This is a direct continuation of "To CAPITULATE or NOT to CAPITULATE? That is the question. – Part 2: The Answer" and the conclusion of this series.

At least for now.

Read the first two instalments here:

• To CAPITULATE or NOT to CAPITULATE? That is the question. – Part 1: The Question
• To CAPITULATE or NOT to CAPITULATE? That is the question. – Part 2: The Answer

Now, back to the action:

To CAPITULATE or NOT to CAPITULATE? That is the question. – Part 2(b): (The rest of) The Answer

Consideration 2: – Volume

The link between volume and price is a strong one. Volume is also one of the best leading indicators in TA, i.e. it shows what is going to happen before it happens, as opposed to most indicators which react to price changes after they have happened.

On the surface this makes volume a great indicator, but the reality is that it is terribly hard to read. It has been my experience that every time I make a call based on volume, it suddenly changes direction and the opposite occurs. I take some consolation from the fact that I see the same thing happen to other analysts regularly.

Be that as it may, volume IS increasing. It's increasing slowly and steadily too, which is (in my opinion) the best way to increase, because it is a less volatile way to grow. Rapid volume and price increases are unstable. Strong, slow volume increase is almost a sure sign of relatively stable higher prices to come.

Of course there is no guarantee that this will continue, but chances of sustaining slow, steady growth are far better than chances of sustaining high, fast growth. Also, there is no reason that the volume should suddenly drop off.

The charts below shows the recent changes in volume. These are Coinbase charts. While other exchanges do differ, the general trend is the same. You can even turn to the likes of coinmarketcap to see a combined chart which will confirm this, but they are very small charts and lack detail.

Look at recent volume:

Which is obviously far greater than volume during the majority of 2018:

...and resembles volume closer to that of early 2018/late 2017:

There is no question that volume is rising, has been rising for over a month now and that even though it was kicked off by a bearish dip, it may have jump-started the lackadaisical and fearful crypto market.

Consideration 3: – Safe haven

We all know that gold is the go-to safe haven in times of trouble in the markets. We also know that the markets certainly are in trouble!

Following a marathon post-2008-crash bull-run, the markets of the world have turned for the worse.

Initially they took crypto with them. It's conceivable that speculative money was drawn out of crypto so that investors could compensate for or shore up positions in other poorly performing markets.

But ask any crypto-nut about "digital gold". If they are worth their salt, then then will be able to make a compelling argument for Bitcoin being at least as good as the precious yellow metal as a safe, long-term investment. Perhaps not quite as safe as gold, but with a far higher ROI.

The trouble that the markets are in is visible. Here is the Dow Jones for example:

Here is Facebook - a "FANG" stock normally noted for exceptional performance.

It's not just one or two indices which look this way. It's not one or two stocks. It's not even one or two countries. It's everything and everybody!

Except for the safe havens. Here is gold:

....and here is Bitcoin: (climbing like gold is - coincidence?)

On the chart above I included the S&P 500 index as a comparison. You can see how when the S&P started it's latest dip (it is now at levels last seen in July 2017, despite substantial growth up to early October 2018!), Bitcoin simultaneously started to climb...

While I can't confirm its source, I believe that there is a good possibility that money liquidated from other markets is beginning to return to crypto. I believe than the "Digital Gold" - Bitcoin - is being used as a safe haven by wise investors who see which way the wind is blowing (so definitely not Dimon then).

As with "Volume" above and the indications of the 200 Day MA in my previous post, a "Safe Haven" scenario has the power to cancel any capitulation event and to turn the crypto market around.

Consideration 4: – Catalyst

I have seen more good news in the crypto space in 2018 than at any time in the past, including the height of the bull market. I've lamented before, the fact that the bear market ignored all this news and swept it under the carpet. Crypto is sitting on a time bomb of good news, great news: new coins and tokens, the ongoing development of existing cryptos, adoption by industry, reaching mainstream audiences, less uncertainty wrt regulations, the backing of (the honest and intelligent) financial experts etc.

Crypto has also been suppressed through a variety of means, the extent of this suppression being impossible to determine, but definitely playing a large role. As I remarked in "Confidence creeps in":

"Too many times I have said that crypto cannot remain suppressed. Bullish attitude will always leak out in bursts and spikes. Those bursts and spikes are caused by those who out-think the market, those visionary contrarians who swim upstream and scoop up the very best deals."

Eventually such "leaks" become a market trend, and the suppression ends.

For several months now I, and several others, have been saying that all crypto needs is a catalyst - something to unlock this pent up bullish energy; a detonator to set off the bomb of positive market sentiment.

It is my opinion that Consideration 3 - the confirmation of a bearish turn in major international markets - may well be that catalyst.

It certainly has the magnitude and impetus to fit the bill. It would be surprising if it did not act as the long-awaited catalyst.

And that dear readers, is the fourth and final reason why capitulation may be a thing of the past for crypto - at least for the next few years.

Conclusion

I have not made up my mind about capitulation yet. I still like the idea of a Dead Cat Bounce. I am very wary of being caught up in the hype of crypto as it performs well, something I am actively guarding against.

But I am an analyst, hence: my job is to call the facts as I see them - not as I want to see them. I can not deny these four major considerations which I have discussed in this post series. At the very least, I believe that they should give any crypto traders serious pause for consideration.

This chart of mine:

... taken from this post: "That was not a Bitcoin double bottom" - now looks outright embarrassing.

But as I say, my mind is not yet made up. I do think that there is very strong evidence for no further major crypto dip, or at least not a new 2018 ATL, but I caution against changing your mind to that way of thinking without positive confirmation.

For me confirmation would start when BTC returns to a stable $6000 support level, but would only really become solid as it breaks through first $7400 and then $8400 - the most recent major resistance levels of 2018.

Until then I still suspect that something along the lines of my blue-line prediction on this chart remains a possibility:

From https://mentormarket.io/bitbrain/btc-latest-trends-part-4/

Yours in capitulated crypto

Bit Brain

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Published by BitBrain

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