Transcription
[music] Technical analysis shows bullish Bitcoin. We're also going to look at how I nailed the top this year by a simple trend line on Bitcoin, calling for the decline we've seen. And I'm also going to show you why this cycle down move is going to be much, much more shallow than past cycle down moves. All right, lots to discuss and unpack here in this verified investing video. My name is Gareth Soloway, chief market strategist here. And as always, folks, no BS, just charts and data. Let's get right into it. Let's look at Bitcoin.
So, this is the daily chart on Bitcoin. And what we always want to look at is we start small, right? We start zoomed in on the chart, we'll then move out. But right now, just on a near-term basis, let's dissect why this chart going into January is bullish. All right. So number one, we have what we call a bare flag forming. Now, many people would say, well, why is a bare flag telling us that we're going to likely go up in January? And the answer is this. Very simply, you can see the bare flag formation here, which again tells us eventually, by the way, we will likely see one more flush. But in the near term, what we're looking at is we're staying within this pattern, which tells us this yellow line here is technical support. As long as that holds, is there more upside or downside in price in the near term? Well, downside, all you have is right to here. Upside, look, you have all this upside up into this range.
Now, you might say, "Well, that doesn't mean it's bullish." You're right. Absolutely. So, let me unpack this even further. Let's zoom in. One of the things that's catching my eye is this pattern formation. We have an up move here, a wide range green candle on a very tight look at the daily chart. And all of these candles here have stayed inside. Notice no candle has broken. Even a wick or the tail has not taken out this low. That is a bull flag consolidation pattern. So again, looking just into the beginning or January of 2026. This pattern is signaling we're likely going to see upside.
Now, on a technical analysis basis and just looking at the data, this almost makes perfect sense. We're seeing silver likely top out here. We've seen multiple big corrections. One day or two days ago, we saw a big drop, then a big snapback, which is psychological by the dippers in silver. And now we're seeing another drop. Eventually, silver is going to start to correct more. Money is going to look for a new home. Now, it could go into stocks, but a lot of the money, the speculative money is going to look for what has not made a move. In addition, and this is a key factor, a key data point that has been proven year after year into year-end into January, it's called the January effect. The January effect, and this applies to all coins, too, basically says that investors will look to dump their losers into year-end if it's been a bullish year for asset prices. And in general, listen, crypto hasn't, but if you're in stocks, and we know that the ETFs, there's a lot of people that have been in stocks and have ETFs that they've bought, they have a lot of money they made in the stock market this year, but their Bitcoin ETF is down. And so, they don't want to pay all the taxes on the money they've made in the stock market. So, they can offset some of that by taking the loss on Bitcoin or on altcoins, right? And so essentially what ends up happening here is is you'll see pressure to the downside or basically, you know, a weaker asset in the final couple months of the year as that occurs. But once January comes, you can't do a tax loss sell in January. It's only allowed till the end of December. And so what that means is all of a sudden a lot of the sell pressure is relieved and assets that have been beaten down in year-end in 2025 will now become bounce plays in early 2026. Really only January. That's why it's called the January effect. And in my humble opinion, I think we're setting up for that. In fact, I think the chart is telling us we're setting up for this move, right? Up move consolidation. This should see one more move up in this range, which is going to get us back to 100,000.
Now, what's so fascinating about this chart is that the 100K level is a perfect retrace to a major level. Look at this right through here. Look at this zone and this upper level is coming right into that. Look at how on this chart we have high pivot here, high pivot here, then we have low, low, and low. So it's very obvious that it established a support level which then broke, which means if price moves up, it's going to meet resistance there. And so ultimately the thought, the concept here, and listen, I've been wrong before, I could easily be wrong again, but the idea here is that the combination of end of tax loss selling on Bitcoin, mainly through the ETFs. You know, crypto investors, hodlers don't care, but obviously anyone that's going in the shorter term and has gains may want to offset. So that's over. Then you have the bullish pattern, the inside bar bull flag. Then you're within this bare flag, which we're still holding the support line. These are all positive factors going into January. And again, this is only projecting out really maybe two to four weeks out, right? So I have no clue in general after that. In other words, the bare flag likely will play out, but it's still, we'll we'll analyze that. You guys know I do multiple videos a week on crypto, so I'll come back and give you guys an update. But what I want to do now is I want to show you one more reason why I like Bitcoin. Micro Strategy Stock. This is interesting to me.
So Micro Strategy Stock put in this bottoming tail. Now, bottoming tails are reversal signals on the chart, right? So here was a reversal signal. And what we can see here is that we've retested the low here, but essentially we've really held that bottoming tail low right there. As long as price holds this, we actually can see a move up. And I like this how you had this reversal and then price is just kind of settled on here. And the idea is as long as we hold this, if Micro Strategy is going up, does Micro Strategy go up for any other reason really than Bitcoin, right? And so the idea is you may have a factor here that tells us we can see upside on, uh, Bitcoin in Micro Strategy stock. And think about how much bearishness. By the way, this is another more psychological data point, but the the kind of the depression within the crypto sector is pretty big right now. I mean, altcoins, many of them at 52-week, multi-year lows. Bitcoin, everyone thought this year was going to be a fantastic year because of the president coming into power and being so positive on crypto. It turned out to be a pretty miserable year where even gold and silver blew crypto out of the water. Stock market did better than crypto and Bitcoin and all of these. And the reason why I bring this to your attention is that oftentimes when everyone's super bearish, you you see actually the opposite. Just like think about how silver was, silver last Friday and over the weekend. I've never seen more hype on silver calling crazy $300 price targets, all this stuff, and then all of a sudden cryp, uh, silver starts to correct, right? Too much bulls on one side, the teeter-totter, right? So the teeter-totter goes up or down. Here's too much bulls, so it has to flip back this way. Right? So, that's the idea there.
All right. So, let's go on here. I want to talk a little bit about the easy ways that you can predict chart action. We're going to get rid of these charts here. Now, this is the most beautiful chart in the world. I'm going to actually go to the weekly on this, but the simplicity of this when you compare to the talking heads out there. I mean, you know, you had Tom Lee in October predicting 250,000 by year-end. Um, you know, you know, you had so many of these when we were at all-time highs earlier this year, the predictions were coming out. And listen, I took a lot of flak in 2025 for saying I don't see it and actually shorting Bitcoin with my members in Smart Money Crypto at verifiedinvesting.com where I swing trade crypto. Um, but it was simple. It's just using logic and not getting emotional. And when we look at the charts, we use logic. All we do is we say, okay, let's connect this high from 2017 bull market high to the high here, right? See, so the highest point in 2021 per the trend line, right? So here you went higher, but this is, but it, but if you did this, look, if you do that, then you, you got above that there, so you have to go to the highest point relative to that and you just extend it out and look at this. Literally the three hits this year in 2025 to that line and it couldn't get through. And so when I, hey, I was using logic. That's really what I was doing. I was saying, "Wait a minute. We have a trend line here that has never been, Bitcoin has never been able to get through it." All right.
Now, listen. Is there a time where Bitcoin can get through it? Very possibly. But what I like to say is make the chart prove itself before you jump to that conclusion. Because essentially, we're playing a probability game here. And probability is very simple. Is that you go with the most likely outcome. Sure, we like to gamble and say, "Oh, this is going to be the time where it's going to blow through that." But that's a gamble. That's saying, well, somehow it's going to defy the line that it's respected for the last eight years, right? I mean, okay. So, so we're saying that this time is different. How many times have we heard that, right? The idea is I go with the higher probability. And the high probability here was when all these players out there were predicting we were going to see 250K. I was just saying, guys, unless it breaks here, this is the top in the near term. Why? Well, it was the top here, right? It was the top back in 2017. So again, is it possible it could defy gravity? Sure. But I want to make it do it before I go to that conclusion. By the way, the bare flag here looks so clean as a bare flag. So, this again, this pattern, even though I still think it comes up here first, uh, it it definitely makes me think that there's there's an eventual bigger drop.
Now, on the downside, I promised you guys I would tell you why this cycle was likely not going to be as deep. And it's very simple. If you look at past cycles, here's our high from 2017. And look, you can see that Bitcoin, when it fell from the 2021 peak, it retraced to that former high, pierced it a little bit, right? But not much. All right. So, the idea here is is that during the bare markets in Bitcoin, if we are in a bare market in Bitcoin, the idea is you really only go back or pierce the prior cycle high. Well, if we look at this, what do we see? We basically have a zone here of the two highs from 2021. And the idea is is that if we're going to see a drop and a continued bare market, and in the bare market of 2021, we just came down in here and then we had our next bull move. The idea is that could be what we're doing here. So let's assume this, and by the way, could be making a little head and shoulders. Comes down here, let's say 65 to 70,000. That would then replicate this cycle low. In essence, if you think about it, right, what type of decline is that? Well, in 2021, that was a decline of 76%. When we had our decline here in 2017, by the way, it basically went back to that, essentially that level, too. That was an 82%. So, you know, basically the cycles in Bitcoin have a 75% drawdown, at least the last two cycles. But if we look at the measurement from the high here to this target, it's only about 45 to 50%. And we're actually not that far away from it. I mean, you're talking about another 20-ish on Bitcoin as a maximum drawdown. Now, that to a lot of people that bought up here, including Micro Strategy, that could be problematic, right? Especially if you're leveraged. If you're using, you know, 100 times leverage or whatever you are using. Uh, but for those of us that are liking Bitcoin longer term, in essence, this is not that bad. It's a 50% 45% drawdown and then you get the new all-time highs after that. Just a thought.
All right, guys. Enough from me today. I hope you learned something. That's really the goal here, folks, is that I always like to explain the thought process, help people get towards being logical instead of emotional. I never was making money as a new trader when I was trading stocks in the early 2000s. I started in '99, by the way. My first trades were in 1999. But my first five years, I never made money in the markets. I honestly didn't start making money in stocks until about 2005. That's when I turned the corner. So, it took me six years. And the whole key was I went from being a momentum trader trying to kind of buy what was working, and I was always finding that I was, I would generally buy the tops. Um, and then ultimately I started to look at charts and the charts helped me become logical and probability-based, and I turned the corner and it's only gotten better because once you become logical, you don't go backwards, really. I mean, of course, we have emotional episodes every once in a while, but in general, you become better and better at being logical and detaching yourself emotionally, and that's where you make more and more money. My two cents, guys. Happy New Year to all of you. You guys are amazing. Your comments, you watching, please share this with friends and family. I think it's really good information, good educational information, but also insightful in terms of price action. Thank you again, guys, for tuning in. Love you all. Take care.