Temperature Take: Bitcoin Market Update

I began a blog post called ‘Moment of Reckoning’ back in August 2021, when we had just reached the third new moon from the June 2021 solar eclipse, which was really important for Bitcoin.

This was close to the autumn 2021 equinox. As I’ve mentioned in previous forecasts, the spring and autumn equinoxes tend to be the times of the year when markets pivot. So if you’re going to have a major crash or market top, this is usually when they start. Sometimes they can be preceded by a major peak, followed by a crash such as Black Friday in the autumn of 1929 – after which a massive and prolonged decline began that became the Great Depression of the 1930’s.

It was not long after this, in September 2021 that the Evergrande property saga in China sent global equity markets into a tailspin. Something they didn’t really recover from, particularly once the US Federal Reserve changed its dovish fiscal policy and began QE tapering and raising interest rates in November-December of 2021 – just as the final iteration of the Saturn-Uranus square bit. At the time, I did say that this would disrupt the usual December bullishness and create fear and volatility, which it did – we went the route of ‘max pain’, rather than ‘max gain’ as predicted.

Given their strong connection to equity markets, particularly tech stocks listed on the Nasdaq, the cryptocurrency space experienced a crash once the so-called ‘Halloween Effect’ had worn off:

The bitcoin-tether price action has plunged 39% from its 69k high on Nov. 21, with a 27% flash crash on Dec. 3-4 that printed this weekend’s 42k low. Several analysts noted that Stablecoin-Tether has enormous exposure to Evergrande and any hint of additional distress in China’s real estate debt market could result in a crypto crash…

The Evergrande Default Notification and a Crypto Flash Crash – Part 2

After a brief recovery in Q1 of 2022, things rapidly went downhill again as the inflationary side-effects of the Russia-Ukraine war began to make themselves felt. This seems to have been the final nail in the coffin for the cryptocurrency market, leading to what’s been dubbed ‘crypto winter.’ Bitcoin has lost over 70% of its value since it’s ATH on 10 November, about a week after the Scorpio New Moon on the 4th.

Despite my (and many other people’s, including Ken Stanfield, Raoul Pal etc) best hopes that Bitcoin might recover sufficiently post-December to rally in the spring of 2022, it would seem that Vladimir Putin had other plans…

To be fair, my eclipse forecasts of Nov-Dec 2021 (particularly the lunar eclipse of November 2021) both suggested that the usual pattern of events related to the Bitcoin Four Year Cycle would not apply (including a December top), and that we were likely to enter a recession in 2022-3, so on these two points at least, I proved to be right.

2022 ECLIPSE CYCLES: MEDIUM TERM HORIZON

Now, one eclipse cycle on – and one year since the June 2021 eclipse that coincided with the Bitcoin flash crash that lasted three months – and we seem to be in similar territory. So could things flip bullish like they did back in July 2021 in time for a final rally to round the 2020 bull market off on a high note? Possibly…

Hope on the horizon?

When I did my forecast on 30 April at the Taurus Solar Eclipse, things looked hopeful. Taurus is the sign of the bull, and it’s where the moon is exalted, which in itself, seemed promising. Plus we had an upbeat and expansive conjunction between the two benefics, Venus and Jupiter – again, super bullish.

At the time therefore, there seemed to be every indication that we could have one last major rally over the summer before a major crash close to the autumn equinox and the bear market sets in for good.

However, Bitcoin has so far failed to recover – it’s now below the $20k mark and floundering. Globally, markets look muted – even the great tiger economy, China, which has seen the fastest and largest GDP growth of any economy since the 1950s, seems to be faltering, which has led to warnings from organisations such as the World Bank about a possible slowdown, particularly if they remain ‘tied to the old playbook of boosting growth through debt-financed infrastructure and real estate investment.’

So, what now? Let’s have a look at some indicators to see if we can get a steer of what to expect between now and the autumn…

KEY INDICATORS

Jupiter

First of all, Jupiter’s movements…

Jupiter entered Pisces – a sign where we tend to see market bleed-outs – in Dec 2021, something I discussed in my summary video on Bitcoin’s (and US market) correlation with Jupiter cycles.

However, since then, it has ingressed into Aries, which could see bullish sentiment briefly recover between now and late October 2022, when it will return to Pisces until Dec 19, a time when the tide for markets is likely to go out again.

However, during the brief window between then, we could possibly see a rally, perhaps as a result of a policy change e.g. friendly Fed policies or its legitimisation in a major financial centre, as I discuss in my April solar eclipse forecast. July 2021 is when Bitcoin flipped bullish last time, so it certainly remains a possibility.

But, and this is a big but… much depends on other conditions, including…

Supermoon Lunar Eclipse

On the other hand, the Scorpio Supermoon Lunar Eclipse in May 2022 somewhat muddied the waters. The Babylonians didn’t really like lunar eclipses – they saw them as bad omens, and so would hide their king and take all sorts of precautionary measures to protect the country from things like plagues, harvest failures etc.

This one was a bit of a mixed bag in terms of overall aspects etc, and so far, it’s been a bit of a doozy, with subdued sentiment, interest rate hikes, inflation running very hot and talk of recession fairly widespread, so I think it fair to side with the Babylonians on this occasion.

Generally speaking, lunar eclipses have a three month window during which we close off projects or trends begun at the previous solar eclipse i.e. Dec 2021. The upshot, the bearish, doom and gloom feel is likely to continue until the end of July, which is when Jupiter’s influence could kick in.

Make or Break Moment: Q3

This would take us to the third quarter of 2022, which is when things could get really interesting, thanks to Jupiter’s retrograde cycle (28 July-27 Oct 2022), which ends during eclipse season 2.0 in Sep-Oct 2022; and, of course, the equinoxes, which is when we do tend to get sentiment changes in the collective as we prepare to switch seasons.

To me, there is still a glimmer of hope that Jupiter’s bullishness could win out, especially when we add in other factors like transiting Uranus, which will be very close to an exact conjunction with the Bitcoin Part of Fortune (another bullish indicator).

If we are going to see a break-out or relief rally, I would expect it to come around one of the two key lunar phases: New and Full Moon. July’s second New Moon looks like a potential catalyst, given it’s bullish trine to Jupiter.

Much, I think, will depend on larger geopolitical factors such as the slowdown in China, trade and export challenges resulting from factors like supply chain disruption and higher commodity prices due to the war in Ukraine.

Whatever happens, I think we have to accept that Bitcoin’s four year cycle as we know it, is over…and this will have a marked effect on forecasting and TA going forward.

Changing Patterns: No more Four Year Cycle?

The Moon, Retail and Reactivity

Since the May lunar eclipse, we’ve seen a further sell-off, starting at the Sagittarius Supermoon in mid-June 2022, and again close to the recent New Moon in Cancer on 29 June (which fell close to a well-known time pivot point for Bitcoin on 26-7 June); as well as the stationing of Neptune on 28 June, which can often lead to feelings of disillusionment and being a little at sea…

I suspect this movements at the two lunar phases may be down to ordinary retail investors, reacting to news and overall sentiment, which are pointing more and more to a recession – something indicated by the Gann cycle as being most likely to occur in late 2022-mid June 2023.

As I explained in my Dec eclipse video, the Bitcoin four year cycle is not only lengthening but may also be disrupted due to the shift towards institutional investment, ruled by Saturn, which is very different to the mentality of retail investors and crypto veterans. This could mean that the Bitcoin market becomes more – and not less – like equities, with quarterly buys and sell-offs and less overall volatility, leading to a further lengthening of its usual cycle movements. Something to consider long-term…

Saturnian & Institutions: Wyckoff Signatures

Certainly, back in May 2021, many people pointed to Wyckoff-style patterns not really seen before in the Bitcoin chart. These are the classic signatures of institutions, which according to Richard Wyckoff, tend to trade securities in four phases: accumulation, mark-up, distribution and mark-down. Since they are market-movers, it’s best to get in sync with them, because unless you’re a whale, you can’t fight against the tide of their buy and sell-walls.

Going forward, this may make it more difficult to solely use ‘organic patterns’ like soli-lunar cycles and previous Bitcoin movements to map or predict trends: something I know I will be bearing in mind. It’s very clear that we are moving into unknown territory, which means building more flexibility into analytics models and doing a lot more risk management just to be on the safe side.

Overall Assessment

Given the very clear signals provided by both the Gann cycle and the macro-Elliott Waves of Robert Prechter, it does look as though we are indeed in for a fairly prolonged recession, one is likely to begin at one of the equinoxes.

Some people think that we entered the bear market in the autumn of 2021 after Bitcoin made an all-time high of $69K (which would fit with the overall negative mood of the Nov-Dec eclipses and Saturn-Uranus square), and they may be right.

However, given the positive indicators regarding Jupiter, Uranus and the Taurus Solar Eclipse, whose influence will extend until October 2022, we may still be in for one final rally over the summer of 2022 before the bear market really sets in.

Much will depend on geopolitical factors and monetary policy, however. I don’t think it a coincidence that the market started to falter soon after the US Federal Reserve began their monetary tightening policy and interest rate hikes.

The fate of China’s economy, may also prove key – there are strong links between Chinese investors and businesses like Binance, for example, and many stablecoins like Tether, which have ties to Evergrande and other Chinese-owned or backed investments.

As I’ve shown, we are moving into new territory for Bitcoin, particularly given the changing regulatory environment, and the shift from retail to institutional investment strategies, both of which are affecting patterns in the chart. So I, like many other analysts with much more experience than me, remain vigilant and open to anything at this point.

For a more detailed breakdown of trends within the crypto-currency market, including Ethereum, check out my Eclipse videocast.

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