Quarterly Market Synthesis: Q4 2024

All Systems Go?

I published this earlier today, but I apparently only sent it to 18 people. Sorry for the repost you 18 folks.

It’s been a long and dull year, but if technicals don’t change for the worse, we will be All Systems Go soon, a time when you ‘can’t go wrong… or get fucked…’ as long as you cash out. ;-)

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Machiavelli wisely observed, "Whoever wishes to foresee the future must consult the past, for human events ever resemble those of preceding times." Across the internet, you'll find enthusiasts studying historical patterns to shed light on the path ahead. The echoes of past market behaviors, economic cycles, and investor sentiments often set the stage for the unfolding drama of the coming months, offering valuable insights.

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This was a thesis for 2024 Q3:

“The environment suggests bullishness for the quarter… However, this trajectory heavily depends on where the market bottom ultimately forms… In the least favorable scenario, we might experience a significant – and potentially final – liquidation event, followed by a rally that brings us back into the trading range observed throughout Q2...”

This particular outcome was a good analysis, as the market made a new lower low for the year on a significant liquidation event and rallied back into the Q2 range.

In this report, we'll explore how the prologue of recent market activity might shape the quarter’s technical narrative.

The goal is to identify the market’s rhythmic up and down waves across various timeframes through algorithmic pattern analysis to construct model that represents the repetitive nature or cycles of the market. With an assumption that the patterns continue uninterrupted, they can provide insights into potential future market behavior and turning points.

There are a few common issues with this approach. A cycle direction is not always directly reflected in the price action on the chart. Also there are often many detectable patterns at once and it’s always speculation as to which ones are the patterns in play at any given time. This leads to the third issue, with each new day new information is generate which can dramatically change the outlook. To mitigate this issue I create a model at the beginning of each quarter with my expectations for the next 3 months and use technical analysis, day by day, to validate or invalidate this thesis.

Below, I’ll be reviewing 5 datasets that I believe in combination can create a comprehensive and accurate picture of the future in the crypto market.

Total Crypto Market Capitalization

Market Cap of 125 top cryptocurrencies.

https://www.tradingview.com/chart/PvuZm06h/

What’s on the chart:

By mid October the yellow, blue and red lines show a complete bullish alignment of the daily, weekly, and monthly cycles respectively. All show topping in this quarter.

What the chart means to me:

New positions in daily chart trading are viable when bullish signals appear at support levels or when price breaks out from resistances with consolidation underneath.

Expectation in a perfect world:

The quarter shows an increase across the market. Initial targets for the total market cap are just under the ATH at 2.63T and the window for the ideal topping signals starting to show up in mid to late November.

Hypothetical evaluations I’d make for the quarter give the current chart:

I’m long and profitable-

• I’d consider adding to long positions if a bullish trade signal appears and consider trimming some profits either in mid to late November or when the chart is nearing the ATH, whichever comes first.

I’m long and underwater-

• I’d consider adding to long positions to try to bring down my average entry price if a bullish trade signal appear and consider trimming some profits either in mid to late November or when the chart is nearing the ATH, whichever comes first.

• In the event I cannot add to my position here, I’m a forced longer term holder OR I just cut out of the trade if we start trading below 1.8T by the end of the year. In the absence of a bullish trade signal there may be bearish continuation at that point.

I’m short and profitable-

• I’d consider taking profits on the short position here and applying some sort of trailing stop in the event the market recovers to preserve some profits. In the event of a rally I’d consider looking for some weakening in mid-late November or as the chart nears the ATH, whichever comes first to evaluate another short position.

I’m short and underwater-

• At the appearance of a bullish trade signal I’d cut out of the trade. I’d consider looking for some weakening in mid-late November or as the chart nears the ATH, whichever comes first to evaluate another short position.

BTC/USD

https://www.tradingview.com/chart/NUNyTY5p/

What’s on the chart:

The yellow and blue lines show bullish alignment of the daily and weekly cycles early in the quarter, while the red still shows the monthly cycles is down. The daily cycle in yellow shows a peak upcoming in late October and lower high in late November. The weekly in blue currently shows a peak in late December.

What the chart means to me:

New positions in daily chart trading are viable when bullish signals appear at support levels or when price breaks out from resistances with consolidation underneath. The later daily cyclical peak might not mirror the price chart, potentially forming a bearish divergent peak—a higher price with lower momentum.

What the chart means to me in relation to the TOTAL chart:

Given that money in BTC right now makes up over 55% of the market it’s unsurprising that the models present a similar bullish picture. The earlier cyclical downturn in BTC than the Total chart also plays into common patterns of market rotations. The total market continues up longer as BTC loses favor to other smaller coins, so the total market cap will continue to grow longer than BTC’s.

Expectation in a perfect world:

The quarter shows an increase. Initial targets are just under the ATH at $73K with ideal topping signals starting to show up in early November.

Hypothetical evaluations I’d make for the quarter give the current chart:

I’m long and profitable-

• I’d consider adding to long positions if a bullish trade signal appear and consider trimming some profits either in early November or when the chart is nearing the ATH, whichever comes first.

I’m long and underwater-

• I’d consider adding to long positions to try to bring down my average entry price if a bullish trade signal appear and consider trimming some profits either in early November or when the chart is nearing the ATH, whichever comes first.

• In the event I cannot add to my position here, I’m a forced longer term holder OR I just cut out of the trade if we start trading below $52K by the end of the year. In the absence of a bullish trade signal there may be bearish continuation at that point.

I’m short and profitable-

• I’d consider taking profits on the short position here and applying some sort of trailing stop in the event the market continues to rally to preserve some profits. In the event of a continued rally I’d consider looking for some weakening in early November or as the chart nears the ATH, whichever comes first to evaluate another short position.

I’m short and underwater-

• At the appearance of a bullish trade signal I’d cut out of the trade. I’d consider looking for some weakening in early November or as the chart nears the ATH, whichever comes first to evaluate another short position.

ALTCOINS/BTC

https://www.tradingview.com/chart/DH2xpITx/

What’s on the chart:

Since the data is too young there are no monthly cycles in existence yet. The yellow and blue lines show alignment for the majority of the quarter. The daily in yellow bottoms in mid to late November and returns to bullish alignment with the blue weekly cycle that bottoms slightly earlier in early November. Neither timeframes peak this quarter.

What the chart means to me:

New positions on pause, except on a breakout of a highest resistance. Daily chart trading is slightly risky as cycles would suggest consolidation and possibly a return to support levels until the middle of the quarter. Spot buys at lower supports are more preferable for me at the moment. Middle November will be likely be the ideal time for heavier ALT exposure whether that’s coming from a breakout trade or lower support buy.

What the chart means to me in relation to TOTAL and BTC:

This modeling also plays into common patterns of market rotations reinforcing the idea it’s an accurate pattern. The total market cap grows earlier as exposure mostly pours into BTC. The BTC price increase can often be reflected as a decreases in ALTs price and market caps at the beginning of the bullish market moves. The timing of the BTC peak aligns with the ALT bottom suggesting this is the timing of profit taking on BTC and increased exposure to ALTs.

Expectation in a perfect world:

The quarter is short term consolidation followed by a bullish breakout. My ideal setup for a buy is waiting for bullish divergence on price action oscillators like Momentum, RSI, or MACD somewhere on the 6HR chart up to the daily timeframe sometime in mid April OR for a bullish breakout at the 0.0007 level with a stop under the most recent low pivot point. This is an active hunt at the time of publication. It is possible this breakout trade setup will fail and that’s ok. I’d repeat it until it worked as the modeling suggests it will eventually be THE trade setup for the rest of the year.

Hypothetical evaluations I’d make for the quarter give the current chart:

I’m long and profitable-

• I’d consider adding to long positions on a bullish breakout or if a bullish trade signal appeared in mid-late November. I’d consider trimming some profits around the 0.00076 level, possible near the end of the year or into next year.

I’m long and underwater-

• I’d consider adding to long positions on a bullish breakout or if a bullish trade signal appeared in mid-late August to try to bring down my average entry price if a bullish trade signal appeared. I’d consider trimming some profits around the 0.00076 level, possible near the end of the year or into next year.

• I’m a forced longer term holder OR I just cut out of the trade if we start trading below 0.000505 by the end of the year. In the absence of a bullish trade signal there may be bearish continuation at that point.

I’m short and profitable-

• I’d consider taking profits on the short position in the 0.0006 - 0.00063 level and applying some sort of trailing stop in the event the market recovers to preserve some profits. In the event of a rally over 0.0007 I’d consider looking for some signs of a false breakout and use a breakdown of that level to add to the short with eyes on the 0.00064 level to take more profits. In the event of further bearish continuation I’d evaluate taking more profits at the 0.00055 level.

I’m short and underwater-

• If the charts are trading above 0.00072 I’d cut out of the trade.

Spent Output Profit Ratio

https://www.tradingview.com/chart/8459uTEL/

What’s on the chart:

The red monthly cycle is down. The blue weekly cycle is up. The daily cycle in yellow peaks is mostly bullish for the quarter showing a head and shoulders type form.

What the chart means to me:

Bitcoin transactions are likely to become more profitable in the near term, suggesting a rally into mid-October, followed by another rally from early to mid-November. After this point, Bitcoin transactions may start becoming less profitable, with a possible lower peak in mid-December and a decline through the end of the year.

What the chart means to me in relation to the TOTAL, BTC, and ALT chart:

This cyclical modeling of this on-chain metric reinforces the analysis presented on all the other charts, bullish action starting soon and a possible mid to late november peak for Bitcoin.

Expectation in a perfect world:

The quarter is an increase through first half of the quarter with mid to late quarter peak.

Zenalytics Stress Composite

https://www.tradingview.com/chart/Rwvh1xtV/

What’s on the chart:

Since the data is too young there are no monthly cycles in existence yet. Alignments are all over the place with only short segments agreeing. Overall middle of October to early November has bearish alignment and late November to Early December has bullish alignment.

What the chart means to me:

I’m not entirely sold on this new financial stress composite yet. It was inaccurate for a pretty long time two quarters ago but completely nailed last quarter. I’ll give it more time to prove itself before swapping this metric out, but research is ongoing for other possibilities.

The down legs through early portion of November suggests a less-than-ideal environment for risk assets and possible flat or ranging price action, less so much on the bullish trending. Later in November through the end of the quarter, the environment shifts towards favorable conditions for risk assets, possibly translating to bullish price breakouts, with the later portion of the quarter flattening out again at a high.

What the chart means to me in relation to the crypto market:

This macro stress indicator doesn’t necessarily speak directly to the crypto market more than the general availability of capital and market sentiments. In general, though, the bullishness on this chart would suggest that market participants may be more likely to put money into risky assets, crypto being one of those, moreso later in the quarter than earlier. Perhaps this would translate to a greedy top then.

**Expectation in a perfect world:**The quarter is an flatter through Mid November and then bullish with consolidation at a high near the end of the quarter.

30Y Treasury Bonds

https://www.tradingview.com/chart/39lMMnIr/

What’s on the chart:

The yellow daily cycle shows misalignment early in the quarter. In early December the yellow daily cycle bottoms returns to bullish alignment with the blue weekly and red monthly cycle. They daily and weekly both shows peaking very late in Q4.

What the chart means to me:

This is suggesting ranging consolidation until December and continuation of the bullish trend, if we use the higher timeframe as the overall bias. Once alignment returns a bullish break of the recent highs may occur and if that happens a more intense bullish trending action would be expected. Late November will be likely be the ideal time for heavier support buys or alternatively breakout plays if prices stay ranging up near highs through the earlier part of the quarter.

What the chart means to me in relation to the crypto market:

Typically, these two markets show similar trends, but recent macro events may have contributed to a reduced correlation between Bonds and BTC in terms of price action. However, monitoring the daily correlation could prove valuable. If it starts moving towards a positive value, this would confirm that Bonds can be used as proxies for trading signals in the crypto market. In the absence of clear technical trade signals in crypto, cues for action could be sought in the Bond market—but only if the correlation is strong.

Expectation in a perfect world:

The quarter possibly sees further decline and a range from $118 - $124 early on followed by an increase, possibly returning to the highs at $127. My ideal setup for a buy is waiting for bullish divergence on price action oscillators like Momentum, RSI, or MACD somewhere on the 6HR chart up to the daily timeframe. This is an active hunt at the time of publication.

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To conclude the Quarterly Market Synthesis:

Lets distill the key insights regarding Q4's outlook. The environment suggests bullish for the quarter, with technical targets for the market cap ranging from 2.6T to 3T, and BTC from $73K to $84K. These levels are quite lower than many I’ve read across the crypto space, but it’s not the first time this has happened. Similar “lower” expectations were publish during the 2021-2022 market. Many posts and publications are all posting comparisons or analogs to past markets with suspect timings. Many choose to ignore the fact that we’ve already had a long bull market, despite 2 quarters of choppy price action.

The data above would suggest we are closer to the end of the bull market than the end. The possible scenario I have envisions new all-time highs for the overall cryptocurrency market capitalization and Bitcoin late in the quarter and decline followed by a decline and follow on rally creating a type of double top, maybe even a macro triple top.

Regarding my trade execution, I have already made multiple spot purchases on certain crypto assets would consider more spot buys if we return to lower levels from mid September to mid October. If those levels come to pass (TOTAL chart measuring in the range of 2T -2.075T), it will likely be the last purchase I’ll make until selling at some higher point near the end of the year.

As much as things change, so many feel the mostly the same. Q4 2024 and Q1 2025 I think will be huge in validating the theory of a shorter fluctuation for Bitcoin price action instead of following a 4 year pattern.

In a few days I’ll release the supplemental post with the reviews of last quarter and extra notes on this analysis for those really into the data.

See you again soon,

PrivacySmurf