Since May 2022, I have warned Crypto is Easy subscribers about bitcoin’s drop to $14,000.
It’s the most realistic, sensible, natural technical price level in history.
In the classic “anatomy of a bubble” model of markets, bubbles need to go back to where they start before they “return to the mean.”
See the circle below:
To get there, bitcoin’s price needs to go back to at least $14,000, where we saw the start of the 2020–2022 bubble (not the many smaller bubbles within that timeframe or the larger bubble surrounding it).
Note: some people would argue this “bubble” chart dictates bitcoin’s price needs to go back to $3,000. It’s just a mental model, the actual lines and axes don’t correspond to reality. The contours and labels simply identify the stages of this model over time.
From a technical perspective, $14,000 is also the last major resistance level from the 2017 peak, the peak of the 2019 upswing, and near the top of DeFi summer in 2020.
This chart shows that perspective with the blue line:
Also, on-chain metrics like Puell Multiple, MVRV Z-Score, and Net Unrealized Profit/Loss suggest a drop to $14,000 would match the levels we’ve seen during previous market bottoms.
But if you’re waiting for bitcoin’s price to drop to $14,000, you could be waiting forever.
An inverse 2021?
Do you remember $100,000 in 2021?
That year, $100,000 made perfect sense. People talked about it for months. Circumstances were rife for such an outcome.
Some even called it “FUD” to suggest bitcoin’s price would not go that high.
It was the most realistic, sensible, natural technical price level — close to the technical “peak” signals like the two-year multiplier and MVRV Z-Score, as well as a nice, round number, a key psychological target, and certainly within the range of bitcoin’s normal volatility.
Yet, bitcoin’s price did not go that high.
In 2021, the market peaked on trading indicators and on-chain metrics from February to April, then reached a new high six months later at a 6% higher price.
At the time, people talked about $288,000 bitcoin, $5k S&P 500, Fed will never raise rates, flippening, supercycle, institutions will not let the market crash, etc.
In 2022, the market bottomed on trading indicators and on-chain metrics from May to June, then reached a new low six months later at a 10% lower price.
At the same time, people talked about $8,000, bitcoin miners' death spiral, Binance/Tether/Genesis collapse, don’t fight the Fed, no more bull markets ever again, etc.
Some even called it “hopium” to suggest bitcoin’s price would not go that low.
It’s like the opposite of 2021.
Mark, bitcoin already made a double bottom, no way we go to $14k
Thanks for the support. That’s not what I meant.
November’s low was 10% lower than June’s. I know only very basic technical analysis and simple chart analysis, but that is not a double bottom. Here are examples of actual double bottoms:
Bitcoin’s price didn’t do that.
Technically, it made a “lower low” for a falling wedge, a bullish pattern, with bullish divergences on several technical indicators.
Likewise, 2021’s “double-top” was a higher high for a rising wedge, a bearish pattern, with bearish divergences. Almost a mirror image, best shown on the two-week trading chart.
(Funny enough, if bitcoin’s price drops to $14,000 in the next week, it will also match the exact 30-week timeframe from the two 2021 peaks, except as two bottoms.)
Situational Awareness
We know we’re in the anger/capitulation stage of the Wall Street Cheat Sheet, circled below.
While nobody knows quite where we are in that range, what price we’ll reach, or when we’ll move to the disbelief stage, we know it’s not likely much higher or lower than today’s prices.
If you’re following my plan, it doesn’t matter, you just take the market as it comes and make the most of the opportunities that present themselves.
https://cryptoiseasy.substack.com/p/crypto-is-easy-special-issue-my-plan?embedable=true
Today, bitcoin’s price is about $18,000. To reach $14,000, its price needs to drop another 20% (ish).
Is it really worth waiting for $14,000 in this market, where 20% drops are so common they don’t even warrant any concern?
I’d never question anybody waiting for bitcoin’s price to drop to $14,000 or lower. It could even go up to $30,000 and then drop to $14,000. We did something like that in 2015.
As of this post, we still haven’t seen bitcoin’s price drop to $14,000. What will you do if it never does?
This post is also available as an NFT on Mirror:
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio and connect with him on Superpeer.