three is still going strong and all these things seem to continually keep happening in threes. The first 123 pump lasted a very long time. The second one lasted half the time, and my guess is that this upcoming third one is going to be half that. Again, all signals point to mid-March being the ultimate blow-off top.
Market is insane right now
I just checked the charts and Bitcoin spiked to $64k as I was writing this and now bears have moved in to aggressively short down to $60k. This is the kind of action we would expect near a blow-off top... the price is very volatile right now and wildly unpredictable. The blow-off-top could happen at any time, but my bet is still on mid-March. Again, if I'm wrong and it happens sooner: no big deal. It's very easy to catch the dead-cat in that scenario. A volcano erupts for months before actually calming down after the top is in. There's no reason to panic or make any kind of moves in the current environment.
Conclusion
These are exciting times in the world of speculation and degenerate gambling. It's a shame I closed my long so long ago but it is what it is. I can't complain as everything I see points to hyper-bullish action and I'm basically all in. I'm ready for it. Are you?