We have emerged into the 3rd price discovery stage as expected. This is when things start to get out of control, and for the first time on this blog, it’s finally that time — let’s discuss tops.
As I see it, we have four varieties of bull market tops for BTCs:
- Local mid-bull top: Target VG 8.5–9. These are typical mid bull market local tops, which are expected to lead to 20%-30% corrections, but are merely detours for the overall bull market. We saw this at $42K (VG 9.0) and $58K (VG 8.8) and three times in 2017.
- Macro top: Target VG 9–10. These are bull market tops which could denote the beginning of a years-long bear market. Dec 2013 (VG 9.6) and Dec 2017 (VG 9.5).
- Mid-term top: Target VG 9–10. These are an odd beast, where we see a parabolic blow-off top leading to a substantial 50+% correction, but doesn’t lead to a years-long bear market. We have seen this once, in March 2013 (VG 9.8).
- Secular top: Target VG 10+. This is purely hypothetical, as we haven’t seen one yet, and I could argue we are several years away from one if ever. But things can change fast for BTC, and we have to consider it. If there were to be a “super-cycle”, this would be the logical end, with VG heading above 10, BTC becomes a mature macro asset, and we could see a long sideways/bear market where it could take up to an entire decade to chart the next ATH.
Keeping all this in mind, we have two possibilities in the here and now. Either we head to a mid-term top over the next couple of months, or a “new paradigm” is a series of local tops before finally breaching VG ~9.
I’m mildly leaning (emphasis, mildly leaning) towards a mid-term top, given the momentum of VG over the last few months, but all possibilities are on the table currently. As always, as we have more OBTC and VG data over time, we’ll progressively narrow things down.