Bears Caught Off-Guard (Part 1) – Crypto Piece
Consolidation Is Nearing An End
In our last Crypto Piece (found here), we mentioned that the Crypto sentiment had gotten the most bearish since October 2023. Right after, we’ve slowly started to see price turn around catching a lot of bears off-guard. Remember, there are 2 types of capitulation: Price and Time. While the price capitulation might be nearly done (i.e., very little downside risk), the time capitulation can still last a little longer based on our Cycles Forecast. But this gives us the necessary time to go Crypto shopping for the next big leg up.
Please note that this article is split into 2 Pieces because it goes into much more in-depth analysis for our paid members. Not only do we cover key technical, intermarket analysis, fractals and Cycles Forecast, but we also look into Crypto-related stocks and the altcoin market to provide multiple Money Making opportunities. We will send the Follow-Up Crypto Piece in 12 hours from this post and the Follow-Up Post will only be for our Paid Members.
Production Cost Indicator
One of the reasons we think the price capitulation from hereon is very limited is because of the Bitcoin Production Cost indicator (courtesy of Capriole Investments). This metric estimates the average cost to mine 1 Bitcoin. It is a dynamic indicator since technological developments or mining bans can change the cost of production, so it’s important to regularly monitor it (can be found for free on Tradingview). The indicator’s bottom line is currently sitting just shy of $60k. Since 2018, irrespective of a Bull or Bear market, Bitcoin has rarely dipped below the bottom line of this indicator, and any pullbacks around the bottom line has been exceptional buying opportunities. Now with this indicator’s bottom line moving to $60k post halving, we think any pullback below $60k will be bought very quickly (and we’ll be heavy buyers too in such an event).
Bitcoin And Ethereum Technical Analysis
Bitcoin seems to be doing typical Bitcoin moves. After breaking below the consolidating triangle, a lot of investors got bearish, but our members were able to use this opportunity to pick up some cheap Crypto. We believed this to be a false breakdown (based on our Cycles Forecast and Intermarket Signals), and now with the reclaim of the 9, 21 and 55 EMAs + bullish MACD cross, it is indeed looking like a false breakdown. However, as we mentioned earlier, just because price capitulation might be limited from hereon, doesn’t mean that Bitcoin cannot time capitulate and bore out more investors in the next couple of weeks by being range bound. The key levels we’re looking at is either a confirmed break below $59.5k indicating a deeper pullback (not our base case) or a confirmed break above $69k indicating the arrival of the next move up.
Ethereum, on the other hand, has been relatively weaker. It has managed to hold the $2854 support level with a bullish MACD cross, but has still been unable to reclaim the 9, 21 or 55 EMA. Bitcoin should be leading the move here, but some important underlying dynamics are suggesting that altcoins are nearing a very big move up. We cover the data to back this thesis later on in the article, and these are details that can really help our members make some Solid Money!
Intermarket Analysis + Bitcoin Cycles Bracket
A key development this week was the return of “Roaring Kitty” the person who kicked off the GameStop ($GME) run in 2021. Interestingly, when this happened in 2021, Bitcoin only had a few more months of upside before seeing a very sharp correction (pointing towards a left-translated cycle for this Crypto bull run? Time will tell). After $GME shot up in 2021, even though Bitcoin had a mediocre % gain from its standard, the altcoin market really took off in % terms (aka altseason). There are signs that we’re nearing that type of a phase once again as we show in Part 2 of this article.
Not only has $GME spiked, but even the S&P 500 hit new ATHs just as USD ($DXY) broke below its 55 EMA finally with the MACD entering the bearish zone, signaling more downside. This happened right on the back of Wednesday’s inflation data (CPI), which came in line with expectations of 3.4%. If the mid-range for $DXY at $103.5 gets broken to the downside, it should open the flood gates for all risk-on assets. Although, there might be a bounce to retest the 9/21/55 EMA, we don’t think it’s long before the mid-range gets broken to the downside.
The idea of a $DXY bounce and Time capitulation still being on the table aligns with Bitcoin’s weekly Cycle bracket, which shows that the next major Cycle low (38 week primary Cycle bracket), should be around 3rd June. This means that we might still see a couple of more weeks of base building and choppiness, before the bulls take the reins in a full-fledged fashion.
In the next section for our Paid Members we’re going to take a look at:
1) A key intermarket signal that has a 100% record with all the past Bitcoin cycles
2) Technicals on 3 Crypto-related stocks - $MARA, $CLSK, and $COIN
3) Our Proprietary Cycles Forecast on Bitcoin, $MARA, and $CLSK
Our Paid Members can expect the Part 2 Follow-Up Piece (covering the altcoin market, specific altcoin names, a very interesting fractal pattern, and our Cycles Forecast for the altcoins) in 12 hours from this post.
Beginning from the 19th of May (Sunday) onwards we’re going to be increasing our pricing across all paid tiers. The new prices implemented will be as follows:
Monthly subscription = $30 per month
Yearly subscription = $270 per year
Founding Member = $1,000 per year
All our existing paid members and those who sign up before May 19th (Sunday) will still get to maintain their old pricing as a perk of being early and trusting in Cycles Edge.
With the increase in pricing, we’ll be increasing our coverage and the depth of the paid section for each article. Moreover, we also have some additional special benefits in the works for our Founding Member tier, such as our proprietary Cycles Forecast sent ahead of time not just for the quarter but also for the full year, a Telegram/Discord channel to share trade/investment ideas, a weekly article highlighting attractive trade setups, and more! We’ll share a detailed update with our Founding Members once the structure for the new benefits is internally finalized.
Lastly, remember, our primary goal at Cycles Edge is to help our members “Make Money”. So, irrespective of the paid membership pricing, we’ll focus on providing our members with attractive Money Making opportunities that should make the ROI for the paid membership worth it!