Bitcoin - Is It All Over, So Soon?

Welcome to the Rekt Capital Newsletter, a resource for investors who want to better navigate the crypto markets with the help of cutting-edge crypto research and unbiased market analysis.

Macro Range Breakdown?

Last week, we looked at how Bitcoin could be developing a new bearish trend reversal formation in the guise of a Double Top hybrid; not your classical M-Shaped-looking Double Top, but one at a Lower High resistance.

The Measured Move for a Double Top was applied last week (light blue vertical line) and here's today's update:

Bitcoin has performed the majority of that Measured Move already, getting very close to $109k by tagging $110.5k.

But the more important technical development is that price has Weekly Closed below the ~$114k (black) level, which technically represents the validation point for a Measured Move.

Technically, the Double Top-like pattern validates on confirmed breakdown, which then sets off a Measured Move for price, whereas BTC hasn't fully confirmed a breakdown but has already see the Measured Move take place to a great degree.

After all - technical breakdowns come in three stages:

1. Weekly Close below the level ($114k, black) which has occurred.
2. Bearish retest of said level to turn it from support into resistance (hasn't happened, nor has it been attempted as of this writing).
3. Downside continuation following confirmed rejection from the new resistance, confirming the breakdown entirely.

So while BTC has taken an important step in beginning a breakdown from $114k, price hasn't yet fully confirmed that breakdown.

And it's important to emphasise that, especially since this cycle has been a cycle full of downside deviations and false breakdowns.

Turn $114k into resistance however and reject strongly from there however and there would be a very good chance that the Measured Move would play out to full completion.

The Bitcoin Roadmap

Historically speaking, Bitcoin Price Discovery Corrections have begun after 5-8 weeks of upside in Price Discovery.

In this phase, Bitcoin produced a Price Discovery Correction in Week 6.5, falling in line with history.

Ever since the local top, BTC has been pulling back and has retraced -11% thus far.

Historical second Price Discovery Corrections have been around -25% deep so of course -11% is still far off the mark in that respect, but the goal of a second Price Discovery Correction is to be shallower and faster in its resolution.

Throughout the cycle, BTC has experienced -32% downside of a couple of occasions, with the general Pre-Halving pullback being on average -22% to -25%.

So if pullbacks are supposed to become shallower and resolve quicker, then that renders a -30% retrace in this phase of the cycle highly unlikely, with -25% probably being the deepest price could go, and -20% being a general "safe average".

However, it if turns out that BTC doesn't even pullback -20%, that would only be a good sign satisfying the historical tendency of shallow pullbacks at this phase in the cycle.

After all, at this same moment in the cycle Bitcoin performed a 3-week pullback that was -25% deep back in 2021 and a -29% pullback that lasted only 1 week in 2017.

In both cases, these pullbacks were shorter and shallower by standards of the previous corrections in the respective cycles.

Thus far, this current pullback is -11% deep and 11 days long, so technically there's still room for both a bit more downside and a bit more time spent in "pullback mode".