recently S&P500 has made it's ath around 2950 and lots of investors are taking advantage of this rally and cashing out their profits, why? if you look at current situation of geopolitics you'll see the US-China trade war and tensions between US & Iran both of this situation has put the markets under heavy pressure and fear, fear of a war in middle east and ongoing trade war with China.
so which must be the best asset for this freshly released money from stock markets? clearly Bitcoin , three imp reasons, undervalued, high liquidity and massive growth potential due to limited supply. obviously gold , silver and other precious metals are also good option, but Bitcoin is Bitcoin .
now am not saying that this is the major reason of bitcoin's rally, that's my own hypothesis, but this could be a major reason most likely. now for a minute if we assume that above theory is the major cause than this rally is the result of fear in stock markets. that means big money which is cashing out could be wrong, and i think probably this rally will end up like a bull trap and we'll see another major low in future, i'll explain it but first don't assume that i am on Bitcoin definitely not, actually most of the analysts including me will tell you that the next major bull run in Bitcoin has started and it confirmed after prices broke and hold 6450 level, and am 60% sure on this, but now we're looking on other side of coin.
this rally in bitcoin could fail if stock markets keep moving forward which mostly depends on geopolitics and policies of trump administrations. now I personally think that Donald Trump won't take decisions which are not in favor of markets and economy, coz he had already said earlier that, "war in middle east was a big fat mistake", i think Trump is putting pressure on China and Iran, so he can make better deal with his own terms. you'll get this point if you read the book "The Art of The Deal" by Donald J Trump. if you read this book you'll see that Donald trump likes to create leverage, he likes to have psychological advantage over his opponent.
note this points from the book,
"My style of deal making is quite simple and straightforward. I aim very high and then I just keep pushing and pushing and pushing to get what I'm after"
"The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you're dead"
clearly from above points we could assume what Trump administration is actually trying to do, they keep pushing and pushing with trade war and sanctions against China and Iran, until they became so desperate to deal with the US. If Trump administration succeed to make a fair deal with Iran and China, which I hopefully they do, than stock markets will again start to emerge and most likely we could see a huge dump in Bitcoin .
now moving towards the chart as you can see that we've completed the first supercycle of Bitcoin and now most likely we're in major corrective wave. now if the corrective wave has ended on 3200 level in Dec 2018, note that this whole major correction took 364 days to complete, whereas corrective wave 4 of 2014-15 took 630 days, that means wave 4 was 1.73x larger than whole corrective wave, now it's not violating the rules but usually that doesn't happen, you'll also notice that corrective wave was the shortest correction -84%, whereas wave 2 retraced -93% and wave 4 retraced -86%.
talking about the moving averages you'll see that in wave 4 (2014-15) prices drop to 200 than rallied to 55 and fall back to 200 retested support levels and then rallied for wave 5. but nothing like this happened in 2019, prices fall towards 200 and then rallied, break 55 , most of the analysts were expecting a drop from 4200 level to retest 200 , but that doesn't happen.
now things like this in chart analysis creates doubt on price movements, I see there's a probability of a double formation, and probably we're now in wave X which goes against the trend and end up as a Bull trap. a normal Wave X goes upto 61.8% of total corrective wave or the wave W, which in this case is around 13500, so the current price movement can go upto 13500 level and if the wave X ends up there than a new wave Y will start from there. usually major corrective waves ends at the top of wave 3 or the bottom of wave 4. but I think that the top of wave 3 around 1100 could be the end of wave Y, or the major bottom of Bitcoin , but if this theory is correct than this whole process could take upto 2 years to complete, and than probably we could see the next major bull run in Bitcoin .
thanks for reading, this is Husain Zabir signing out...
Again thank you for your analysis and hard work, its greatly appreciated!