Bitcoin Confirming Major Peak; 40-Year Cycle ‘Seismic Shift’ Begins!
01/04/22 INSIIDE Track – “2016 – 2021 underwent another major economic shift and accompanying Currency War in line with the 40-Year Cycle of Currency Wars that has repeated since before the founding of the USA.
As described throughout the 2010’s, that cycle was expected to usher in a heightened battle against US Dollar hegemony around the globe and likely result in a new reality that would subsequently unfold in the 2020’s.
2016 – 2021 was forecast (in 2013 – 2016) to possess some subtle & some not-so-subtle ‘battles’ with a primary one projected to unfold between the US Dollar (fiat currency) and Gold (hard currency) – with Gold forecast to gain progressively throughout 2016 – 2021. At the same time, a third combatant entered the fray – digital or crypto-currency.
Even though the US Dollar Index – an index that reflects the Dollar’s perceived value versus a basket of other fiat currencies (the healthiest or least healthy horse in the glue factory) – was projected to rally from 2014 into 2017, Gold was forecast to enter another multi-year bull market in 2016 & stretch that into 2021.
The Golden Year
The synergy of cycles in 2016 was so significant that three years of articles, interviews and publications were devoted to discussing the impending bottom in Gold and why 2016 would usher in a new reality – dubbing 2016 as The Golden Year (‘The Golden Year’ – described throughout 2013 – 2015 – was the year when a new ~5-year advance would begin – see insiidetracktrading.com/wp-content/uploads/2018/07/ 2016-the-golden-year.pdf).
That Gold forecast was also tied into Solar Cycles (2020 – 2024), impending War Cycles (2021 – 2025) and Disease Cycles described in 2009 – 2014 (that projected a major viral or disease outbreak for 2019 – 2021 – see insiidetracktrading.com/wp-content/uploads/2020/04/ 2016-The-Golden-Year-III.pdf).
Gold & Economic Cycles
As it turned out, Gold bottomed in Dec. 2015, fulfilled almost everything written about 2016 (The Golden Year), and advanced into the final half of 2020 before peaking. That powerfully fulfilled the latest phase of this 40-Year Cycle of Currency Wars while ushering in the time (2021 – 2025) when the onset of a literal military conflict is cyclically likely.
2021/2022 ushers in a new cycle, with the opening years often the most dramatic (transitions are always the roughest period before a new, or revised, ‘norm’ begins to take hold). One need only look at the early 1820’s, 1860’s, 1900’s, 1940’s & 1980’s to verify this pattern. In many cases, those transitions also began new economic upswings… so they were not all bad.
2022 has the potential for some intriguing parallels and also some stark contrasts to that pattern. Part of that has to do with the principles governing cycle analysis and Hadik’s Cycle Progression…
40-Year Low-Low Cycles
In the first half of the USA’s history (roughly from 1780 – 1900), the movement of Gold swung similar to that of the economy. Stable and dependable Gold usually coincided with a stable and dependable economy (more or less). Conversely, panics in Gold (like 1869) led to panics in stocks.
Since ~1900, the correlation has been inconsistent. However, 2016 – 2021 was similar with both moving higher throughout that time frame and both suffering sharp setbacks in March ’20. In order to better understand what is expected for the coming years, it is important to review a related 40-Year Cycle that has timed pivotal lows in the US economy…
1782 – Start of new country (and financial system) after end of Revolutionary War (Treaty of Paris drafted on Nov 30, 1782; peace negotiations began in April 1782); first American commercial bank is opened and a new monetary system begins to take hold after the collapse of the Continentals (paper currency).
The chart above provides a broad illustration of the economic growth in America in 1700 – 1850 with the two intervening low points spread exactly 40 years apart (surprised?) – in ~1782 and ~1822.
1822 – Follows Panic of 1819 and recession of 1819 – 1821, one of the worst in US history. It included mass unemployment and plunging property values that bottomed in 1822. However, there were far-reaching ramifications of that Panic, particularly the heightened skepticism of paper money that it raised among the American public. That is why Gold’s movement synced with the economy. To quote:
“The national bank’s reaction to the crisis—a clumsy expansion, then a sharp contraction of credit—indicated its weakness, not its strength. The effects were catastrophic, resulting in a protracted recession with mass unemployment and a sharp drop in property values that persisted until 1822.
The financial crisis raised doubts among the American public as to the efficacy of paper money, and in whose interests a national system of finance operated. Upon this widespread disaffection the anti-bank Jacksonian Democrats would mobilize opposition to the BUS in the 1830s. The national bank was in general disrepute among most Americans..” (wikipedia.org/wiki/Second_Bank_of_the_United_States)
1862 – Start of NY Gold Exchange; Along with stocks, gold rallied into 1869 (coincided with one of greatest bull markets in US stocks in 1860 – 1872) before Black Friday and a gold & stock crash surrounding an attempted corner on the gold market.
1902 – Stock market enters new advance following Panic of 1901 (attempt to corner Chicago rail market) – a sequence similar to what has played out in previous cycles as in 1822, following the Panic of 1819.
1942 – Stock market enters new advance following 1929 – 1942 bear market and 1937 – 1942 crash – setting one of its most significant lows in the 20th century (and the onset of one of the strongest advances).
1982 – Stock market enters new advance following 1966 – 1982 consolidation that included 1966 – 67 sell-off, 1973 – 1974 (50%) crash, 1976 – 1978 (~29%) decline, 1981 – 1982 (25%) drop – setting perhaps the most significant low in the 20th century (and the onset of the strongest overall advance).
While this might normally be perceived to augur a subsequent low in 2022 and the onset of a new multi-year advance, there are key reasons why this cycle is due for an inversion and why stocks could see a multi-year peak in 2022.
First and foremost is the 40-Year Cycle Progression illustrated at the top of this page. The decisive lows in the early 1860’s, 1900’s, 1940’s & 1980’s portend a likely inversion and a peak in 2022. That would fulfill a 40-Year low (~1862) – low (1902) – low (1942) – low (1982) – (high; 2022) Cycle Progression.
Reinforcing that is the 20-Year Cycle Progression illustrated at the top of this page. The decisive lows in 1942, 1962, 1982 & 2002 portend a (similar) likely inversion and a peak in 2022. That would fulfill a 20-Year low (1942) – low (1962) – low (1982) – low (2002) – (high; 2022) Cycle Progression…
Stock Indices have rallied into early-Jan ‘22 – the fulfillment of multiple daily & weekly cycles that portend an early-year peak… an initial top has been forecast for the opening day(s) of 2022 and some indexes may have fulfilled that.
It is helpful to step back and review a few longer-term factors that continue to focus on 2022 as the time when a major peak could be seen in equities… A couple key indexes – the DJTA and Russell 2000 – fulfilled upside wave (price) objectives in Nov. ‘21, indicating that those highs could hold for several months (if not longer) from that point forward.
That is one of many reasons why the expected 1Q ‘22 peak has repeatedly been described as a likely divergent one with some stocks/indexes setting higher highs while others set equal or lower highs.
The Russell 2K fulfilled that wave objective and a host of decisive upside targets while peaking right at 2460/QR – its multi-year upside range-trading target. That trading range was set by the early-2020 peak near 1710 and the ensuing March ’20 low near 960 (as well as the preceding Jan/Feb ‘16 low near 960) – projecting a surge to 2460/QR after the Russell 2K broke above 1710 in Nov ’20 (960 low – 1710 high – 960 low – 1710 – 2460/QR peak; see accompanying diagram).
By spiking to new intra-year highs (fulfilling its weekly trend and monthly trend patterns) AND fulfilling its Elliott Wave objective AND attaining this multi-year upside target, the Russell 2000 ushered in the time for a sharper decline in Nov ’21… and potentially longer after completing its wave structure.
That 2460/QR objective had been reinforced by the Mar ’21 low (~2085/QR) – precisely at the midpoint of that overall projected trading range (1710 – 2460), a key level that supported declines in May, July & Aug ’21. For the majority of 2021, that support (2085/QR) held multiple pullbacks while creating a corresponding (upside) trading range target at the same 2460/QR level (1710 – 2085 – 2460/QR).
Those ~375.0/QR & ~750/QR ranges have enveloped most of the intermediate and larger-degree swings in the Russell 2000 since the 2009 bottom. They also prompted a sharp sell-off into mid-Dec that had the Russell 2K coming within a few points of that 2085/QR support. That level is now also ‘4th wave of lesser degree’ support (the low before this culminating rally) – magnifying its significance.
That identifies it as pivotal support for this current period AND the breakdown point if an even larger-magnitude sell-off is in the cards (which would be signaled by a weekly close below 2085/QR).
In the same month the Russell 2000 was fulfilling that synergy of upside targets, the NQ-100 peaked right at its multi-month upside target (~16,700/NQ) and reversed lower – with key support near 15,700/NQZ. Late-Nov action projected another sell-off in early-Dec. (see Dec ‘21 INSIIDE Track), which unfolded and spurred a drop to that support that overlaps several other points of support near 15,600/NQH.
That is pivotal support leading into 2022. It is also range-trading support – a key dividing point in an ongoing series of ~1,200/NQ trading ranges with extremes set near 9,600/NQ (Feb ‘20 high), 10,800/NQ (Sept ‘20 low), 12,000/NQ (Aug – Oct ‘20 highs & Mar ‘21 low), 13,200/NQ (May ‘21 low), 14,400/NQ (Oct ‘21 low), 15,600/NQ (Aug/Sept ‘21 highs & Nov/Dec ’21 lows) and 16,800/NQ (Nov/Dec ’21 highs). A weekly close below 15,600/NQH would likely spur a quick drop to 14,400/NQH…
Another (leading) index also fulfilled major upside objectives in Nov ‘21 – related to a potential wave ‘5’ surge and culmination. The DJTA bottomed in late-Sept and projected a new impulse wave higher (’5’) after experiencing its longest correction since 4Q ‘18 (all linked by the 16-Month Cycle).
On Oct 15, the DJTA closed back above its weekly 21 High MAC and reinforced those bullish signals – spurring a surge into Nov. 2 when the Transports led the way as they fulfilled upside objectives and signaled a multi-week/multi-month peak.
Many significant stocks and indexes fulfilled 1 – 2 year upside targets in Nov ’21 – ushering in a potential topping process that was expected to stretch into 1Q ‘22 (when stronger indexes could set final highs as other indexes diverge.
1Q ‘22 (most synergistic in Jan/Feb ‘22 and ideally in Jan ‘22) is the convergence of a web of 16, 8 & 4-month cycles AND the latest phase of the most consistent cycle of this century – the 3.25-Year Cycle.
That cycle was last involved in creating the Dec. ’18 low and projecting an overall advance into 1Q ’22 – when the next phase should invert and time a peak. That would fulfill a 3.25-year low (1Q ‘09) – low (2Q ‘12) – low (3Q ‘15) – low (4Q ‘18) – high (1Q 2022) Cycle Progression. [There is a chance it could also time a low if a sharp drop into March ‘22 unfolds.]
A peak in Jan/Feb ‘22 would also align with the 2-Year Cycle that was detailed extensively in 2018 and again in 2020. Both times, it created peaks in Jan/Feb of those respective years – as well as subsequent peaks in Sept/Oct ‘18 & ‘20 – and is on track to create a similar peak in Jan/Feb ‘22. (It is also possible it creates a subsequent low in March ‘22 – 2 years from the March ‘20 bottom.)
3 – 6 month & 6 – 12 month (and even 1 – 2 year) traders and investors should have been lightening up on long positions in early-Sept…
Bonds & Notes peaked in early-Dec with Bonds attacking their primary upside target based on the weekly trend pattern. In mid-Dec, they created a divergent top (lower high in Bonds, higher high in Notes) after Notes had twice neutralized their weekly downtrend but could not turn that trend up. That signaled a 1 – 2 month peak and spurred a quick reversal lower…
On a broader basis, Bonds & Notes are steadily validating the overall outlook for 2020 – 2023 in which interest rates have been forecast to slowly rise in response to developing inflation and other factors.
The Bond peak in July ’20 perpetuated an uncanny 4-Year Cycle that timed multi-year highs in July ‘12 & July ‘16 and preceding lows in mid-2004 and mid-2008. That cycle projected that interest rates would slowly rise (and Bonds fall) in 3Q ‘20 – 3Q 2022, possibly extending into 2023.
Longer-term investors and hedgers could have been liquidating long positions in Bonds & Notes and selling on intermediate rallies in 3Q/4Q ‘20… and should have added to short positions in Aug ‘21…
The Dollar Index has consolidated since surging to new highs in late-Nov… On a broader basis, the Dollar remains bullish on a 6 – 12 month and 1 – 2 year basis after bottoming in early-2021 while completing a 4+-year ’A-B-C’ decline and perpetuating an uncanny 38 – 41 month cycle. That should lead to another advance, stretching into 2023 – when an uncanny ~3-Year Cycle recurs.
It confirmed that by turning its monthly trend up in Aug ‘21 and has reinforced that by closing the month above its declining monthly 21 High MAC. That often spurs a pullback to retest that MAC while giving it time to flatten and turn higher. That could set the stage for a new rally from Feb into May ’22…
Bitcoin is fulfilling the 2 – 3 month outlook for a drop to 40,000 – 42,000/BT – where crucial 3 – 6 month support resides. The intriguing thing remains the multiple levels of ‘5th’ waves that were fulfilled at its high in Nov ’21.
In 2022, that leaves Bitcoin vulnerable to dropping as low as [reserved for subscribers] IF/when it breaks below 40,000/BT… A 15-month low (9/17) – low (12/18) – low (3/20) – low (6/21) Cycle Progression recurs in Sept ‘22 and could time the next major low.”
Bitcoin, in Nov ’21, fulfilled what its monthly and weekly trend indicators projected and what its overall wave structure necessitated – a surge to new all-time highs (~66,000+/BT) ushering in a major top in late-Oct/early-Nov ‘21. That also fulfilled the multi-year outlook for a major advance into 2021 when Currency War Cycles culminated and a ‘seismic shift’ was forecast to take hold as cryptos completed the expected culmination of a major bubble.
Since then, Bitcoin has been on track for an initial plunge to 40,000 – 42,000 (ideally in 2021) and an overall plummet to 29,000 – 30,000/BT – its most decisive level of monthly support. Bitcoin’s unfolding sell-off is powerfully corroborating the outlook for 2022! Projected Dollar strength & equity weakness in 2022 could burden cryptos throughout the year and usher in 2023 – when a major solar storm is cyclically likely (also see Oct ’21 INSIIDE Track). Rising interest rates should also pressure cryptos.
Coinciding with this, major stocks and indexes are completing multi-year uptrends with final wave ‘5’ spike highs (also in Bitcoin) fulfilled in Nov ’21 in key indexes and many leading stocks. The German DAX Index is signaling a related wave ‘5’ peak – the culmination of an 18-year bull market. That portends subsequent plunges to (at least) their 4th wave of lesser degree support – in 2022 and possibly 2023.
What does this mean for the future of cryptos?
Why is 2022 Bearish for Cryptos & Stocks (and Bullish for US Dollar & Interest Rates)?
Could 2023 Provide Massive ‘Challenge’ with Solar Storm??
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.