Impending Bitcoin Plunge… and Unintended Consequences. 2025 Outlook.
02/19/25 – The Roaring ‘20s, the dot-com ‘90’s and… – “While it might only be only one sector of the overall financial markets, there is an unfolding parallel – part 1920’s & part 1990’s – that warrants closer scrutiny in the weeks and months to come.
In both previous cases, it was an example of trends getting way overdone. Another trend is showing signs of stretching to an extreme… and preparing for a sharp ‘snap back’ (some of which has already taken place).
In the 1920’s, stocks were heading progressively higher when someone developed the ingenious idea of creating a shell company whose only value would be the stocks that shell company purchased.
That shell company would issue shares – like any other company – and allow the ‘average investor’ to afford stocks in a market that was quickly becoming overpriced & inaccessible to many investors.
On the surface, it sounded like a reasonable idea.
As that roaring bull market became over-extended, the shares of those shell companies became too expensive… so someone had another bright idea. Let’s create a shell company whose only value would be the stocks of the other shell companies it purchased (whose only value is the shares of the stocks they purchased & owned).
That shell company would issue shares – like any other company – and it would allow the ‘average investor’ to again afford stocks in a market that was rapidly becoming overpriced.
Great idea… except for one thing!
Any setbacks in the overall stock market – something considered next to impossible at that time – would exponentially magnify losses in the corresponding shell companies …and exponentially magnify losses in the related shell companies of shell companies.
As a result, a 10% loss in general equities might create a 20% (or greater) loss in the first level shell shares… that might create a 40% (or greater) loss in the second level shell shares. Hmmm.
Lucky for them – or so they thought – the roaring ‘20’s bull market would never stop… and serious corrections were impossible. Maybe.
The 1990’s were a bit different but were still a prime example of a market that gets WAAAAYYYY ahead of itself with shares of dot-com companies – that were years away from possibly showing any profitability (or even any income) – bid up to levels akin to the Tulip Bulb Mania.
Luckily, the roaring ‘90’s bull market could never experience a serious correction. Maybe.
The 2020’s is seeing an amalgamation of both – though it is probably not yet to the same degree (and could stay contained to one sector of the market).
This is occurring in the digital currency arena.
When digital (crypto) currencies – particularly Bitcoin – became overly expensive, a plethora of less-‘qualified’ cryptos were created to fill in the void.
Then came NFTs and meme coins – examples of ‘the greater fool’ type of ‘investment’ (speculation).
And now there is a race to see which tech companies can become the largest holders of Bitcoin (and others) the fastest.
Even if they have a viable core company, the value of their Bitcoin holdings is rapidly overtaking the value of the core company.
What happens if Bitcoin drops 20 or 30%… and just languishes there for a few months?
What happens if Bitcoin returns to where it was when the post-Election parabola took hold… built entirely on ‘future expectations’?
If Bitcoin merely erased those 6 weeks of gains – from early-November – mid-December – it would be a normal, healthy correction in a multi-year bull market.
However, that would equate to a ~35% drop (a relatively normal correction in a bull market that has extended this far) that would be exponentially magnified in companies, funds & individual accounts that bought it since mid-December… some of which is probably on margin or debt of some form.
What then?
Before 2025 is complete, investors might find out the answer to that question…
Bonds & Notes are tracing out what could be a 3 – 6 month bottom – expected to lead to a contrasting peak in June/July ‘25. They dropped sharply into the middle part of February after rebounding to multi-week upside targets, trend objectives & declining 21 Low MACs in early-Feb.
They were/are expected to create secondary lows on Feb 14 – 21st, a cycle that has been initially fulfilled but not yet confirmed. It would take daily closes above 116-00/USH & 109-16/TYH to signal that new multi-week lows are in place and that any additional spike lows are very unlikely.
On a broader basis, Bonds & Notes have neutralized their weekly downtrends multiple times and need weekly closes above 117-01/USH & 110-00/TYH to turn those trends up.
If that occurs, it would also have them closing above their declining weekly 21 Low MACs – the start of a 21 MAC (bullish) reversal sequence.
The Dollar Index likely set a secondary top after surging to its weekly LHR (weekly extreme upside target at 109.78/DXH) and monthly SPR (109.83/ DXH) to begin the month and reversing lower.
After a quick plunge, it bounced into Feb 12th and right to its declining daily 21 High MAC before resuming its decline. It has now bounced to its declining daily 21 Low MAC – placing it at a pivotal juncture. It needs a daily close below 106.44/DXH to confirm a new wave down and a weekly close below 106.44/DXH to turn its weekly trend down and confirm that a multi-month top is in place.
The Euro is the inverse and needs a weekly close above 1.0557/ECH to turn the weekly trend up and project an overall advance into April ’25 – the next phase of a ~34-week high-high-high-(high) Cycle Progression and a .618 rally in time.
In the short term, a daily close above 1.0529/ECH is needed to show new strength.
The Yen remains in positive territory with an increasing probability for a larger surge – likely reaching .6950 – .6980/JYH – in the month of February. A weekly close above .6652/JYH is needed to turn the weekly trend up and confirm.
Bitcoin & Ether are reinforcing signs of topping after Bitcoin set its highest daily close on January 21st – 6 months/180 degrees from a previous high daily close (July 22nd) – ushering in the potential for a larger-magnitude wave ‘5’ peak as it fulfilled a ~43 – 46-week low-high-high-(high; Jan 3 – 24, ’25) Cycle Progression.
Ether preceded that top and many cryptos have lost 40 – 55% from their recent peaks.
A drop into early-March remains the primary objective for this decline.
Ether & Solana have already plunged to their early-November ’25 lows. Could others follow suit?”
Bitcoin is poised for a sharp, late-February plunge in sync with the daily 21 MAC/21 MARC indicators that pinpoint a very vulnerable period in the coming weeks. At the same time, interest rates are signaling a peak as Bonds prepare for a larger rally. Is there a connection?
Bitcoin’s January high was a textbook (weak) wave 5 of V top that was set in perfect sync with MAJOR upside price targets as well as annual cycles. That projected/projects an overall decline into late-Feb/early-March ’25 as the first phase of a major shift. Could Bonds rally as Bitcoin plunges?
Ether (and other cryptos) peaked in December ’24 and projected a sharp, multi-week drop to 2,200/ETH or lower… that should ultimately stretch into early-March ’25 (with an initial low forecast for early-February ’25). It attacked that downside price target in early-February – when a 1 – 2 week low was most likely – so some consolidation was expected before a late-February sell-off.
On a broader basis, Bitcoin is capable of plunging back to 72,000 – 74,500/BT and stretching an overall multi-month decline into [see publications for details].
Could This Create Unintended Consequences as Bitcoin Losses Project Exponential Reverberations??
Bitcoin’s multi-month cycles bottom in [reserved for subscribers].
What Does Bitcoin’s Wave 5 of V Peak Mean for 1Q 2025?
What Does Bitcoin’s Wave V Peak Mean for 2025?
How Would Late-February Sell-off Corroborate That?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.