Bitcoin: What If We Are Wrong ??

👇1-12) George Soros's "two opposing theories" concept refers to his conflicting market views, allowing him to flexibly respond to changing conditions. Soros would develop a hypothesis for either market direction, jumping on the hypothesis that the market was confirming.

👇2-12) Bitcoin has followed predictable cycles, a fact that many of the most prominent crypto experts preach but seem to overlook at turning points. For instance, in November 2021, when the last bull market peaked, none of them advised cashing out. Similarly, in Q4 2022, when Bitcoin was expected to dip to 12,000, they failed to recommend buying.

👇3-12) All our analysis is based on quant analysis, and on October 28, 2022, we suggested it was time to buy and that Bitcoin could rally to 63,160 into the 2024 Bitcoin halving (+215% upside, actual halving price: 63,491). We also suggested on February 1, 2023, that Bitcoin could rally from 22,000 to 45,000 by Christmas (+100% upside, actual price on X-mas: 43,613). For 2024, we suggested Bitcoin could rally to 70,000 (+70% upside) based on the risk of diminishing cycle returns. We wanted narrative confirmation before committing to much higher Bitcoin price targets.

👇4-12) Our quantitative analysis supports our view that Bitcoin could rise significantly. However, a sustainable narrative must accompany the price return after the respectable rally from the Q4 2022 lows. Otherwise, the price could consolidate until a new driving narrative develops (our base case scenario). Hence, Soros’s hypothesis can not simply be based on ‘that’s what the cycles have always done.’

👇5-12) Coincidently, the main narrative that Wall Street is buying Bitcoin through the ETFs has run out of steam at 70,000. The market might need a new narrative and attract a new marginal buyer at this level. Bitcoin could have run up with the hype of the halving (April 20) and a target price of a new all-time high (>68,330).

👇6-12) Wall Street buying as the narrative, halving as the specific date, and the previous all-time high as the target price might have caused this parabolic rise to 70,000 at this particular time window—which we expected. However, we struggle to identify who could lift prices higher (marginal buyer) and what would be the theme (new narrative). Hence our bearish view last week (here).

Bitcoin Line-In-The-Sand at 68,330

👇7-12) Repricing of interest rate expectations popped the bubble in November 2021, which is why they are essential to monitor at (potential) turning points. As we wrote a week ago, we expected the current shifting in US inflation to affect Bitcoin and US tech stocks negatively. Indeed, the Nasdaq fell -3.5% (its worst week since October 2023), while Bitcoin held up well at -1.3%. Although we expect downside pressure to continue, we can not rule out that the bullish hypothesis takes over.

👇8-12) For Soros, it was about something other than being right but making money. Hence, in our case, prices must fall so low that Bitcoin is cheap again (52,000/55,000) or rise above a level (68,330) where we must turn bullish. Soros believed that financial markets are inherently unpredictable due to participant's biases and reflexive feedback loops.

👇9-12) This is why Bitcoin’s failure at the previous all-time high (68,330) is our ‘line in the sand’ where we could imagine the bullish hypothesis taking over, but below this level, patience is warranted in our view. Even though this call is difficult as there are hardly any natural sellers in crypto (besides the miners), the (tactical) bearish view is still our base case scenario.

👇10-12) The bullish hypothesis gains traction above 68,330 and could be driven by the US debt explosion (another $61bn in aid for Ukraine, student debt forgiveness, etc.). US presidential election years tend to be bullish. Higher interest rates could also be seen positively as a benefit to savers, signaling that the US economy is in good shape. The Runes theme could run longer than expected, new copy versions could gain traction, and new narratives could emerge as the market evolves.

Bitcoin potential targets based on Elliot Wave and Flag Breakout

👇11-12) Elliot-Wave analysis could signal that the current consolidation period is wave (4), with the next leg starting at any moment with a target price of 81,000/83,000 for wave (5). A breakout above 73,000 might qualify as a ‘flag formation’ and project a target price of 81,000/83,000.

👇12-12) Although the bullish scenario is currently NOT our base case scenario, we can not rule it out. Similar to Soros’s approach, we want to be able to switch our mindset if Bitcoin rises above our 68,330 level - a level if successfully climbed above, where our bearish view is wrong.