Bitcoin Check List (Back to 2021)
The Checklist is unchanged for February 3, 2025 from last week.
That said, I thought it would be interesting to see what the Checklist said in both April and November 2021.
Let’s start with April 2021:
As you can see there were 8 RED, 7 YELLOW, and 3 GREEN. Let’s go through it:
Sentiment: Screaming Red as everyone that was into crypto was putting laser eyes on their social media profile picture. Plus, Elon was going on Saturday Night Live where it was expected for him to mention Dogecoin. This is peak sentiment.
200 Day Moving Average: The Bitcoin Mayer Multiple hit 2.5, another extreme. This was definitely was a red signal.
Nasdaq chart structure was bullish. Trend line was in tact and the market continued higher for the rest of the year.
S&P chart structure was bullish. Trend line was in tact and the market continued higher for the rest of the year.
Elliot Wave Theory - The 3rd wave started at the bottom of the Covid crash. And there were 5 distinct waves. It was pretty clear that we were at the end of the 3rd wave. At the time, I would have expected a pull back, which we got.
Bitcoin Chart - the Bitcoin chart itself was yellow because it was stalling out. I remember predicting a pullback to $40, I was not expecting it go as low as $28k in July of 2021.
Interest Rates: Interest rates were low, but the charts were showing that they were starting to bottom. No one was talking about interest rates except for how low they were and how it was causing assets prices to soar.
Dots System - The Dots System signaled a sell at the end of April as green dots stopped, after them being very consistent for the previous 6 months. At the time I was new to the dot the system, and would have scored this Yellow.
RSI - RSI had spent months above 70 and had started to fall below 70. This would have been a big Red signal.
Ichimoku Cloud - The price was well above the cloud, again signaling we were over extended and due for a significant pull back.
Gold vs BTC Chart: This had definitely formed a bottom.
S&P/BTC Chart: Bottom forming
Nasdaq/BTC Chart: Bottom forming
MSTR chart: MSTR chart had peaked 2 more prior and had broken it’s trend line and parabolic structure. This was a bearish signal.
Yield Curve: Yield curve hadn’t inverted yet. This was not a helpful signal
Parabolic Advance Structure: End of April, it started to break the structure. Another clear sign.
Bitcoin Dominance (BTC.D) - This chart was definitely showing Bitcoin peaking.
DXY Chart - DXY was bottoming, but nothing too strong for it to be a clear indicator.
As I remember back in April 2021, I was fully expecting a pullback in the price before we would push higher towards $100k. I thought we would see a 25-30% pull back to $40k. I did not expect the price to drop as low as $28k.
But where I really went wrong was in November 2021. I thought we had weathered the pullback and we were destined to see $100k, especially with the likes of PlanB and Raoul Pal and their convincing charts and models. But let’s look at what the Check List was showing:
As you can see the signals were saying there was a lot of risk with 11 YELLOW, 5 RED, and only 2 GREEN. Here are my key takeaways:
Sentiment was still not great considering everyone still had laser eyes.
The Nasdaq and S&P charts were starting top
Elliott Wave Theory was confusing.
Interest rates were starting to rise, but no one could have predicted the Fed would raise rates as fast as they did.
RSI was trending down, which isn’t a good sign.
The Gold vs. BTC chart was clearly showing a double bottom, eventhough the BTC chart showed a higher high.
And the Bitcoin Dominance was also forming a clear bottoming structure, which is never a good sign.
I’ll be honest and say the signals weren’t crystal clear to sell, but they were saying you probably want to be careful here. This wasn’t a time to be all-in the market.
The checklist isn’t perfect. It still takes a gut check to decide how to play the markets. But hopefully this helps give some guidance with the market. I think as soon as there are more yellow/red signals, than green, you might consider starting to sell some of your crypto.
It will be interesting to see how the signals on the checklist continue to change over the next 3 months!