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Bitcoin Taproot Upgrade Setting Up Market for Final Push?

It should come as no surprise that things have heated up in the crypto space since last month. Every week, leaders like BTC, ETH, and SOL have created new all time highs with increased public speculation as to how long this kind of action can be sustained. However, with the total market cap of crypto surpassing the $3 trillion mark, it is hard not to be bullish about these next few months.

For the bull case, Bitcoin has officially launched its first update to the blockchain since Segwit in 2017 called Taproot. We talked about this coming to fruition last summer but it is here and the implications can not be ignored. You can read a detailed dive into the update here. The increased privacy, scalability, and network security brought on by Taproot sets Bitcoin up with the narrative that could be needed for a final rally of this cycle.

It is always useful to look towards the past when trying to predict the future in crypto and the past is very telling for what lies ahead in this case. In 2017, Segwit was passed by the miners in a contentious vote that actually lead to multiple forks of their code since so many did not agree with the direction. Despite this controversial update, Bitcoin rallied over 50% that November and ignited the run to nearly $20k in December. Taproot is a completely different beast in that it was almost unanimously voted on by the miners as they push to ensure Bitcoin’s seat as the top crypto for years to come.

The question is now begged:

Will BTC rally like it did in 2017? Do the technicals indicate room to run in this manner?

Let’s dig in.

A Look at the Market

Taking a look at the weekly timeframe for BTC, it is very telling and it may not be what you want to hear. There is a bearish cross forming on the Stochastic RSI implicating weeks of possible downside action ahead. The RSI also had a major rejection at the fabled 70.37 level. The bulls really wanted to break upwards from this resistance as it would have likely pushed price past $70k. Of course that is still in the cards but if the bearish cross does confirm and actually play out, it could be a longer and more drawn out final phase than many were expecting.

If it does turn out that we have weeks before more bullish action, it would be the first time that Bitcoin did not reach a peak mania phase in December during a bull market. While those that are impatient may see this as problematic, it may actually be a good thing for the final price of BTC when it does peak as you will soon see.

…it would be the first time that Bitcoin did not reach a peak mania phase in December during a bull market.

Bitcoin Logarithmic Growth Curves

The reason why a slightly more drawn out final push can be good for Bitcoin can be noticed in the Logarithmic Growth Curves. Each cycle top has touched the HighDev curve and it is of course evident that we have not done so as of yet. More importantly, the HighDev curve is continuing to rise over time. A peak price in November will be around $10K less than if a peak happens in January. So at the very least, the top will be so much sweeter for those that had the patience to stick around for it.

Advanced NVT Signal

While the Advanced NVTS may look a bit all over the place, there is some wisdom to be derived from it. The thick red and green bands represent times where price is either at a strong sell or buy moment. Green being the buy and red being the sell. Despite the current price of roughly $60k per BTC which is already quite exciting for folks that have been around crypto for some years, there is still a major move in the works.

With the NVTS as the blue indicator, you can see that we are in a moment that will be profitable to buyers at this level in the future. While the dotted red indicator has produced many false sell signals, the solid red tells a different story. Once the NVTS touches the thick red resistance, we have just a few weeks before our top is reached. It is hard to believe there could be significant price action left but that is what the charts are telling us.

Bitcoin Profitable Days

Taking a look at the Bitcoin Profitable Days chart, it is more of an ode to the tried and true Dollar Cost Average strategy. Slow and steady wins the race they say and for those that have been accumulating BTC at almost any price over its history are now in profit. A chart like this shows how silly it can be to look at crypto from a short timeframe. Of course the short term price swings can be daunting and maybe even devastating compared to more traditional investments, but sitting back and picking strong fundamentals will end in your favor eventually.

The Bottom Line

Crypto markets have been and will likely be a wild ride for years to come. The volatile swings that mint millionaires are the same ones that drain others to oblivion. Learn to embrace these volatile swings knowing that they are part of the rules of engagement in this sector. It can be a hard thing to do as most people like to look at their portfolio trackers on a daily basis but taking a step back to enjoy the ride rather than over think it can be one of the best gifts to yourself during this holiday season.

When will Bitcoin break out and start the final parabola?

If the market teaches us anything, then we know time in the market trumps timing the market so this question is not so important. Stay level headed and hold on tight for when the fireworks really get going.



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Jared Gabaldon

Jared Gabaldon

Principal for R.F. Capital - Decentralized Finance Fund