FM Wealth Management News Letter
In our previous newsletter, we were calling for a top in bitcoin in
the range of $7500 to $8000. So now that the top is in and peaked at
$7630 (depending on your exchange), what are the experts saying?
Those voices that were extremely bullish are now passing blame. In looking for a “cause” for this correction, they look to blame Jihan & Co, one of the largest Bitcoin mining operations, is switching its ‘hash power’ to mine Bitcoin Cash. This includes suspicion of collusion with other Chinese miners.
For the purpose of this discussion we would rather not discuss mining in detail, even though we think an explanation here may be appropriate. Expensive computers manage Bitcoin transactions that anyone can set up, as long as they have the capital. This is what is referred to as ‘mining’. One of the largest Bitcoin miners, Jihan in China, has switched their computers over to mine Bitcoin Cash (a different coin), this has caused the Bitcoin network to slow. This has the effect of making Transactions take much longer than they usually do. So most analysts say this loss of mining power as threatening the very existence of Bitcoin.
What you need to understand here is that, after the market has already struck a top, participants scrambling to identify a cause. We have already shown that it is impossible be successful in any the market if you’re following the news especially when it is coming out after-the-fact.
We have been looking for a top in this market in this range since mid-October and the market provided us an extension just past our original view. We did not need or use any news to define our analysis parameters and targets.
Our primary view is that we are in the midst of a second correction wave, with a potential target down to .620 retracement of the entire move off the low in September. We have already hit the a wave of that a b c correction at $5446. Bitcoin corrections can be notoriously shallow according to our wave pattern analysis standards so we are ‘moving down’ resistance levels as the drop continues to make sure we know where the next market pivot resides.
At the moment we have a key resistance level for a B wave top in the range of $7000 to $7350. Should the market not break that level and follow through to $7800 in 5 waves, this correction could continue and hit our current target of under $5000. We even see the possibility of reaching the sub $3000 if this turns into a higher degree wave 4 correction, which is our alternate view.
As the market continues to correct, we expect bitcoin traders to continue to blame the Chinese mining situation. As you know, sentiment always reaches extremes before we see a turn. At each key level, we’ll watch for a five wave structure to provide initial evidence for the start of the next rally.
As far as Bitcoin cash goes, we see it outperforming Bitcoin for some time with the BCH/BTC ratio looking rather bullish. Assuming that support holds in that ratio, we are projecting that the ratio will reach 2.36. Bitcoin cash has already overtaken Ether in market cap for a short period during this rally making it second only to bitcoin for a short time.
Let the “blame game” continue and sentiment have its way. Our wave analysis method gives us key price levels for market direction. We keep it simple and trade price action as it comes, measuring each move, and identifying key support and resistance levels along the way. Because of its shallow corrections Bruce doesn’t like to short Bitcoin. However, he has already called two successful short ‘scalps’ in this correction and is currently looking for the next trade at the preferred b-wave top suggested above.
Those voices that were extremely bullish are now passing blame. In looking for a “cause” for this correction, they look to blame Jihan & Co, one of the largest Bitcoin mining operations, is switching its ‘hash power’ to mine Bitcoin Cash. This includes suspicion of collusion with other Chinese miners.
For the purpose of this discussion we would rather not discuss mining in detail, even though we think an explanation here may be appropriate. Expensive computers manage Bitcoin transactions that anyone can set up, as long as they have the capital. This is what is referred to as ‘mining’. One of the largest Bitcoin miners, Jihan in China, has switched their computers over to mine Bitcoin Cash (a different coin), this has caused the Bitcoin network to slow. This has the effect of making Transactions take much longer than they usually do. So most analysts say this loss of mining power as threatening the very existence of Bitcoin.
What you need to understand here is that, after the market has already struck a top, participants scrambling to identify a cause. We have already shown that it is impossible be successful in any the market if you’re following the news especially when it is coming out after-the-fact.
We have been looking for a top in this market in this range since mid-October and the market provided us an extension just past our original view. We did not need or use any news to define our analysis parameters and targets.
Our primary view is that we are in the midst of a second correction wave, with a potential target down to .620 retracement of the entire move off the low in September. We have already hit the a wave of that a b c correction at $5446. Bitcoin corrections can be notoriously shallow according to our wave pattern analysis standards so we are ‘moving down’ resistance levels as the drop continues to make sure we know where the next market pivot resides.
At the moment we have a key resistance level for a B wave top in the range of $7000 to $7350. Should the market not break that level and follow through to $7800 in 5 waves, this correction could continue and hit our current target of under $5000. We even see the possibility of reaching the sub $3000 if this turns into a higher degree wave 4 correction, which is our alternate view.
As the market continues to correct, we expect bitcoin traders to continue to blame the Chinese mining situation. As you know, sentiment always reaches extremes before we see a turn. At each key level, we’ll watch for a five wave structure to provide initial evidence for the start of the next rally.
As far as Bitcoin cash goes, we see it outperforming Bitcoin for some time with the BCH/BTC ratio looking rather bullish. Assuming that support holds in that ratio, we are projecting that the ratio will reach 2.36. Bitcoin cash has already overtaken Ether in market cap for a short period during this rally making it second only to bitcoin for a short time.
Let the “blame game” continue and sentiment have its way. Our wave analysis method gives us key price levels for market direction. We keep it simple and trade price action as it comes, measuring each move, and identifying key support and resistance levels along the way. Because of its shallow corrections Bruce doesn’t like to short Bitcoin. However, he has already called two successful short ‘scalps’ in this correction and is currently looking for the next trade at the preferred b-wave top suggested above.
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