What Bitcoin’s Evolving Bubble Says About Stocks
Thus far, the stock market is following my Dark Window scenario perfectly. It’s about half-way along this path now, so we’ll likely see a break (pause or mild correction) for several weeks or so. The markets’ disappointment with the good jobs report on Friday – because it reduces the certainty of a rate cut later this month – is in line with this pattern. My target is still near 10,000 for the Nasdaq by early next year, as I commented on last week.
Bitcoin is following my early-year forecast even more perfectly, moving toward a final hype-phase bubble to $32,000 or so by the end of this year. It’s also about half way there and due for a pause.
So, today I’ll look at how that bubble is evolving and how it could get to $30,000-plus by December or so… And because bitcoin is leading the way, stocks should peak about a month later (which is what happened in late 2017 and in early 2000).
Let’s start with this chart…
The 84% correction off the $19,871 top in December 2017 bottomed in December 2018 – a one-year crash. I said from the beginning that it would take more like a 93%-plus crash to end this hype phase. That’s what it took to end the internet’s hype phase after the 2000 bubble top.
Last year’s correction was a larger 3rd wave top following the 1st wave peak in late 2013 – that also saw an 87% crash, and it wasn’t over way back then either.
My view has been that this final, larger 5th wave would come in half the time, or two years from the 2017 peak. That puts the top by late 2019/early 2020.
Because bubbles are always progressive in time and/or gains.
In this final bubble, we had the smaller 1st wave peak in late December and the 2nd wave bottom in early February. The recent, more dramatic 4.5-month 3rd wave looked to peak in late June, with bitcoin just under $14,000. The current 4th wave correction could last into as early as mid-July and as late as early August or so…
That means the final 5th wave should make about twice the gains in a similar time period and peak late this year. My best target is for bitcoin to hit between $30,000 and $32,000 by December. It could go higher.
Don’t miss this grand finale if you’re doing a little speculating here. Don’t bet the farm though. This is the most volatile bubble in history.
If we do see a peak, say in late December, then look for stocks to peak a month or so later, say in late January 2020.
Obviously, things could change, especially given how this near-term correction plays out – and there is a wide range for that as I covered in Economy & Markets last week. So look out for updates and emails from me and my team.
This final stock and more extreme bitcoin hype-phase bubble are intertwined. That is not the way most people in the crypto-industry see it. They see the next bubble peak between $30,000 and $50,000 into late 2021, at the next “halving” of bitcoin issuance… and they think it will do best in the crash!
That 4-year halving cycle would be the natural cycle.
But the larger global stock bubble is a bigger cycle (the 90-year Bubble Buster) that is due to peak more like late this year or early next year. And bigger cycles trump smaller ones!
I see the coming crash as the reset to end all bubbles… including bitcoin and cryptocurrencies!