Normally, I hate the use of an ATH to factor performance. But this is more about flexibility than striving for a new ATH. Usually, I would think that provides a lot of growth potential. But in reality, hitting an ATH takes time. And there's history to show it. This year, there were multiple ATH's set, lost, and regained.
But want I want to look at specifically is BTC's patterns between ATHs. These are the charts from 2021.
Jan 8 - Feb 8. | 31 days, 31% drop | 13 day bottom out
Feb 21 - Mar 13 | 19 days, 26% drop | 6 day bottom out
Mar 13 - Apr 13 | 30 days, 19% drop | 11 day bottom out
Apr 14 - Oct 20 | 189 days, 56% drop | 69 day bottom out (heh heh)
Oct 20 - Nov 8 | 19 days, 14% drop | 8 day bottom out
Nov 10 - Present | 49 days, 39% drop | 23 day bottom out
It's important to recognize the drop percentage in the last chart is the drop to the bottom that occurred on Dec 3rd. We're currently down from the last ATH by about 31%.
So, with these charts to examine, there are some really interesting patterns to account for. And this is what is leading me to look towards other coins instead of BTC for 2022.
First, out of all price movements throughout 2021, every ATH recovery occurred within the span of a month (31 days) except for one - our summer of despair (April - October). The rebuild throughout was important - but it took a long time. We're currently in the second occurrence like this. We're 49 days off ATH putting us well outside of the pattern of one month ATH recovery.
Second, every recovery period between ATHs shows the bottom occurring around the same time during the recovery period. The bottom out date relative to the period entire period is strikingly similar. The chart below shows the approximate timing of the bottom throughout each ATH period.
| Date | Total Period | Bottom Out | Bottom Out Period % |
|---|---|---|---|
| Jan 8 - Feb 8. | 31 days | Day 13 | 42% |
| Feb 21 - Mar 13 | 19 days | Day 6 | 32% |
| Mar 13 - Apr 13 | 30 days | Day 11 | 37% |
| Apr 14 - Oct 20 | 189 days | Day 69 | 37% |
| Oct 20 - Nov 8 | 19 days | Day 8 | 42% |
| Nov 10 - Present | ? | Day 23 | ? |
That's... crazy. Like, really crazy. Every single bottom in between ATHs in 2021 occurred between 32-42% of the way back to the ATH. The average of bottom out period is 38% of the way through the recovery.
So, if we apply that to our current model and assume that the bottom has already occurred (the dip to $42k on Dec. 3rd) - it gets interesting. That would make the current trend look as follows:
| Date | Total Period | Bottom Out | Bottom Out Period % |
|---|---|---|---|
| Nov 10 - Present | 61 days | Day 23 | 38% |
So what does that mean? If this recovery looks anything like every single other recovery this year, BTC can potentially reach it's previous ATH around January 10th, 2022. Which... is looking... kind of crazy. If we compare it to the long recovery in the middle of the year, it looks even weirder.
Currently, if the model is close to accurate, we are approximately 80% through the expected ATH recovery, If we look at the long recovery, 80% of the way would be about September 12th. At that point, the price was down 31% from it's starting ATH - and up 61% from the bottom.
For us today, at 80% through this model recovery, our price is down 32% from it's starting ATH - and only up 12% from the bottom. So our recovery is clearly much slower. And to hit anywhere near the model's expected recovery date - there would have to be major price action. Which isn't impossible - but looks slightly unlikely due to the year's coming hurdles.
So, it suggests one or more things. One, that the bottom of $42k wasn't actually the bottom. This - I don't believe. I think there are more than enough incentives for whales to maintain $42k at this point and after the events of the last few months. Two, that the recovery model is wrong. This - I don't believe. Patterns are patterns until they aren't. If this one breaks the model but the next one returns to it - the model isn't necessarily wrong, but there are anomalies like with every kind of TA. Three, that this is one of those anomalies. This - I believe.
I think there are more than enough outside factors to influence the recovery period at present time. With the trading behaviors in massive 100x leverage being restricted, the massive influx of institutional money into crypto companies, the growing battle of countries taking sides in crypto, the FED tapering bonds and raising interest rates, the current and coming launches of major layer2 DeFi protocols, the exploding NFT marketplace, the emerging P2E gaming sectors, and more... there are so many variables involved that simply didn't exist even... last year.
There's not a whole lot of institutional interest in pumping Bitcoin for increased value - while at the same time there isn't a whole lot of interest in dumping it below current levels. This suggests a lot of... crabbing. And I think this is part of the natural evolution of the crypto markets and Bitcoin specifically.
So, I think there are a few important things to take out of all of this.
- We've already seen incredible economic volatility and disruption because of the pandemic. Crypto has weathered it well.
- The most influential outside aspects to 2022 will be the FED tapering bonds purchasing to zero and raising interest rates - most likely to settle around .9%. This is going to impact crypto - but no nearly on the level the pandemic has. And it shows no justifiable reason to abandon it's trajectory from the last few years.
- Crypto is macro driven by institutional investors - and micro driven by retailers. The major issue is on-risk assets being tapered when interest rates rise. And they most likely will. But that too, will also be relative to the risk assessment. Crypto functions on faith - just like every other investment. And the faith in crypto has grown massively in the last few years.
- Institutional investment in crypto evolved from security investments (parking cash) to include technical investments (staking crypto development companies). This put an extra responsibility on the institutions that have done so - and the pattern hasn't slowed. VCs and Pools are pouring money into crypto companies - almost all of which have an interest in maintaining their respective coin/token/operations. Search Google News for crypto company investments and it's flooded with announcements day after day.
- The bear rejection for BTC at $42k at the beginning of December was a solid message. It didn't hit a support level - it was the fucking Rohirrim whooping bear ass. So much so, for the rest of the month, the bears couldn't break $45k after numerous attempts.
With all that being said - I don't expect 2022 to dip much further than we already have. Even if we did drop below $45k, there's no long-term interest in now further embedded institutions pulling support from their own investment projects - as the crypto holdings are no longer such high-risk assets to keep on the books.
And finally, the pièce de résistance. Bitcoin's lost dominance.
Through the entire year, Bitcoin has steadily lost it's dominance in the crypto markets. HOWEVER, the comes with a gigantic caveat. That dominance has been essentially held at 40% since the drop in May. It bounced back up over the summer, dipped again in September, bounced back up, and dipped back to 40% where we are currently.
Now, here's the COOOOOOOOOL part.
It happened! Like a Christmas miracle or something, BTC dominance dropped below it's held line from May. And we've been dancing on it for the last four days now. We haven't seen this since 2018, and things back then were entirely different than they are today. New markets, new rules, new money. There is no reason to believe BTC will suddenly spark dominance back to 70%+ again. The technology and use cases of crypto today simply prevent that from being possible.
So - does BTC manage to creep back towards 50% dominance? Doubtful. BTC's major use for macro investors is as a secure investment. But the coming year is going to limit on-risk assets. BTC itself isn't tied to any major crypto tech or coming public uses. It's becoming a pseudo-onramp for crypto in general. But the alt coins... oh... the alt coins...
That's where the institutional investments went. Not the security holdings (that's what they've been selling) - the actual futures investments into buying shares of crypto companies. The hundreds of billions of dollars that have been invested into the alt projects.
So, what I'm looking for are projects that are exceeding bitcoin's performance since May (our last break to 40% dominance). And now, with our hovering around it longer than ever, call it what ever you want - but the flippening is happening in real time. And it has been for a while now. The thing is - if the project couldn't succeed between May and now, how can I expect it to rebound from prior to May??
So, I compared the performance of some of the more popular alt projects against BTC since May 18th to see performance during BTC rise and falls. And the results are interesting to say the least. Are you ready?? MORE CHARTS!!!
Bitcoin is up 9.26% since May 18th. So that's my par. I opted to run it against a bunch of coins/tokens including ETH, SOL, ADA, LUNA, DOT, AVAX, DOGE, SHIB, MATIC, ALGO, LINK, ATOM, FTM, LRC, ONE, CRV, and ANKR. All top 100 MC projects - many of which are mentioned quite a bit in this sub.
The highest performing against BTC is LUNA. The lowest performing is DOGE. The really cool part is seeing how Doge clearly has been lagging behind BTC while LUNA took the hit and exploded in August.
Of the coins that showed the most performance during the period...
| LUNA | 443% |
|---|---|
| LRC | 272% |
| FTM | 240% |
| SOL | 213% |
| AVAX | 192% |
| SHIB | 113% |
| BTC | 9% |
Of the coins that showed the most average performance, that is - most tied to BTC...
| CRV | 41% |
|---|---|
| ONE | 24% |
| ATOM | 21% |
| ALGO (forgot on chart) | 18% |
| ETH | 9% |
| BTC | 9% |
And then there are some reeeeeally surprising stinkers.
| DOGE | -64% |
|---|---|
| LINK | -53% |
| DOT | -31% |
| ANKR | -36% |
| ADA | -33% |
| MATIC | -2% |
| BTC | 9% |
So, we put it altogether and what do we get... ???
Well, let's take a look. LUNA, LRC, FTM, SOL, and AVAX are charging along like crazy. I don't put much stock in the meme market - but if you're looking, SHIB is keeping it's hold, but it has been lacking beyond the other outperforming coins/tokens.
The Normies are are fairing about the same. Though, CRV, ONE, and ATOM are showing some slight potential.
But holy shit the Stinkers.
DOGE is dead. LINK is on life support. DOT?!? ANKR?? I'm not surprised to see ADA down and falling, but even seeing MATIC lower than BTC since May is showing me that MATIC's return to hype levels may be approaching the peak of it's large growth potential in the coming 6-12 months.
Take this for what you will - but I'm giving strong consideration to consolidating into LUNA, FTM, and possibly one other project for the coming months. I think the history shows clear potential, the door is being held open by BTC, and the power of these projects against a falling BTC is incredibly impressive. The resilience during mad BTC swings is showing me that they can whether the coming 2022 better than most of these other projects.
Obligatory NFA - and wish everyone the best. I hope this helps at least one person figure out what they want to do - whether it be along with this concept or otherwise.
P.S. Obligatory - hate on TA all you want, there's a reason Wall Street uses charts and not magic 8 balls.
CARRY ON!
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