Hopium and a hot take: Five reasons why the bottom is in and why we are going to rally soon

This is a controversial take, but I believe that the BTC bottom is in and that we are seeing the start of a new rally. I have no strong views on whether this assumed rally is a dead cat bounce (similar to what happened in previous bear markets where everytime the price of BTC was down by 70%, we saw a 100%+ rally) or whether the cycle bottom is in. But in my opinion we are going up significantly from hereon. Why?

1) (Almost) every bottom indicators flashed

Whether it is the Pi Cycle indicator, the Hash Ribbons indicator, the Puell Multiple indicator, or even the memey but often correct rainbow chart, they basically all agree on one thing: we have bottomed. An example here is the RSI weekly chart. RSI is the relative strength index, which reflects the speed and magnitude of a security's recent price changes to evaluate overvalued or undervalued conditions. Bitcoin always bounces when we hit the oversold areas. its doing it again now.

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Bitcoin and RSI on the weekly chart (Source: Tradingview)

2) The DXY is losing its parabolic trend

There is a strong negative relationship between the strength of the DXY and the price of Bitcoin. This is a very well established correlation, please google it for more info. For clarity, the DXY is the US Dollar Index and reflects the strength of the Dollar relative to a bunch of foreign currencies. The parabolia is likely to end as there is massive bearish divergence on all timeframes, even on the weekly timeframe, with the DXY making higher highs and RSI making lower highs. This typically is a strong signal for downside and any strong move down has always caused BTC to move up.

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DXY parabolia about to end (source: Game of Trades)

3) This is the first 3-day bullish divergence since the start of the massive rally in 2021

In May 2021, there was a clear bullish divergence on the 3-day chart, with price moving down and RSI moving up. This helped to give enough confidence to the market that we are ready to move up. The same thing is happening now and it is likely that this bullish divergence just got confirmed. See here:

Bullish divergence (orange line below) on the 3-day Bitcoin chart (Source: CryptoWorldJosh)

4) BTC Dominance is low and acting different than in other bear markets

Traditionally in bear markets, the dominance of Bitcoin relative to the alts sees a rapid increase, with alts bleeding out. The opposite has happened now, with BTC losing ground against the alts in terms of market cap. This has caught many off guard. Based on the altcoin season index, we are even in an altcoin season, with 96% of the Top 50 coins performed better than Bitcoin over the last 90 days.

If the confidence was gone in the market, we would see the opposite pattern with alts losing market cap relative to BTC. Any improvements in the macro environment will help us move up fast. Adoption has never been better and a lot of institutional money is still flowing in this space - this could have very well been the fifth point.

BTC Dominance relative to alts - currently at its lows (Source: Tradingview)

5) The fifth Elliott Wave is missing

I will put myself out there because many here are critical of any technical analysis. But in my view, we are missing a blow off top that typically markts the end, the fifth Elliott Wave. Elliott Wave theory is a form of technical analysis that looks for recurrent long-term price patterns related to persistent changes in investor sentiment and psychology. The theory identifies impulse waves that set up a pattern and corrective waves that oppose the larger trend. Typically, an impulse has 5 waves, that follow strict rules (e.g., wave 4 cannot go below wave 1; wave 3 cannot be the shortest). Many traders use this method of analysis and on larger timeframes in particular it is usually successful.

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Elliot Wave Counts

Conclusion

I think that there are many reasons why the bottom is in. This is my attempt at a bit more of a serious content on this sub that could feed into meaningful discussion. Please do not invest your money based off this post, as I am also just a retail person that is trying to learn as much as possible about the markets and wants to share some of that growing knowledge. Do your own research. But I would love to hear your thoughts.

Importantly, I know the macro economy is scary and therefore believe that this could take a while to play out. But I do think we are at the start of a significant rally and that 17k will hold.