Yesterday’s Crypto and traditional market sell off in response to the FOMC 50bp hike is a strong sign that market participants believe there is more downside yet to come in 2022.

As I mentioned in my post yesterday. Link 👇 there are a number of key resistance levels which $BTC had to overcome. The market sent a strong signal yesterday that, for now, those levels will hold.

The key question is when will the market bottom? Here are my thoughts:

1) We will almost certainly now test the Weekly Support (WS) level at £32K.
If this had a long wick down into the £29K levels as seen back in June/July ’21 this would be a signal that there are allot of buyers at this level and it could hold as the market bottom, at least in the short/mid term.
This would be a 58% drop from the All Time High (ATH) of $69K. We have traditionally seen bigger (75-90%) drops from ATH for BTC cycles BUT this cycle also has a much smaller percentage increase between cycle tops (from £20K to £69K). Since the market cycles are constricting it would seem probable to see a lower drop from ATH this time.

2) As Peter Brandt noted (https://twitter.com/PeterLBrandt/status/1520551413968908288) a bear channel invalidation typically results in a drop equal to the width of the channel – this would also indicate a drop in price in the £32K to £28K range.

3) Given that the cycle is constricting and that we can learn something from prior market patterns I have overlayed (in light blue) the price action from the prior cycle top & bottom (Dec 2017 onwards). I have constricted the pattern so it roughly maps over the price action we have seen so far in this bear cycle from the ATH at £69K.
This scenario would see price bottoming out at $25K by Nov/Dec 2022 at ~65% drop from ATH.

4) We could go back down to test the prior cycle ATH of 2017 at 20K which would be a 70% drop from this ATH. This has never happened before in prior BTC cycles and I think it highly unlikely.

Not financial advice, or prediction. Simply providing some data to help us guide our ships through the stormy seas.

I would love to hear views from others particularly if you see things playing out differently.