All Eyes On Bitcoin in Q4 2021
With us finally skating past one of the most bearish months in crypto historically, October looks to lead the charge into greener pastures and quite possibly the last major leg of this cycle. Things are absolutely bullish again when the tried and true method of attempting to dump the market with China banning Bitcoin (again) had a nominal effect on prices. Regulators in the U.S. are standing tall and calling for harsher laws against this industry while also saying that they will not ban it. It would be nearly impossible to fully ban it anyways. With demand from retail investors going through the roof, even banks are looking at hosting digital assets for their clients. Can’t beat em’ so might as well join right?
It would be nearly impossible to fully ban it anyways.
Bitcoin today
The king of all digital assets has climbed 13% since the start of spooky season to a price of $55,053. The overall market cap of crypto is also approaching its all time high at $2.3 trillion. We only need to get to $2.5 trillion to create a new high. It does appear that Bitcoin is back in the lead as it has even confirmed a bullish engulfing candle on the weekly dominance chart. Bitcoin dominance has been in free-fall for most of 2021 and most of those that have been around these markets long enough know that does not last forever.
We pointed out in our last article that Bitcoin was ready to reverse in a major way on the monthly outlook. That reversal could have come at any month but currently we have had a bullish cross on the Stochastic RSI momentum indicator which points us towards confluence that we like to see across multiple timeframes. While we can not say that the stochastic has confirmed on the monthly as of yet, price action is leading and should give us our confirmation by next month. Despite the monthly lagging to confirm our uptrend, the weekly stochastic has had its bullish cross.
Looking to the future
A massive price target of resistance that we are looking to break is at $56,000. If Bitcoin is able to break this, there should be fireworks across the board for not only Bitcoin but the rest of crypto markets. It could very well be the break that pushes us to our final expansion phase of this macro bull market. We have been waiting for this moment all Summer but Q4 has been one of the most bullish quarters in crypto history and this one is shaping up to be more of the same.
If Bitcoin is able to break this ($56,000), there should be fireworks across the board for not only Bitcoin but the rest of crypto markets.
Let’s take a look at some metrics!
Stock to Flow Model
It has been some time since we talked about the Stock to Flow Model but there are some interesting developments here. We have switched to a light green color which was around the time that Bitcoin pushed to the blow off top phase going into 2018. As you can see, Bitcoin has this phase farther and farther back from the initial color pattern from 2014. If it is true that Bitcoin is slowing down over time compared to past cycles, then we should see our peak at a blueish tint rather than the lime green.
Take a look at the model variance indicator on the bottom of the chart as well. Times spent in the green have been profitable buys as long as one sells in the red period following. We are at one of the most profitable buys in history according to this which is likely why institutions have been non stop buying Bitcoin all year long as we have been in the green zone for most of 2021.
Pi Cycle Top Indicator
In our past articles, the Pi Cycle Top Indicator was one of the major market cycle charts that indicated a top back in April. We did tell you that this was likely a false signal as it was one of the only macro indicators to tell us that things were over. It seems that a repeat of 2014 is underway where a false top was indicated and price action had one more absolute tear left in it.
Price also broke below the 111DMA which usually serves as resistance in a bear market. While Bitcoin did spend some time below this powerful MA, price has broken above and confirmed it as support. It is fantastic for the bulls to see such a confirmation on one of the most bearish indicators from this cycle.
RHODL Ratio
The RHODL Ratio is an on-chain metric that we haven’t taken a look at it a while but it is telling quite a tale. This ratio delves into long term holders that start moving their funds around towards cycle peaks. As we have seen in past cycles, the ratio climbs steadily until a peak in the red zone. This bull run has been no different. Despite the volatile price action and news headlines that have been extremely unfavorable at times, HODLRs have been sticking to their conviction and gearing us up for what looks to be this next cycle peak.
The Bottom Line:
We hate to sound like a broken record but you can not decide on a bias based on one indicator or metric. There needs to be a confluence of them to help paint the picture in either direction without the emotion of hoping for a particular direction. We have seen quite a confluence that points to opportunity for many in this market over the next months. Those of us tracking this have waited patiently since April and patience always pays off. See you all in the citadel, there is room for everyone.
About RF Capital
RF Capital is an alternative investment firm with a special focus in the underlying infrastructure of the blockchain space. Other areas of specialization include real estate, debt/equity markets, and OTC trading.
