The FTX affair ushered the cryptocurrency market into the final phase of the bear market, which began in the spring of 2021 when interest rates started to rise and the US dollar hit a long-term low. The price of Bitcoin (BTC) is now developing its last wave of decline, the 5th, the one which constitutes (in my humble opinion), a long-term opportunity.
The FTX Affair and Systemic Risk
The sudden return to earth for the price of Bitcoin (BTC) which had been clinging to the support of $19,000 for more than 6 months and which was beginning to benefit from a more favorable cross-asset context (interest rates and the dollar US on Forex no longer rise).
But the crypto market had to look for a reason to fall of its own, the risk of bankruptcy of a major crypto exchange on a global scale.
Our team has published and continues to publish many informative articles on the price of Bitcoin, and cryptocurrency news.
My specialty is graphics. But it must be borne in mind that the FTX affair, if it does not result quickly in a rescue solution, would then represent a systemic risk for the ecosystem, thus sweeping away all relevance from a technical viewpoint.
In my two previous analyses, I highlighted that the volatility of BTC reached its historic low, an event likely to create an explosion in theft. We are there and the market has decided on the bearish trajectory.
On a fractal level, specifically the Elliott wave approach, I believe bitcoin price is now building a bear market wave 5, this is the last leg down, the one that is a long-term opportunity technical (except systemic risk).
The chart below shows BTC’s weekly Japanese candles, with a logarithmic scale and the 5-count count. The “theoretical” target for this wave 5 is between $9,800 and $13,800.
This is the price range that must be defended, otherwise, the long-term uptrend will be jeopardized.
Chart showing the weekly Japanese candles of bitcoin price in logarithmic
Two graphs that point to the area of the long-term interest of this last purge
I have selected two graphs which each represent in their own way the deviation from the mean of the price of Bitcoin.
The common message is the following: in a market context that eliminates systemic fundamental risk, then the price of bitcoin is very close to a very long-term buy zone.
It is therefore imperative that a financially reliable solution be found for FTX because otherwise, the market would sink into a technical no man’s land, which would signify the end of the upward momentum that started more than 13 years ago.
This first chart shows that a support line is in sight on Bitcoin’s drawdown percentage curve against its former all-time high.
A chart that shows the drawdown curve in % of BTC since its old historical return (ex-ATH)
This second chart should make you think of the Stock To Flow model, but it’s a little different.
This is primarily a standard deviation plot that demonstrates that if the market does not make a major bottom in the $10,000/$14,000 price area, then it will enter an as yet unknown technical phase in its young history.
Chart exposing the Bitcoin Power Low Corridor indicator from Capriole Investments Limited
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