What a tremendous week we’ve seen in the markets in just a short span of time since our last
update two weeks ago on Bitcoin’s Price Action. There’s no denying that Bitcoin has defied short-
term expectations. It is reassuring to see that price has now not only just hit our previous target of
$59,000 from our BTC Emergency update just over two weeks ago, but it has since outperformed!
With the immense volume we’re seeing in the ETF market of which reached a record high at $7.69 Billion in volume traded in ETF’s baskets alone, it’s no wonder that price has sent us careening into a weekly high last week at $64,000 to the dollar!
An extraordinary feat in just a matter of weeks, which truly is a testament to the resilience Bitcoin maintains regardless of the trials and tribulations it faced in the wake of the 2022 Inflation crisis and broader Bearish macro-picture. Given the above you’d be hard pressed to find people who aren’t saying “We’re so back!” However, I pose the question; Are we? Does this rally keep going or do we require a correction first before a healthy re-accumulation period to really set us up coming into 2025.
Let’s dive into the data below.
As we can see the Fear & Greed Index has now reached a level of ‘80’ by the end of February,
inching higher over our last review of these metrics which landed us at a figure of ‘72’ a mere two
weeks ago. This further indicates that not only have we reached our desired price target, but from a market psychology emotion standpoint we’re historically over-extended; therefore leaving the door open for seller demand to set back into the market at such critical levels. This is where previous market participants during the 2021 Bull market that bought above $60K and have held for nearly three years may be finally having a respite on their balance sheet to proverbially “hop-off the rollercoaster” and wash their hands of the volatility without realising substantial losses. Let’s peer into how such a retracement might look.
Market psychology can be used when charting, one such useful tool to determine psychological levels of any rally or sell-off is by applying Fibonacci’s Sequence; a mathematical set of integers which can have a correlation to where the markets see value in both buying and selling demand of an asset and allows us to plot levels pertaining to such emotional reasoning. Historically, when we see much needed retracements after a substantial rally, it’s not uncommon for a retracement to head back down to the 0.618% or the lesser known 0.702% psychological level. Take a look at the retracement that began after the highs in June 2019; over a period of nine months, we retraced back down 70.2% the entire move up that began January 2019 according to the monthly close.
This level is known in Fibonacci’s as the 0.702% level and plotted us back at $6,328.35 in March 2020. Despite the volatile liquidation wick due to the Covid crash at the time, the monthly ended up closing right on this level almost to a tee, an un-likely coincidence.
Now let’s look at our current market structure below;
As we demonstrated in our last two previous analysis, we believe that the $30,000 zone of support for BTC currently stands firm where we’d expect to see strong buying demand if a broader
retracement occurs. As we can see, that would land us just $6 USD shy of our $30,000 projected
zone when we look at the 0.702% Fib level plotted on current Price Action as this gives us a figure of $29,994.49. The resemblance between the two cycles is striking. We’ve had a substantial mid-cycle bear market rally just like we did in June 2019, although with more organic bidding this time around due to the ETF’s opening the floodgates for institutional adoption allowing price to reach much closer to the All Time High this time around, although the overall trajectory may very well be the same.
The quote that “The Market doesn’t always repeat, but it certainly rhymes” comes to mind. While
this isn’t the exact same set of circumstances, we saw last cycle that led to the 2021 Bull run, it’s
paramount to be aware of the ways is which history has repeated itself on numerous occasions, of
which we will discuss in further detail in future market analysis in the coming months.
Taking advantage of this knowledge allows us to peer into possible outcomes that may lie ahead so that our clients and us here at Stormrake are better prepared leading into the 2025 market cycle!
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