Disclaimer: Nothing here is financial advice.
1. Bubble burst remains incomplete
Trends climax in one of two ways: euphoria or capitulation. December certainly felt like the former — did $6,500 really feel like the latter to you? And no, Bitcoin, although certainly quicker, is not immune to go very bearish. In fact, that is one of its best features: its ability to get rid of weak hands to grow ever stronger, much rapidly, than any other asset. So, just as a reminder: parabolic rise, bear trap(s), euphoria, blow-off top, bull trap, panic selling, dead-cat bounce(s), capitulation, despondency, and stagnant bottom. See? Something’s missing.
2. We’re still far above the mean
Below, three images: (1) the anatomy of a bubble, (2) a linear regression from begining of trading at Bitstamp to the December-2013 blow-off top, and (3) a linear regression from beginning of trading at Bitstamp to the December-2017 blow-off top. Notice the means on each graph and compare. Price overshoots below it before accelerating up again. Good news is that the current downtrend seems to be more accelerated than 2014's.
3. NVT ratio and NVT signal confirm overvaluation
The fact that perma-bulls enamored with fundamentals shit on or ignore the NVT indicators is mind-boggling to me. They are two of the few tools that actually rely on fundamental data. (1) NVT ratio still shows overbought conditions since the bounce at $5,900, repeating an environment only seen since 2014. (2) NVT signal, which has been spot on in detecting both bubble tops and major dead-cat bounces, is currently showing a very similar fractal to 2014: blow-off top, down, dead-cat bounce… Is down next too?
4. A price correction still needs a time correction
Harald Weygand puts it best, so I stole his sequence for the subtitle above. It’s too soon to call the last stages of a Wyckoff accumulation period — and only time makes a market achieve a ranging equilibrium and begin an ascent once again. Euphoric moves still seem abundant and bullish-to-bearish sentiment remains asymmetrical.
5. New money needs to become immune to risk aversion
By this “new money” I mean “dumb money” — like the ones who bought above $17,000. They need to forget about getting wrecked a little before re-entering the market, and they may never buy a satoshi again until we see new all-time highs some months down the road. Oh, and concerning smart money — keep reading.
6. There can be more than one major failed rally
And this is number two in my humble opinion. Remember the triple top in gold’s last bubble?
7. The double bottom still needs to confirm
Yes, if we confirm the Adam-and-Eve with a close above $11,700 and a major injection of positive volume, that would be great. However, if we don’t, Bulkowski stipulates that “there’s a 64% chance that price will continue lower without confirming the double bottom.” Anything before that target is a pretty doodle on a price chart. Oh, and falling wedges rarely reverse a bear market. Peter Brandt says so, no?
8. Sentiment remains bullish
On YouTube and Twitter, a sell signal — especially in a bear market that hasn’t even achieved capitulation, let alone despondency.
9. Institutions can now short while adding to positions
Everybody talks about institutional money coming in. Sure, but why do you think that they’ll be buying at current prices? Wouldn’t the evil, manipulative masterminds of Wall Street keep shorting to hedge while adding to positions down to $4,300, $2,800, or $1,300 — the major volumetric points of control below the major balance we seem to be ranging in? They certainly think long-term, and why would they want 10x gains on the path to $100,000 when they can have up to 100x by waiting a few extra months?
10. The altcoin and ICO bubble is still a bubble
Are you telling me that only BitConnect goes to zero? Bullshit. I know that when it comes to bubbles you never know enough until you know more than enough, but correlation still seems the path of least resistance for shitcoins to go and die. Whenever a bullish scenario comes to mind, I always remember that TRON and IOTA have multi-billion-dollar valuations and I return to reality. Call me Papa Bear, call me high on crack, but I’m still bearish. I’ll write my “10 reasons for being bullish” or my “10 reasons why I was wrong” if and when the right time comes along.