Since my last analysis on Christmas Eve 2024, after the massive wave of volatility post-US elections, the markets have since made the well-adjusted decision to take the needed time to cool off and enjoy some breathing room as we outlined then would be a likely possibility. This has allowed the market participants that have been Bullishly long since early in this cycle to not only take advantage of all the mounting positive narratives for Cryptocurrency, such as the deluge of Institutional Investment and unprecedented ETF inflows that have been building up over the last few years, but also seizing this current mid-cycle correction phase to provide ample opportunity in reallocating capital to undervalued positions and ensuring our strategies remain well-poised in maximizing gains ahead of the upcoming Altcoin Season.
With recent volatility pertaining to a few curveballs such as; the surprise announcement of China’s DeepSeek AI, rocking the foundations of US-based AI companies and NASDAQ heavy-hitters such as Open AI and Nvidia who’ve built businesses around limitless spending budgets and boundless excess of capital derived from the notion that “more spent = better results,” now with China swooping in and undercutting their competitors with a viable Open Source solution that’s up-to-speed meeting market demands at a fraction of the cost, it’s no surprise that the recent manic over-valuations of some of these US companies led investors into a selling frenzy realizing that these once “safe-bets” a mere twelve months ago are now being threatened simply by the free-market finding opportunity via inefficiency, thus creating viable competition. Ultimately this is all very good for the technology ecosphere in the long run, however; yes – the market needed its medicine when Nvidia’s overblown P/E Valuations were sustaining a figure above 40.0, which for the Stock Trading enthusiasts know this is deep in the over-valued territory where a sudden steep and sharp correction becomes an inevitability sooner rather than later, which we’ve now got.
This of course, spilled over into the Cryptocurrency sector and solidified our prediction that a mid-cycle correction of sorts would likely commence here started to ring true. Combined with Trump’s inevitable Tariff Shock to the broader markets, it’s clear that we’re in a deluge of uncertainty right now, however nothing fundamental has changed for the markets; mainly newer retail participants just don’t like uncertainty and tend to overreact in the short-term. Based on all the positive political shifts and executive orders Trump’s signed in the wake his inauguration combined with his feverishly bullish plan to make the United States of America the world leader for all things Crypto, there’s no doubt where this industry is heading in the future in my eyes. Let’s take a look at the charts and see what price levels we’ve needed to respect in the meantime, and where we will be going thereafter once out of the storm.
In our previous article in December, after hitting our $102K target for Bitcoin, we called for a well-deserved retracement as we stated “nothing goes up in a straight line forever.” This couldn’t have been more fortuitous, as since then Bitcoin hasn’t been able to trade consistently above that Fibonacci extension target without being sold-off consecutively each week. We noted that there were two primary entry points we were looking for when coming back down on the weekly time-frame that were also ascertained using Fibonacci’s sequence, again looking at likely psychological price levels that we could retrace back down to. Our first level at 0.236% tagged around the $96,500 mark early on, however, it was our predicted optimal level of 0.382% level sitting at a price of $89,400 where our ideal retracement level was that price ultimately came to test and hold and has been holding ever since.
A clearer view of the chart can be found here:https://www.tradingview.com/x/B9CMVoUb/
While price chopped along sideways in a channel for some time, we blocked out the noise and remained steadfast that this level would tag in some way, shape, or form, and that day came on Jan 13th in the lead-up to a forecasted “hotter-than-expected” CPI print of 2.9% Year-on-Year, +0.2% greater than previously anticipated. This gave the market the extra little bit of uncertain push back to the downside that we were hoping for, albeit still holding trend, therefore giving us a nice setup and bounce higher that came in the following days before the announcement of DeepSeek AI.
Since the eventual panic sell-off from not only DeepSeek AI challenging the overblown valuations of the US AI Sector, but also now with Trump’s 25% Tariff shock to Canada, Mexico and now being discussed which other non-US nations will need to be subject to these extra economic buffers, it was only natural that the market has priced this in and remains somewhat “choppy” and stagnant with prices mostly sideways across the board until we clear these high seas of uncertainty into clearer waters. With that being said though, in terms of Price Action, we have held what we’ve needed to, and maintained the overall uptrend that has gotten us to these eye-watering prices in the first place.
A clearer view of the chart can be found here: https://www.tradingview.com/x/l86DJqrX/
As you can see, despite the narratives that seem to just keep on coming, despite the relentless nature and wild swings of the market, Bitcoin is determined to hold the $90K line in the sand and Local Uptrend on higher-timeframes; a good sign that this is all just noise and won’t permeate into a larger and broader sell-off. The Local Trend needs to hold here (green box) to keep momentum relatively high in the medium term so that we push into fresh All Time Highs later this cycle, however, if we do end up getting a Weekly or a Monthly close below the green box zone, then we will be looking at yet another broader re-accumulation phase (similar to what happened between March – September 2024), in order to re-gain buying momentum before attempting to head higher.
Whilst we expect to see Bitcoin trailing higher once it’s ready to sustain consistent buying volume and reduced selling beyond the current $102K Resistance zone, given that historically in the first half of a Bulllrun we usually see Bitcoin lead the charge, it’s the second half of a Bullrun where BTC dominance starts to fall off, giving way to the meteoric rise of Altcoins, like we saw in cycles past. As is true for all trading opportunities, this can even be charted and critiqued using Trend Analysis and our understanding of Price Action to determine where a likely trend reversal will come in, paving the way for Alts to reign supreme again. Currently, BTC dominance has remained consistently in an uptrend since the beginning of 2023, in-line with the beginnings of a bottom forming from the FTX crash in Q4 2022.
A clearer view of the chart can be found here: https://www.tradingview.com/x/1HSdsNJi/
As Bitcoin is the grandfather of all Crypto currencies, the relationship it has relative to how the entire Crypto industry will perform as a whole later on in the cycle cannot be underestimated. However, at a certain point during a Bullrun, usually happening once Bitcoin has breached into fresh new All Time High territory in USD, often when that first major mid-cycle correction kicks in (like what we’re experiencing now!) that’s typically when BTC whales and eagle eyed market participants look at reallocating their holdings into undervalued and underperforming Altcoins in order to make the remainder of their gains seeing that Bitcoin has already done most of its rally up until this point thanks to the law of diminishing returns. Upon closer inspection, we can see BTC dominance last Bull cycle during 2021, Bitcoin reached a market saturation peak at 73.63% in December 2020, again aligning with when it started breaking above $20K USD for the first time since the 2017 Bullrun, beginning the printing of fresh highs that would last all the way until November of 2021. The question then remains – where do we see BTC Dominance topping this current cycle? Well again, thanks to the law of diminishing returns as the overall plethora of Cryptocurrencies, memecoins and broader umbrella of Web 3.0 assets available to market participants each and every cycle keeps growing, it’s unlikely we’d see the peak at those levels again, in-fact if we trade the trend on the basis that BTC.D will keep making lower macro highs on higher timeframes as a result like it’s always done given the above, I’d expect to see this cycles resistance coming in around the 60-65% zone, of which we’ve tagged twice now in the recent months and rejected off of both times. This further gives credence to the idea that whilst BTC will continue trailing higher from here nominally in USD prices, it’s performance compared relatively to its Altcoin counter-parts will start to dwindle until this cycle has reached its peak.
Speaking of undervalued and underappreciated heavy hitters in the space currently, Ethereum has remained stable yet consistently low on buying volume for the entire duration of this current Bullrun for the time being. This meant that while the sell-offs that came for the entire broader market also came of ETH naturally, as its not vastly overvalued yet like it has been in cycles prior, it meant that the sell-off didn’t send prices below support and reversing trend into becoming Bearish – in-fact we held nicely at the structural accumulation zone and proceeded to double bottom during Trumps Tariff shock cleanly at $2,100, with a sharp rebound within 24 hours straight back to the $2,600 - $2,700 range.
A clearer view of the chart can be found here: https://www.tradingview.com/x/jxkD2fXH/
This is a great indication that despite being dragged down with the rest of the market which is to be expected in times of market-wide volatility, ETH was able to respect it’s broader macro uptrend since 2023, consequently not losing trend and having buyers stepping in quickly to seize the immense “Double Bottom” opportunity. Given all this, I’d say that ETH likely is here to stay defending its #2 place in the pecking order for all Cryptocurrencies for the foreseeable future.
In the December article we also looked at how once ETH broke out of this accumulation phase, we’d likely see the completion of an Inverse Head & Shoulders Pattern, careening price up to a first Fibonacci Extension target of $7,400. While it might seem at first glance with all the recent volatility and market shocks that this may no longer be valid, if we block out all the noise of the sharp candle wick sell-offs that were bought up same-day in recent weeks, we can see the overall structural trend of ETH when changing from a Candlestick graph to a more simplistic Line graph, that nothing has changed.
A clearer view of the chart can be found here: https://www.tradingview.com/x/9FiUA51b/
Actually, if we end the month of February back at around $3,000 or higher, we could easily see the aforementioned “smaller Right Shoulder” easily form here, therefore keeping the original analysis unchanged from December. Sometimes in the market, discerning trend can be difficult when the charts are full of long wicks to the downside where buyers have longed with capital hard and fast to “Buy The Dip”, however that noise can sometimes get in the way of seeing the bigger picture, hence the Line chart in this instance removes that singular day’s extra volatility to the down-side, seeing it got bought up virtually instantly anyway, demonstrating that essentoally nothing has changed in the grand scheme of weekly or monthly timeframe trading. This is exactly what you want to see during a mid-cycle corrective phase, as newer retail participants sometimes trade solely off the noise, hype and mania, where-as veteran traders tend to look at the overall trend structure and bigger picture to make their analysis for the Long term.
Now taking a look over at the current Macro-Economic landscape, ultimately the trend is still the same there too. The US FED are still being extra cautious to make sure they don’t cut rates too quickly and send us straight into a heated-up second wave of consumer inflation. As a result, despite Trump’s vocal conviction that the FED must start cuƫng rates ASAP, for the month of January, the FED decided to keep rates on hold at a forecasted 4.50%.
Source: https://www.investing.com/
Whilst Trump would have preferred they started cuttng right off the bat once coming into office, when asked, he commented that the decision rather to hold rates steady here for the time being was “probably the right move”. The market was happy with this response as it didn’t sell-off again due to any further uncertainty surrounding this, likely in-part to Trump’s tepid and understanding tone.
Coming into 2025 with moderate enthusiasm, a bit of uncertainty yet overall unchanged macro trajectory I think was the best possible outcome for the longevity and remainder of this Bullrun. Remembering the last cycle, we came into 2021 as hot and ever, hittng the ground running with memecoins galore making insane gains, which sounded nice at first, however I very quickly remember by late Feb, early March we started losing steam quickly, which ultimately led to an entire market top in just mid-April, which saw us sharply over-correct to the downside minimum 50% in some cases. The market then struggled for the months following creating uncertainty for far too long, meaning that BTC was never able to regain the $60K peak again with any form of consistency there-afer, eventually bleeding out and spilling all of its gains quickly once 2022 rolled around. This left many feeling like it was an underperforming cycle upon looking back, of which I’m glad we’re not repeating again. Moderate, yet extensively quick market-wide liquidations like we’ve seen in the last few weeks which we forecasted in our December article, the fact that we’re experiencing those now and they’re well within expected correction drawdown tolerances, means that we’re settng up to have a healthy and fruitful 2025 ahead. With a Crypto-pro Trump at the helm of the largest and arguably most impactful economy in the world – I’m confident we’ll see clearer skies ahead in the near future, with fresh narrative and retail euphoria quickly washing away the much needed tepidness of January. Allow us at Stormrake to show you the way through the noise so that you and your portfolio can prosper in a world where the pendulum is swinging back the other way, making not just America great again, but making the whole world have something to look forward to in a new Tech-driven Golden Age where future possibilities of innovation and growth are boundless and exciting once again.
Written by James Ryan
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