What an amazing month we’ve had since the US Elections! Not only was our prediction on the money with how a Trump victory would positively affect the markets, but in just a very short amount of time we both sustained the breakout momentum of the Bull Flag pattern we’d been following and careened straight into our first price target at $102,000 USD using our Fibonacci extension strategy outlined last month. While retail mania has started to seep in again naturally with many meme coins pumping and speculation running rampant given the substantial gains across the board, the question many are asking is – where to from here? Let’s take a look into some possible scenarios for Bitcoin and what might be next after the Godfather of Cryptocurrency taps out and hands over the reins to its younger brother later this cycle…
After hitting $102,000, Bitcoin naturally sustained some trading momentum over the subsequent days and weeks allowing us to actually overshoot our target by a small margin and tag a local high as of three days at $108,364. This is to be expected in Bull runs as some overperformance almost always takes place in a volatile market as retail participants somewhat late to the game in this cycle will naturally chase a sea of green for a quick buck. However, as the saying goes; nothing goes up in a straight line forever. Price corrections are a healthy part of any market cycle with Bitcoin being no different. I suspect we’ve reached somewhat of a plateau for now and could be seeing the beginning of a healthy correction. Currently the daily trend is still holding, although a short sharp liquidation of the over-leveraged longs here is starting to take place now as expected. Bitcoin has a history of the very hard and fast price spills in order to weed out some of the bad money in the system, usually finishing of the larger timeframe candles such as the weekly or monthly with a large bottoming-wick, solidifying a base of support before continuing to print higher. Using Fibonacci’s sequence for a retracement here would make sense given it’s a psychologically bearing indicator being used on an emotionally fuelled pump, post-election mania. Right now, we are getting a nice sell-off, which hopefully could allow us to do a retracement into the 0.382% Fib level, getting us to $89,430.
A clearer view of the above chart can be found here: https://www.tradingview.com/x/cICk8mHy/
If this was the case (which is a pretty optimistic one, we might not go that low), it likely means we close out of the month of December with a red month, although as mentioned above if we can get a nice long bottoming wick due to buyers swooping in and buying the dip, we could start moving back upwards rather quickly at these levels which are perceived as a relative “good deal”; this would consequently set us up very bullishly leading into the New Year for 2025 and beyond.
The Alternative scenario (and more likely one) would be that these last few weeks of exhaustive and slowly diminishing gains are leading to an eventual Distribution pattern in the short term. This essentially means that as retail buying momentum starts to slow once we reach a temporary point of market saturation, eventually profit taking comes in and overpowers the few diminishing buyers that are left. Once you start getting more sell orders than buy orders in a market, an inevitable price correction happens, and we start to turn back down such as is currently taking place. Again, all of this is healthy for the markets – so long as we hold and maintain the critical levels of support, of which at this point in the cycle would be rather easy to do, especially given the macro bullishness across all sectors of the market right now. The first level of daily support I also believe to be here at $96,490 as mentioned above in order to maintain the daily uptrend we’re in
A clearer view of the above chart can be found here: https://www.tradingview.com/x/01wuTYO6/
In this liquidation slide-styled correction, even if we wick through the $96,490 level pretty hard, as long as we close daily trend around or above this price, it makes for a fantastic opportunity to add to our holdings so that we can get the last few entries in before the real mania begins. At that point, because we have closed the daily candles and weekly candles holding trend despite the hard sell-off, a strong reversal will likely come in eventually spurring on substantial buying volume followed by even more green on the charts until we fully melt up and blow out ultimately closing out this approximate four-year market cycle. In either scenario, as long as we’re holding the broader structural trend we’ve made up – we’re clear to keep printing higher from here in the coming weeks and months ahead.
In our previous articles we’ve also given credence to how an “Alt Season” may play out, meaning when Bitcoin starts to become the less dominant coin in the market and the alternative Cryptocurrencies that aren’t bitcoin start to gain significant momentum and, in some cases, even outperform BTC by the end of the Bull run. Let’s take a look at what Bitcoin’s younger brother and second largest Cryptocurrency is doing.
Ethereum is well positioned to take advantage of this upcoming “Alt season” and has shown all the technical signs it’s needed to in order to demonstrate it’s not only undervalued currently, but soon to play catch-up with the rest of the market. Historically, Bitcoin is the first major Cryptocurrency to breach new All Time High’s when a Bull run kicks off, becoming the leader that points the way for all other Cryptocurrencies to follow suit once deeper into the Bullish cycle. This is usually true up until the point of a significant “Mid-Cycle Correction” of which I believe we’re potentially in the midst of as writing this. Right now, we’re also getting a sell-off in ETH as its value is closely correlated to BTC at this stage of the cycle, however once we recover out of this, I suspect that the retail mania will ramp up to higher levels of speculation, therefore paving the way for the broader Alt Coin market to melt up even further which will position ETH as an attractive yet currently undervalued-conservative way to gain exposure to this upcoming Alt Season.
The Price Action leading up to this correction has been trending really nicely, in fact ETH has done a similar “Bull Flag” Pattern, of which we successfully predicted on BTC earlier this year. ETH broke out of its Bull Flag post-Trump Election win, pumping from it’s major support which held since early August between the 0.618% and 0.702% Fib levels, equating to lowest point held at $2,131.22 in this zone of psychological support.
A clearer view of the above chart can be found here: https://www.tradingview.com/x/FiWocl2S/
As of early December, we finally reached structural resistance for this bull flag at $4,093.57, meeting the resistance point again from which we fell from initially back in early 2024. Now that we’re correcting from there, we have come back to retest the weekly breakout level that confirmed the uptrend had resumed when we gained the $3,561.89 weekly high. This was a Lower High within the Bull flag itself that we needed to gain in order to reverse trend. Now that this has happened and we have retested this level, it’s an excellent sign that we’re likely to keep trending healthily back upwards by tagging all the needed support along the way now so that we can cleanly break the All-Time High’s and beyond, I suspect most likely by Late January – early February. Until then, this entire trading range on ETH between $4,000 and $3,000 will become an accumulation range likely for the next 30 days or so, providing ample opportunity for market participants to add to their positions before a “sea of green” really takes hold and it’s off to the races!
This deluge of bullish momentum will likely come in when Ethereum completes another more advanced yet bullish pattern which I believe to be currently forming in its final stages known as an “Inverse Head & Shoulders”. Essentially this is another bullish accumulation pattern layered over the Bull flag, indicating further confirmation that we’re likely to head higher after this correction. For the pattern to finalise, we need to form the right shoulder of the pattern, which we are currently doing by having a correction here. Then finally we need to get a breakout of the “Neckline” of the pattern which is around our same resistance at approximately $4,000 in order to cleanly break higher and soar past the All-Time Highs and into virgin territory thereafter.
A clearer view of the above chart can be found here: https://www.tradingview.com/x/dpR7OCrb/
As you can see, also using Fibonacci extensions in order to ascertain where the first target might be once above the All-Time High, it’d likely land us at $7,475.60 where the 1.618% psychological level resides, similarly to how we predicted the $102,000 first target on bitcoin with a high degree accuracy, of which it just reached and pulled back from this month.
As we correct in price here, it’s an excellent opportunity to take a look back at the absolutely stellar year we’ve already had, allowing us to achieve what was once considered impossible; a Six Figure dollar value on merely a single Bitcoin – but it’s not over yet! The most ludicrous part of this market cycle is still to come, although to maximise opportunity, we need to stay vigilant with how this correction plays out over the course of January into early 2025, because if we hold these levels here, despite the bottoming wick volatility and some daily timeframe selling and follow-through to the downside – once we zoom out in larger timeframes it’s clear to see that this is a healthy correction in the grand scheme of things, rather, I’d say it’s a blessing in disguise to veteran market participants. In further articles that are to come over the following months, we will also look at how to chart ETH relative to BTC price, as opposed to USD in order to get an even more in-depth look in how we can capitalise off this incoming Alt Season accurately using historical data and manage risk while we’re melting up in a deluge of retail (and possibly institutional this time around too!) mania. Allow us here at Stormrake to guide you through the noise and catch the hidden gems of the market in order to achieve your bounty this cycle and beyond!
Written by James Ryan
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