BTC reached our next upside target at 29,890-30,108 [see: Dec 22 Update on BTC.]  Had it remained in either the rising pink or purple channel, it might have taken quite some time. But, as we discussed last month, it broke out of both channels and topped the Fib target at almost exactly the time forecast by our cycle model.

continued for members…Recall that the 19,666 high was achieved on Dec 17, 2017. The next significant high of 13,880 came on June 26, 2019 — 556 days.  Extending that same period of time forward yielded Jan 2, 2021.

I expanded the pink channel in order to emphasize 29,890. But, given the breakout, it has probably lost its relevance other than as a potential backtest target.  Likewise, BTC has broken above the less steeply rising purple channel, potentially relegating it to a backtest role going forward.

This morning, it more than backtested the 1.618/2.618 Fib levels, tumbling 20.3% from yesterdays highs before bouncing back above 30,000.  If it can’t hold these Fibs, then we could easily see a drop back to the 1.272 at 24,165 – potentially around the end of January when the red TL reaches that level.

The yellow SMA100 and the red SMA200 are also due to reach that level around Jan 9 and Mar 15 respectively. For now, we’ll focus on the price level. If it can hold these Fibs, the next major Fib target to the upside is the blue 2.24 and red 3.618 at 40,180-40,138 – followed by the blue 2.618 and red 4.236 at 46,433-46,337. This would mean a departure from the cycle model as the next low – midway through the highs 556 days apart – is Oct 8, 2021. It’s represented by the black line in the chart below.

Bottom line, something has to give. Either the cycle model will reassert itself and yesterday was an important top signaling the beginning of a 9-month slide, or the craze will continue and bust the cycle model in pursuit of those higher Fib levels.

Keep an eye on other inflation and currency measures. DXY has occasionally – but not always – correlated negatively with BTC……but has more consistently correlated positively with the 10Y and RBOB.