Making Sense Of The Recent Price Movements: Where Are We Headed In 2022?

In this analysis, we will be mainly looking at Bitcoin/USD chart, as that's a pretty good index for the overall price action in the crypto market, just like the S&P-500 is for the stock markets.

As we know the Crypto markets and BTC/USDT have been in a clear downtrend for the past few weeks, 10 weeks to be precise.

BTC/USDT | Binance | Heikin Ashi Candles

In this chart we can clearly see the downward trending regression, with a Pearson's R of over 90%, meaning that the regression is a fairly accurate measure in this context.

In the past when Bitcoin went below the Bull Market Support Band (info), we saw a 12 week downwards/sideways movement from May to July-21. As of right now, BTC 21w EMA sits at $48k, and the current price is $42k. This points to a scenario where I think, we are about to see bearish (or sideways at best) price movements for the next 1-2 months. The recent update in human malware might also contribute to this trend. But do I think $69k was the top of this cycle? NO. Reason being:

• If the theory of the lengthening cycle is to be believed, we still can be bullish for long, and the BTC can go much higher than $69,000.
• The charts indicate that this wasn't a double top, as the recent local top($69,000) is a bit higher than the last one ($64,000).

All in all, I think this is merely a short term (3-4 months) downward volatility period, and it's a nice time to DCA down your average prices. But I would like to emphasize the fact that crypto investments are not for everyone. As seen in many of the recent posts and FUD, it's clear that some people can't handle bearish price movements.

If you’re gonna do dumb things because your stock goes down, you shouldn’t own a stock at all. ~ Warren Buffett 

Similarly, if you're gonna sell your coins every time it goes down, you probably shouldn't invest in crypto at all.

While Mr Buffett might not be the most pro-crypto person, we can all agree that his views on price movements are on-point and effective. That's because, price movements and patterns in crypto are very similar to that in traditional stock markets, except with much higher volatility.

In conclusion, I would say that we need to have a fair bit of persistence and faith to make it out of this tunnel. I certainly think that $69k was not the top, and we can go much higher in this cycle.

Cheers!