Last November, FTX suddenly paused customer withdrawals. One of the world’s largest crypto exchanges soon filed for bankruptcy, revealing a scandal that led to $8.7 billion in missing funds. The FTX incident caused capitulation in crypto with Bitcoin seeing 77% drawdown.
With this backdrop, on December 9th, The I/O Fund and The Wealth Umbrella stated in the analysis: “Bitcoin is Going to Rally Again – Here’s What you Need to Know:”
“Though we are in the 4th bear cycle in Bitcoin's history, the prior 3 cycles suggest where we are in a rare buying opportunity. There is ample evidence to support the $15,500 level is either a major low or very close to a major low. Both the technical and on-chain analysis support this.”
We reiterated this in early February in a follow up analysis: Bitcoin is up 40% in 2023, Here’s Where it Goes NextBitcoin is up 40% in 2023, Here’s Where it Goes Next
“In conclusion, our multifaceted analysis into Bitcoin is supporting the likelihood of a larger trend reversal. This is not confirmed from our end until we see price make that last high in the coming weeks towards the $25,600 region. Interestingly, this new bull cycle is coinciding with a weakening US Dollar. Also, it is accompanied with more central banks being boxed into inescapable corners.”
And then to really drive the point home, we repeated in April: Bitcoin Vs Banks: Here's Where the Price Goes NextBitcoin Vs Banks: Here's Where the Price Goes Next
“What you can clearly see is a completed 5 wave pattern off of Bitcoin’s low. This is usually bullish. As long as $19,550 holds, any breakout above the current consolidation would be considered a buy from our analysis.”
“As long as The Wealth Umbrella’s signal stays in the “green environment” and price holds above $19,550, we will continue adding carefully to our Bitcoin position with real-time trade alerts sent to our research premium members.”research premium members.”
The chart below illustrates our impeccable timing:
The reason this is important is because our firm offers a rare, yet valuable roadmap for this volatile asset. Not only did we call the Bitcoin bottom, but we also called the previous Bitcoin top at the $58,000 range in the analysis Bitcoin Approaches Upside Target: “We have trimmed some in the $55,000 region, and may trim some more if we reach the $65,000. However, we see any large drawdown to be an opportunity for Bitcoin and we will likely enter again if/when this happens.”
Bitcoin is susceptible to a noisy, bifurcation between bulls and bears with extreme statements, such as: “Bitcoin will go to $1 million” or “Bitcoin is a ponzi scheme and will go to $0.” The truth is that Bitcoin has risen 7,000% in the past 10 years and smashed every record in equities in the past 15 years. Yet, it has also weathered multiple 70%+ drawdowns, but then against all odds, is capable of a full recovery within 3.5 years -- every time. It bears mentioning that many dot-com companies have not reclaimed their all-time highs in over 20 years following such a selloff. Therefore, if you look at this rationally, it only makes sense to try and participate in this asset while limiting the downside. Most especially, if you can buy at the bottom, which is exactly what we set our readers up to do in 2023.
Our firm specializes in this precise discipline with all tech stocks – which is, participating in the upside while limiting the downside by using technical analysis for risk management. However, in the absence of fundamentals, this process excels at the ultimate high risk-high reward tech asset (crypto).
Our method combines price patterns with on-chain metrics which helped determine when crypto was approaching a meaningful top in early 2021. As a result, we cut our crypto holdings in half when Bitcoin was trading between $50,000 - $60,000, and then subsequently, our method helped determine when Bitcoin was bottoming at $15,500. By having a strong process for layering-in at the bottom and layering-out at the top, our firm has surpassed institutional tech portfolios every year since inception.
Below, is our updated analysis including what levels must hold for Bitcoin to be a buy.
Bitcoin is Setting Up for a New All-Time High
One year and 150%+ gains later, my firm would like to update you on where Bitcoin will go next. We do see a critical pullback on the horizon, yet the pullback is likely to be shallow for Bitcoin’s purposes. Most importantly, this next pullback has the potential to be the last great buying opportunity for Bitcoin, as the asset could be setting up for a new all-time high. My firm is prepared to buy this next dip and issues real-time trade alerts for every entry and exit.
Bitcoin’s Next Great Buying Opportunity
In the December 9th report just referenced, we showed a chart that outlined our long-term perspective while Bitcoin was around $17,000.
The above chart, at the time, showed Bitcoin was on major support with momentum shifting to the bulls. It also suggested that Bitcoin was only in a correction within a larger uptrend. Our targets for the coming bull cycle were between $75,000 - $132,000.
At the time, these targets seemed unlikely; however, the technical patterns supported them as long as critical support levels held on the way up. Today, Bitcoin is up 175% from our $17,000 buy rating, and the upper targets remain.
It is our belief that the current pullback will potentially be one of the last great buying opportunities before investors are forced to chase Bitcoin higher. The setup is there, but this depends on if Bitcoin can clear a few, key price levels.
If we zoom into the pattern that is developing off the November 2022 low, we can see the danger zones, as well as updated critical supports that must hold for this pattern to continue higher. Where I will grow cautious is if the next push higher stalls within the $50,000 - $58,750 region. If the 2023 bounce is only a corrective bounce in a much larger downtrend, this is the zone where this corrective bounce will reveal itself, and likely top.
In the above chart, the 1st major change of character was the opposite of what we saw in 2022. The uptrends consist of vertical moves higher, with overlapping and messy corrections that fail to make new lows. What is important to notice, in blue, is that we have successfully completed 2 series of five wave patterns. Each series pushed Bitcoin higher.
What follows a five wave push is always a three wave retrace. We are now starting the 2nd three wave retrace, which we believe will be targeting between $39,000 - $35,000. If this pullback resembles the prior one – overlapping and in an obvious three wave pattern – then, we believe this will be the last great buying opportunity before Bitcoin goes vertical. This will remain our gameplan as long as Bitcoin holds $28,000 in a deeper correction than expected. If we do break below $28,000, then the larger uptrend we are tracing to $100,000 will be invalidated. This is key as what’s central to risk management is always having a game plan if the primary count fails. For us, the $28,000 price level will act as an emergency brake with minimal downside for the mid-$30s. By having this emergency brake, we can participate in the upside while limiting the downside.
The next major hurdle for Bitcoin will be if/when we enter the $50,000 - $58,750 overhead resistance. The alternative red count on the chart suggests that the 2023 bull cycle is actually a corrective bounce in a very large bear market pattern. If we get into this zone and see the character of the trend reverse, then we will alter our risk management plan. If Bitcoin can clear the $58,750 resistance, then odds will greatly improve that we are on our way to the overhead targets listed over a year ago.
