BTC: Do Sellers Have What It Takes?

BTC: Do sellers have what it takes?

In the past week there is little to update from last week's article. That is to say, the entirety of last week's analysis applies to BTC's current stance with a few micro exceptions noted below. 

First, regarding the title: The consolidation since the 7/14 high persisted last week with price remaining rangebound well inside the noted edges discussed in the recent weeks, $110k, and $123k. That is to say that while 'Nap Time' is almost over it did extend an extra week. 

Second: Last week's chart (with a screenshot reposted from last week) posited that the wave circle 4 low had reasonably completed and price was in the early stages of filling out the next rally expected to target $125k+ while remaining above the 7/25 high. And, while the post FOMC catalyst action appeared to support this micro thesis, the subsequent selloff on Thursday and Friday invalidated the immediate start to a rally to $125k+ in favor of more consolidation of the July breakout.

On a higher timeframe all of this activity remains constructive, provided that sellers are unable to make a sustained push beneath $110k. For a more confident Elliott Wave micro interpretation, the "purist" preference is for price to remain above $111.9k, which is significant as the .618 extension of the initial wave i rally from the June low extended up from the July 1st wave ii low. It's also the May high and a successful test from above has bullish ramifications. 

Also, of note was the $113.4k level which I would've preferred to see hold as the 50% retrace of the July range and the wave iii range. At this time, this is the singular piece of evidence providing credibility to a bearish prospect that some more significant top has been struck. That is to say that while sellers have gained some momentum on lower timeframes from July 31st, nothing in the overall action from the June 22nd low appears substantially bearish or more concerning for the bullish case for another run more imminently to new highs, especially since there's a successful test (as of writing) of the May highs from above that's propelled a micro impulsive bounce (so far).

In summary of the above paragraphs, unless price breaks below $111.9k and gets followthrough to sustain below $110k, the overall expectation for a new all-time high remains the same. 

I'll explicitly note another small alteration from last week's chart: The extent of this consolidation from the 7/14 high has me favoring that price has already completed iii and is completing (or having completed at the Saturday night low) wave iv. This means I've moved the count up to one larger degree, which entails the next move up that creates a new All-time high can be seen as more reasonably completing all of the move from the June 22nd low, rather than just completing the wave iii from that low and still needing another iv-v. The labeling of that (now alternative) prospect is displayed in purple on the micro chart.

On the very small timeframe, the action from Saturday's low is supportive of price having bottomed. That is to say "no," I don't think sellers have what it takes regarding the question in the title.

Regarding how this current action fits into a larger perspective beyond the more near term expectation for another smaller time frame run to $125k+ I'll reiterate from last week:

I will note that outside of Elliott Wave analysis, other indicators providing measures of sentiment are nowhere near what's been seen at other important cycle highs. Specifically, I'm referring to the MVRV Z-Score https://www.bitcoinmagazinepro.com/charts/mvrv-zscore/. That said, considering limited history of major highs in Bitcoin, I would not put a ton of weight into this indicator alone but want to note that there's a reasonable case to make still for Bitcoin to run to $200k, even if not being consider as the primary perspective at this moment.

Overall, I see the upcoming highs ($125k+) as an opportunity for trimming some longer term long positions with a willingness to get back in should we see evidence of a more direct run higher developing. Specifically, I'm referring to the blue potential which would entail a bigger run to $200k+ developing and should we see price get a sustained break above $140k, a direct move to $200k becomes a reasonable prospect with support in the 125k-$135k zone. As I mentioned last week, even if such a rally develops, meaning a move to $200k without breaking back below the June 22nd low, the more high odds potential favors a multi-day to multi-week pullback to the $110k-$115k region first (from $130k~) and then breakout. 

On the other hand, assuming BTC does complete the 2022 cycle in the coming weeks, the evidence we'll need to validate this case will be a break below the 6/22 low (98.3k) followed by a break below the April low $74k. Given that our confirmation of a high in place for the cycle likely requires a 40+% pullback risk management in the current region becomes key.

I'll conclude with a warning to mindful of risk. The past few months have been outstanding for Bitcoin holders but we'd be wise to recognize that the current euphoria will not permanently last. As has been discussed before, while this cycle may have a decent amount of upside left, odds are strong that the majority of the move from November 2022 is in hindsight and very large positions would be wise to consider trimming some profits, trailing some stops, and reducing some risk as price pulls towards key targets.