What The Charts Are Screaming About Bitcoin And Ethereum

Summary

• Bitcoin and Ethereum: market history is repeating itself.
• Technical analysis provides bearish signal for both cryptocurrencies.
• Current charts replicate pattern just before 2018 cryptocurrency crash.

Photo by AHPhotoswpg/iStock Unreleased via Getty Images

Technical analysis and crypto have something in common: half the world thinks crypto and charting are frauds and valueless and the other half swear by them.

So, it is interesting to see that right now there comes a point where these attitudes are interlocked.

Let me first show you the chart of Bitcoin (BTC-USD) and Ethereum (ETH-USD) before the crypto crash of 2018.

2018

Now, here we are currently (May, 4^th), though as I write Bitcoin is moving down fast.

(current situation)

That is pretty breathtaking. If technical analysis has much use, then you would have to come to a very bearish conclusion. However, let us overlay this just to make certain.

In the below example I’m offsetting one over the other so you can see them closely together but I’m not trying to lay them on top of each other, because that obscures the picture. Even doing this, the match is startling:

So now let us get them matched as closely as my primitive tools allow - and I need to say I’m using Microsoft Paint and no fancy art package to do so; I’m just plonking one on the other...

After this point, here is what happened in the 2017-18 period:

Now we are either jumping to conclusions or this is a startling repeat in 2021 of what occurred in 2018; and the intriguing thing is, the initial rise of Bitcoin in 2019 showed a similar such repeat of 2017.

I drew and published this in November 2019.

So, watch out below and - if this is the peak - then remember that crypto is likely to go mad again in approximately three and a half years’ time when the next halvening occurs; after everyone has written off Bitcoin and Ethereum.

Most people will still be drawing their lines on stock charts because in the end knowing the past tells you much about it and it is a brave academic who states that the past really doesn’t affect the future, especially in young markets which lack the efficiency that professors crave.

I believe it will turn out that in the end crypto and technical analysis are both here to stay – that is when used in the right way - and are both tools to enhance investment portfolios.

Analyst’s Disclosure: I am/we are long BTC-USD, ETH-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I own Bitcoin and Ethereum with random positions in other cryptos but I am currently overwhelming parked in stable coins.

Comments

[kkthxbye]

Is it a ponzi or is it just that the $ has no value anymore?

[steve7074]

@kkthxbye I call it a video game. Think of it like a casino.

[kkthxbye]

@steve7074 at the casino the money comes from other players. Losers are paying winners.
Here there are only winners.
Here its either a ponzi or its just that dollars mean nothing. Money has to come from somewhere.
I think 90% ponzi, 10% dollar inflation

[MillionsDollarMan]

Technical analysis doesn't reveal the event-driven nature of trading crypto. The selloff is based on margin-driven liquidations. This is forced selling and over-leveraged positions. When this occurs buying the dip is advantageous for the long-term holder. Unfortunately, crypto trading platforms are not operating properly, and trading is in a frenzy.

[JoeD23]

@MillionsDollarMan you must be new to crypto.. these exact events happened in 2018. Keep buying the dip. Then the next dip.. then the next..and next until eventually you lose all your money

[MillionsDollarMan]

@JoeD23 I have been long since 2016 in ETH. I am quite wealthy!

[shut_up_and_take_my_money]

@JoeD23 you must be new to crypto.

[William Darusmont]

Cathie Wood's advice on Bloomberg just now: our analysts know more about the future than other analysts...oh, and stay humble???

[Perciad]

@William Darusmont Hubris calling !

[HerradoPELOTA]

Why were you Long if Very Bearish?

[William Darusmont]

oops...across the board tanking...oh and GME too...let's talk about REAL value!

[kjseagle1]

Textbook Wyckoff Distribution

[jdmshorty]

Wow what a mic drop. It's gotten awfully quiet here...what a call!

[shut_up_and_take_my_money]

@jdmshorty ETH is still sitting right at its 21-day moving average, so there hasn't really been much of a correction yet.

[William Darusmont]

@shut_up_and_take_my_money hmmmm....ETH is Ethan Allen....think you mean ETHE...if not...you are looking at the wrong charts.

[shut_up_and_take_my_money]

@William Darusmont this conversation is not about stocks. i was referring to ETH, you know, the 2nd largest cryptocurrency by market cap...

[Russell's Decalogue]

"half the world thinks crypto and charting are frauds and valueless and the other half swear by them."

They're both right.

[William Darusmont]

@Russell's Decalogue ...ah but there is a third class that says if they can hack a pipleline company they can hack cybercurrencies...oh wait...nothing can go wrong...go wrong...go wrong...

[conservatismismentalcancer]

@William Darusmont Hacking the infrastructure of a country whose former President refused to pay any attention to cybersecurity for 4 yrs isn't the same thing. lol

[William Darusmont]

@duketherhodesian friends don't do that to friends...or do they, Mr. Putin???

[JoeD23]

Good call clem. The children thought the free money casino was opened permanently.

[Cryptonomics]

look at coinbase earnings report published today. Institutional money is 2x retail at this point

[William Darusmont]

@Delta999Nine_Ninjanomics oh??? and that is why it is dropping like a stone? -3.9% today...and it ain't going to end here.

[Cryptonomics]

@William Darusmont lol. do you really focus on the daily noise. Lets check in 5 years, and lets have a chat

[tradetron]

@Delta999Nine_Ninjanomics its like the dude didn't even read the article.

[Mebarrett3]

Why doesn’t Elon musk become part of the solution rather than part of the problem? He could establish crypto mining facilities using solar power and that would solve the problem.
This is another test of support at 47-49 k. If the support is there expect another leg up. So far, Btc has had good support at this level, a level set by musk if I’m not mistaken?

[User 51733529]

@Mebarrett3 simply put Elon is just another rich fat cat who cares not a thing about the masses. The cult of Elon needs to grow up and quit looking for someone to follow. Start making their own decisions based on fundamentals and what makes sense

[shawnseyk]

I suggest you read up on Bitcoin and the Stock To Flow Analysis done by Plan B

[ocbearclaw]

Where are the legends? Black line and blue line? Which belongs to each crypto? Anyways, half the world thinks Cryptos are a fraud and Ponzi scheme... the other half believes people can make money out of thin air by generating blips on a computer screen.... Problem is people have lost faith in government currencies so nations have brought this crisis on themselves

[Cryptonomics]

@ocbearclaw lol, ponzi. sorry to tell you but by that definition every asset is a ponzi.
Not thin air, it is work to secure the network and move wealth around the world 27/4 that can't be stopped

[gijoebot]

@Delta999Nine_Ninjanomics
Exactly, the so called “smart money” has been replaced by Redditors. It has nothing to do with value, momentum, or quarterly earnings. It’s supply and demand and if you look at the 24hr volume of the top 20 coins the Mungers are angry.

[c.casesvilla]

Lots of propaganda against crypto recently, mostly the same claims that have been made for 12 years, most lies, or misleading, why people talk about stuff they dont understand, oooh cryptos going to crash!!! beware its going to zero!!!

i love how so many on here just take the authors word of any article on this site like any of us couldn't contribute on here, think about the fact this guy leaves out the length of bitcoin cycles is designed to get further apart, its not going to go back to 100 days, nor should the crash be anywhere near 80%

for everyone who thinks there is nothing too crypto, ask urself why Germany just dumped 100 mil euros to host their bond market, or look into CardanoAfrica, or how much blockchains save supply chains, cutting costs on items, on financial services, a 17 Trill a year banking industry charging to clear transactions, disrupted, or the insurance or real estate or property rights, music art movies, help catch bootleggers and protect consumers from buying fake stuff, this isnt 2009 maybe you shouldnt listen to some stoge probably paid by bankers and do some research for yourself, theres more crypto than BTC

[tradetron]

@c.casesvilla People who think crypto (as if all protocols are monolithic) will go to zero, or who think the coins themselves are all there is to crypto are the same kind of folks who think that home ownership is the end-all to wealth generation.

[Dealerdeb1]

First time I read this author and I am VERY impressed with the straight talk. Loved it Followed.

[JRS5]

Looking at charts without any reference is a very dangerous thing to do. Look at the money supply chart today versus 2018 and you will see why this is not a bubble, it is a new reality. People are fleeing the dollar, and rightfully so. Stocks are the highest they have ever been. Real estate is through the roof. Crypto is a logical alternative to holding cash (cash - which is losing value every minute).

[arjx36@gmail]

@JRS5 Last I heard was that crypto, which is valued in dollars (that people are dumping) is not so hot anymore either. So nothing in the cash world is save, right?
Back to gold! But you can’t do much with gold either. Bonds don’t pay. Stock are overvalued. Inventories are short so prices go up, stocks too: Inflation! Dollar is down- doesn’t matter, just print more. Escape! Great. Where to? And not to forget, now there’s FOMO.

[vint]

If btc and cryto crashes , it doesn't matter as I have written off the investments . Actually hoping you are right , it crashes 40% so I can buy more but you are very wrong now as it has not happened nor your article created any effect . The expectations of it crashing hasn't been factored by masses and institutionals so your article has not managed to convince everyone .

[JoeD23]

First off.. every newbie in here with there "institutions are buying now thesis".. yeah they are that's why this bubble is even more parabolic than the last. People think the free money casino is going to stay open forever.. that they will be able to time the top perfectly and get out. But the reality is.. the crypto market is as brutal as it is glorious and you will not suspect where the top is. When everyone and there mother thinks its going to 80k, I think right now could be the end as well. The next crypto bear market is going to crush ignorant retail investors badly. 50/50 at best right now

[User 51733529]

@JoeD23 Agreed. The ones that really scare me are the ones who say they are never getting out. What does that even mean? What’s the point if you don’t take profits on the way up?

[MillionsDollarMan]

@OkieSwede Buffet has never sold a share of BKB.

[vint]

R u silly . That fall out happened in 3rd year after halving . We are now in 14th months after 2020 halving . Next one is 2024 . Way too early to call out major fall down .

[JoeD23]

@vint Yea bro, the free money casino will be open 3 more years. Imagine

[Silen]

@vint that's factually wrong. The crashes happened 1,0 years after the first halving and 1,5 years after the 2nd halving. Right now we're exactly 1,0 years after the third halving. In both crashes, Bitcoin crashed around day 280 after having broken the previous ATH from before the halving. For us, that would be September.

[steve7074]

@vint How do you know that ?
You never know about the future.
2 factors for me - most of the mining occurs in China, & maybe more important, ESG. Crypto is clearly not ESG.

[Mhst]

Maybe price is more and more driven by AI algorithms? So these algorithms simply expect that the future will behave like the past. This could explain this similarity of the pattern. However, it might be a bit different: Bitcoin rises faster, because AI tries to buy earlier before the others and falls faster, because AI tries to sell before the others.

[steve7074]

@Mhst Maybe crypto trading is one big algorithm. Anything is possible nowadays.

[kkthxbye]

@Mhst thats exactly why technical analysis is a thing.