Technical analysis by cnote56 about Symbol BTC: Buy recommendation (3/12/2024)

Is BTC finding its top at the end of the ride, and now the market rollercoaster starts? Are we about to see a sell-off and a retracement period? Let's delve into the fascinating world of market cycles, especially in highly volatile asset classes where all-time highs (ATHs) have recently been reached. 1. **Volatility Cycles and Behavior** : - **Volatility** refers to the variations in market prices. The more an asset's price moves, the higher the volatility; conversely, less movement results in lower volatility. - **Volatility spikes** often occur across major financial markets. These spikes share common characteristics despite arising from different reasons and markets. - A typical **volatility event cycle** unfolds as follows: - **Build-up Period**: Before a volatility spike, volatility gradually rises. This hints at potential market dislocation. - **Sudden Spike** : Volatility then experiences a vertical surge, reaching a climax. - **Normalization Phase** : After the spike, volatility reverses and gradually normalizes, albeit with bumps. 2. **Cryptocurrencies (e.g., Bitcoin)** : After ATHs, cryptocurrencies often follow a pattern: - Rapid surge beyond the ATH. - Correction and value shedding. - Oscillation with diminishing volatility. - Gradual upside continuation before the next significant event (e.g., halving)³. 3. **Retracement Levels and Fibonacci** : - **Fibonacci retracement levels** help identify potential reversal points on price charts. - Key retracement levels include: - **38.2%**: Often rounded to 38%. - **50%**: Not directly from Fibonacci but widely used. - **61.8%**: Rounded from the Fibonacci sequence. - These levels are applied after an advance (to forecast corrections) or after a decline (to predict counter-trend bounces). - The Fibonacci sequence and the Golden Ratio (1.618) play a crucial role in these retracement levels⁵. - For example, the 38.2% retracement is based on dividing a number by another two places higher, approximating 0.3820. Similarly, the 61.8% retracement is based on dividing by the next highest number, approximating 0.6180⁵. Understanding volatility cycles, asset-specific behavior, and retracement levels can guide investment decisions during highly volatile periods. While each market cycle is unique, historical precedent provides valuable insights. (1) Historical Volatility: A Timeline of the Biggest Volatility Cycles. dailyfx.com/education/volatility/historical-volatility.html. (2) Bitcoin Market Cycles Explained - CoinShares. coinshares.com/research/bitcoin-market-cycles-explained. (3) Fibonacci Retracements [ChartSchool] - StockCharts.com. school.stockcharts.com/doku.php?id=chart_analysis:fibonacci_retracemen. (4) Market Cycles: Understanding Phases, Strategies, and Real-world .... supermoney.com/encyclopedia/market-cycles. (5) Market Cycles: The Key to Maximum Returns - Investopedia. investopedia.com/trading/market-cycles-key-maximum-returns/. (6) Retracement vs. Reversal: What's the Difference? - Investopedia. investopedia.com/articles/trading/06/retracements.asp. (7) What Are Fibonacci Retracement Levels, and What Do They Tell You?. investopedia.com/terms/f/fibonacciretracement.asp.