- February 26, 2023
- Posted by: Tradingshot Articles
- Category: Cryptocurrency
This is a very radical approach to Bitcoin’s (BTCUSD) Cycle Theory as it expands on the notion that BTC has so far had only two (mega) Cycles instead of the traditional view of four (smaller ones), which is an idea we have analyzed quite a few times in the past. Radical but as the analysis shows not unrealistic, since each Cycle shares common parameters with the other one that haven’t been broken.
** The Pivot line and the Three Phases **
As this 1W chart shows, each Cycle has a Pivot trend-line, which is the essence of the model as it is the piece that is holding together the three different Phases. Those (mega) Cycles start with the Take-off phase (blue Triangle), a rally which is the most aggressive part of the Cycle. The Pivot line is the Support during the Take-off Phase.
Then with the 1W RSI curving, it transitions to the Expansion phase (green Arc), which is also rally but less aggressive that eventually forms the top of the Cycle. The Pivot line is the Resistance during the Expansion phase.
The third and final phase starts after the Cycle top, the Correction phase (red Channel Down), which is the pull-back of those tow rally phases that finds Support on the 0.236 Fibonacci retracement level. Towards the end of Correction phase, the 1W RSI almost flattens as it turns sideways at the lowest level of this three-phase Cycle. This is the Accumulation period where investors start buying Bitcoin again on those low prices.
** Fibonacci levels **
Apart from the horizontal Fibonacci levels, the most important of which is the 0.236 Fib that offers Support on the Correction phase, we have incorporated the Time Fibs that assist at providing a better perspective as to which part of the Cycle we could approximately be at. As you see, between Fib 0.5 – 0.618, the Expansion phase’s first rally starts and after Fib 0.786 the final rally of the Expansion phase takes place.
Based on this model, Bitcoin is on Level Zero (circle) which is the starting point of the Take-off phase, meaning that we are starting the Third ever Mega Cycle.
As for what the top of this new Take-off phase might be? The December 2017 top of that Take-off phase was marginally above the -0.236 Fibonacci extension of the Cycle before it. The new -0.236 Fib is around $280000.
Do you agree? What are your thoughts on that? Feel free to let us know in the comments section below!