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This week we are changing our stance a bit as to how this year will end and when we can expect our first big correction in BTC.
We will show you substantial evidence as to how these cycles continue to rhyme and what upcoming catalysts and anniversaries could mean for a typical -30% correction of this final phase.
We will then cover what this means for the alt coin market and how to prepare over the next 2-4 weeks.
Gann Rules
Above is a short excerpt from Gann on some of his seasonal rules around the dates I have been talking about. December 22nd is a natural date and likely an important inflection point going into what will be an emotional early January window. What I’m seeing in time and price lines up perfectly with these Gann rules.
You can also see these rules in action from the previous two cycles nearly to the day. In both 2017 and 2021 a big rally started on December 21st and culminated on January 4th exactly. The 2013 cycle is the outlier. Price in 2013 basically just went straight vertical to start the year with no pullbacks at all until April. I doubt we see that. I expect more volatility in both directions with the Gann dates being key to watch.
BTC Weekly Time Counts
2017
2021
Today
The above charts are just to illustrate that after the major August low of previous cycles the first multi week correction in BTC has historically taken place in the early January window.
With both the 2017 and 2021 cycles having a -30% or more correction around 160 weeks from the previous top and 20 weeks give or take from the August low we can draw some similarities.
I understand this is not a lot of historical data by any means but if we look at the current cycle and what time is telling us, this time may not look so different.
Familiar Patterns and Possible Scenarios
The above chart is a little bit busy but if you look closely you can see that we have a near identical setup to a year ago with equal moves in time in play.
In 2023 we had the major April high that set the summer range which culminated in a low on September 11th.
You can see that the first big inflection point in the run up came on an emotional ETF announcement which was 270 and 120 degrees from those major dates.
Also notice the RSI in the box on the bottom and how it was setting up a bearish divergence while the market ripped higher on the announcement. Lower highs on the RSI while the price was making higher highs is bearish. When see this divergence setting up into an important time window it tells us time and price are coming together for an inflection point.
If you then look at the setup going into this January it’s nearly identical. The final factor here is that January 6th with also coincide with a 360 degree cycle from the ETF launch.
If we are to see a measure move based on the previous move its possible Bitcoin could reach as high as 113k-125k by early January as the black line in the first image indicates.
The 11k daily candle we saw on December 5th is a sure sign that volatility is coming to this market and the swings are about to get bigger.
If we were to see 125k and then what would be a typical -30% correction over the next two weeks of January, that would drop price all the way back to 87k. So be prepared for these big moves. They can be nasty but remember they are typical of a crypto bull market and they are usually short lived.
Catalysts and Anniversaries
This is an interesting setup going into this date for a few reasons. First, Gann always said you have to know your anniversaries of important tops, bottoms, and highly emotional events in the market.
Here we have a few emotional events that are in this current market cycle. The ETF a year ago is a clear emotional anniversary of the market, the April top was also a big one in that it market the double top before the long grind, finally we have the September low which was not the low but it was a lower close than the August.
All these dates coincide with important points in the 360 degree cycle of the year.
We wrote about this to readers at the time but often the second top of a double top or the second closing low like September is more emotional than the actual high or low of the market so measuring from the more emotional date is key and something Gann did frequently.
The other obvious event that comes into these time factors is the inauguration of Donald Trump as the 47th president of the US.
Given the events of January 6 several years ago and the current euphoria around Trump being the “crypto president” this will be a highly emotional day on a universal level.
Trump is making big promises and usual and whether or not he follows through doesn’t matter so much as the fact that people believe he will. Because he is promising to do big things in crypto on his first few days in office this will likely lead our late December run up into a very emotional date and a sell the news event.
ETH Begins Big Outperformance
2017
2021
In both the 2017 and 2021 cycles you can see above this January inflection point in BTC is where we saw ETH really start to outperform. While BTC corrected 38% in 2017 ETH dipped -18% then recovered sideways. (Note ETH moved up in a big way right into this window as well.)
Similarly, in 2021 ETH had an initial -30% candle but recovered within a day or so and then began making higher lows while BTC continued to fall for another two weeks.
So I would expect an initial dip in ETH after it make a run to nearly 5k but a quick recovery will lead to a the start of a very big bull leg and run on alts starting in the second half of January continuing possibly as late as May.
Low Caps
We see a similar pattern in the OTHERS chart where there is an initial dip but then relative strength picks up big starting around the middle of the month.
Conclusion
Get ready for volatility to pick up in both directions. The December 5th date we highlighted I am now of the opinion that it was was not the high of the month given what I am looking at with our time factors and previous cycles at this stage.
However, the December 5th date was important none the less. It was a signal that volatility is coming into the market very soon. When you get a really big wick like that in both ways the market is telling you that the violence of the price movements is picking up. The December 5th day was an 11k swing and an emotional one.
I expect the seasonal times will play a big factor to close out the year just as they have in past cycles. There is always big money moving at this time of year to finish the previous year strong and position for the new year.
I expect a big move to begin in BTC by late this week and carry into the date of the inauguration which just so happens to coincide with our cycles.
Funny how that works. These events happen at preordained times and the price is always telling us when it will be even if we don’t know what it will be.
That said with what our analysis tells us about equal price ranges I would not be surprised if BTC rises over 113k in the next few weeks and maybe even as high as 124k into our window.
If so I would be very cautious of a sharp correction that could revisit as low as 87k area.
So far things have been fairly tame but the market is telling us they will not remain that way for mush longer.
As for positioning we continue to hold spot alts from the August lows. If you are not positioned how you want to be I believe the market is providing a good window to add positions before the 22nd. I think we will see a slightly euphoric alt market going into early January where it will get a sharp pull back and then resume late January on.
The times to buy or add to positions will be now, before the 22nd or in that mid January pull back. I believe alts/memes that have been going down into the 22nd will start to rise and the ones rising into the 22nd will pull back into January.
That’s a a lot to digest but it should be a great roadmap for you on how I see things playing out over the next month. Once we clear that mid January window I think it will be all out alt season from February on. It will take some patience and positioning at the right times but we’re getting there. Expect volatility to increase over the coming weeks and just be prepared to ride it out.
Great analysis - thank you for your work