The Truth About Bitcoin's Recent Drop

Actually this was an article slated to be published roughly a month ago ( first week of August). Let's see how right or wrong i was a month ago with this review.

Here we go

Crypto is down again, linked to broader markets. Political, geopolitical, and macro factors are the main drivers. The past few days have been critical. Bitcoin plummeted with global equities due to recession fears. U.S. stocks had their worst day since the 2020 Covid crash, hitting big tech and AI stocks.

Bitcoin fell 10% this week, from nearly $70K to $61.6K. What started as a dip turned into a crash, showing election sentiment isn't the only crypto factor. Poor job reports and doubts about AI revenue wiped out U.S. equities equivalent to the crypto market cap.

The macro environment is shifting. Recent job reports missed expectations, casting doubt on the labor market's strength. This has altered market dynamics - we're seeing a sell-off in Bitcoin, stocks, and the dollar, with investors flocking to short-term U.S. Government bonds. Short-term bullish catalysts are scarce.

We're likely to see downward pressure until the next CPI report. The Federal Reserve's next moves are crucial - the market is pricing in significant rate cuts, but uncertainty prevails without clear guidance until late August.

As I analyze the recent Bitcoin price action, I see two potential scenarios unfolding:

1. Q3 and Q4 might disappoint expectations. The consensus view anticipates a bullish trend due to potential rate cuts and the November elections. If this doesn't materialize, we could see a significant market reaction. New token launches at high valuations (like Monad and Berachain) could flood the market, potentially triggering a sell-off as participants try to avoid a repeat of the 2022 bear market.
2. An unexpected development could be Gary Gensler's dismissal before the election. This isn't widely considered but could significantly impact the crypto market. It might be a strategic move by the Democratic party to appeal to crypto voters and donors.

Despite the current downturn, I maintain a bullish long-term outlook. Here's why:

I believe we're witnessing what I call a "scam dump" - a premeditated move down before a significant run-up. It's a classic market manipulation tactic that often precedes major price movements. This current dip looks like a microwave (ii) correction within a larger minute wave (i) pattern.

Here's what I'm watching:

1. There's a CME gap around $58k. I'm expecting a possible "scam wick" below $60k before we see the next major upward movement.
2. The next minute wave, which I anticipate will be a (iii), could be violent and explosive. These waves often bring rapid price appreciation.
3. Be cautious with leverage. Don't take leveraged long positions at intermediate or minor cycle highs - these are often liquidity traps designed to shake out overleveraged traders.

This analysis aligns with my overall bullish sentiment. Despite the current turbulence, I still anticipate Bitcoin reaching $100K+ by the end of this year.

These dips, in my view, present buying opportunities for those with a longer investment horizon and the stomach for short-term volatility.

Remember, the crypto market is known for its dramatic swings. What we're seeing now could be setting the stage for the next big move up. It's all about perspective and understanding market cycles.

What's your take on these market dynamics? Are you seeing similar patterns in your analysis? How are you positioning yourself for the potential scenarios we've discussed?

Gracias