Bitcoin (BTC): 1987 Crash vs. Today, Wyckoff Last Point of Supply

February 24, 2019 / by Bill Noble

With the intensity of the volatility in Bitcoin (BTC), we wanted to post an update to the weekend chart package.

First, we have a chart comparing the recent sudden correction in Bitcoin (BTC) to the events surrounding the 1987 crash in S&P 500 (SPX).

In the early 1980s, equities began to rally after years of declines during the 1970s. The uptrend between 1982 and 1987 was filled with skepticism. For the first 10 months of 1987, the skepticism melted away. It was pure FOMO prior to the crash. The 1987 crash was a cleanse of excesses. (Figure 1). The event had such an impact on market psyche that it became a generational bottom.

 class= Figure 1

In crypto, looking at a chart of Bitcoin (BTC) on BitMEX, the structure and sentiment are similar. FOMO and hope prevailed with Bitcoin up 5 percent on Saturday, Feb. 23. That gave way to despair with the 8 percent drop in BTC on the morning of Sunday, Feb 24.

To us, this looks like history repeating itself. Both markets went from a period of depression to a hope-driven rally that ended with FOMO, followed by a harsh crash.

Another important chart may be the Wyckoff bottoming scenario that we have been tracking diligently all year. Looking at Figure 2, we plot the existing price action in Bitcoin (BTC) vs. the Wyckoff scenario. What seems so interesting is that Sunday’s decline (Feb 24) fits the final “Last Point of Supply” before a major uptrend begins. So, assuming this is not another crypto crash, this recent decline may mean last call for cheap Bitcoin (BTC).

 class= Figure 2

Bottom Line: While the decline is scary, it seems that buyers should monitor what happens at $3,700 in Bitcoin (BTC).

Come see if the Crypto.IQ Trading Desk agrees or disagrees with this analysis. You might be surprised…