Wyckoff ‘SOS’ Could Catapult Bitcoin To $100,000: Hedge Fund Manager
March 29 2024 - 5:00AM
NEWSBTC
Charles Edwards, founder of the Bitcoin and digital asset hedge
fund Capriole Investments, published a detailed examination of
Bitcoin’s current market phase suggesting a bullish trajectory,
potentially reaching the $100,000 mark. The analysis hinges on the
identification of a Wyckoff ‘Sign of Strength’ (SOS), a concept
derived from the century-old Wyckoff Method that studies supply and
demand dynamics to forecast price movements. Understanding The
Wyckoff ‘SOS’: Bitcoin To $100,000? The Wyckoff Method, developed
by Richard D. Wyckoff, is a framework for understanding market
structures and predicting future price movements through the
analysis of price action, volume, and time. The ‘Sign of Strength’
(SOS) within this methodology signifies a point where the market
shows evidence of demand overpowering supply, indicating a strong
bullish outlook. Edwards’s observation of an SOS pattern in
Bitcoin’s recent price movements suggests that the market is at a
pivotal point, where sustained upward momentum is highly probable.
In Capriole’s latest newsletter, Edwards offered a precise
depiction of Bitcoin’s market behavior, highlighting a period of
volatility and consolidation in the $60,000 to $70,000 range.
Related Reading: Bitcoin Bull Flag Could Predict 10% Surge To
$77,000, Analyst Explains This phase was anticipated by the hedge
fund. Currently, as Bitcoin ventures above its last cycle’s
all-time highs, it aligns with the predicted zig-zag SOS structure.
Edwards elucidates, “It would not be surprising to see a liquidity
grab at / into all-time highs […] All consolidation above the
Monthly level at $56K is extremely bullish. It would be uncommon
(but not impossible) for price to continue in a straight line up.”
The “zig-zag” phase also perfectly aligns with the halving cycle as
BTC tends to consolidate “both months either side of the Halving.”
Edwards added that “the realities of a much lower supply growth
rate + unlocked pent up tradfi demand will then kick-in and launch
12 months of historically the best risk-reward period for Bitcoin.”
From a technical perspective, Bitcoin’s foray into price discovery
territory above $70,000 is devoid of significant resistance levels.
This opens a pathway to psychological and Fibonacci extension
levels, with Edwards pinpointing $100,000 as the next major
psychological resistance. Related Reading: Bitcoin ETF Inflows
Could Eclipse $1 Trillion, Predicts Bitwise CIO The 1.618 Fibonacci
extension from the 2021 high to the 2022 low is noted at $101,750,
serving as a technical marker for potential resistance. Edwards
reflects on investor sentiment, stating, “You can also imagine
quite a few investors would be happy seeing six-digit Bitcoin and
taking profit in that zone,” acknowledging the psychological impact
of such milestones. BTC Fundamentals Support The Bull Case Edwards
also delves into the importance of fundamentals, underscoring their
role in providing a bullish backdrop for Bitcoin. The introduction
of the Dynamic Range NVT (DRNVT), a unique metric to Capriole,
indicates that Bitcoin is currently undervalued. Edwards describes
DRNVT as “Bitcoin’s ‘PE Ratio'”, which assesses the network’s value
by comparing on-chain transaction throughput to market
capitalization. The current DRNVT readings suggest an attractive
investment opportunity, given Bitcoin’s undervaluation at all-time
price highs. “What’s fascinating at this point of the cycle is that
DRNVT is currently in a value zone. With price at all time highs,
this is a promising and unusual reading for the opportunity that
lies ahead in 2024. It’s something we didn’t see in 2016 nor 2020,”
Edwards remarked. With both technical indicators and fundamental
analysis signaling a bullish future for Bitcoin, the anticipation
surrounding the upcoming Halving event adds further momentum to the
positive outlook. Despite the expectation of volatility and
consolidation in the short term, Edwards confidently states,
“probabilities are starting to skew to the upside once again.” At
press time, BTC traded at $69,981. Featured image from
Shutterstock, chart from TradingView.com
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