Market Milestones: So Many Options!

Last week was marked by selling, and this week, the markets have been retesting last week’s bearish candle. The SPY, QQQ, DIA, and IWM have all retested the 50% level of last week’s bearish candle as of Thursday night. Zooming into the daily chart, the SPY and QQQ retested the Trump election retest gap and are now bouncing after bulls held firm to that support. As long as last Friday’s low holds, we can expect a further grind up into new highs. However, if the markets start breaking below last Friday’s low, we could see additional selling heading into December. In that scenario, the $565.00 level and the 100-day SMA on SPY should act as strong support and provide a good buying opportunity.

SPY

The exuberance in the stock market is palpable right now, but it pales in comparison to the sheer euphoria in the crypto space. By the time you’re reading this, Bitcoin may have already hit the $100,000 mark—an incredible, some would say inevitable, milestone. However, many thought this big moment would happen during the last cycle before Bitcoin peaked at $69,000 and plummeted 77% into a long crypto winter.

Looking at past cycles, it’s clear that large drawdowns during the strongest parts of bull runs are normal. However, history also shows that Bitcoin can run higher and longer than most expect before these corrections occur.

• 2012 Cycle: Bitcoin experienced a massive parabolic move followed by an 80% drawdown, resembling a mini-cycle within the broader cycle. After breaking out again in October 2013, Bitcoin saw two 25% drawdowns and one 50% drawdown before peaking in December 2013. The first bull run in the 2012 cycle lasted 13 weeks, while the second lasted 7 weeks.

• 2017 Cycle: Following the breakout from the “Post-Halving Accumulation Zone,” Bitcoin endured five drawdowns of over 30%, each lasting 2–5 weeks. This "Post-Halving Party Zone" spanned 50 weeks before peaking.

• 2020 Cycle: There was only one significant drawdown, occurring 12 weeks into the post-halving rally. Many argue that the true cycle top occurred in April, as the truncated November peak was part of the broader correction. This means that the parabolic bull run lasted about 25 weeks.

This history highlights Bitcoin’s tendency to rally vertically for months with minimal pullbacks, creating intense FOMO and reinforcing the “buy high and sell higher” mentality in new traders—until the inevitable cycle shift leaves them rekt. At just three weeks into the current “Post-Halving Party Zone,” the rally may feel extended but could continue longer than many anticipate.

Now that we have discussed bitcoins proclivity for leaving everyone in the dust, let’s review some signals that may give potential buyers some hope. The following are signals that a pullback or retest could occur within the next six weeks, providing latecomers a better entry point:

For those hoping for an entry or a chance to add to their positions, here are some potential signals that a pullback or retest may occur before year end:

• $100,000 milestone: This psychologically significant level is a logical profit-taking zone for many investors.

• SOL at all-time highs: Solana, one of the strongest altcoins, is hitting a key resistance zone, at its previous all-time high of $260.00.

• ETH resistance: Ethereum, while underperforming (still 30% off its all-time highs), is approaching its bearish trendline resistance that has held since March of this year.

• Elliot Wave: The Elliot Wave pattern we are tracking on Bitcoin has us completing wave 3 of a larger wave 3. This means that 4th wave correction needs to happen before the next big push higher on Bitcoin That said, Bitcoin's 5th waves are notorious for extending, so this correction could be delayed.

BTCUSD

Before we dive into the exciting news for this week, let’s address an important topic in crypto: taking profits in crypto always makes you feel silly and wrong. You’ll never sell at the absolute top, and prices often go higher, sometimes much higher, after you exit. However, if you’re trading, profit-taking is an essential part of the equation. Accept now that you won’t perfectly time the top, and instead, embrace the wealth crypto has helped you create by taking risk off the table. To combat FOMO, let partials ride so you can still participate in further upside.

If you’re committed to HODLing, ideally, you were accumulating throughout 2022 and 2023—or even in 2024 when Bitcoin consolidated in a fourth wave for eight straight months. That low dollar-cost average provides plenty of breathing room to weather larger drawdowns. Just remember, HODLing altcoins is a quick way to crater your portfolio. Stick with the "big daddy" of the crypto world—the tried and true Bitcoin.

In an exciting development for Bitcoin, IBIT (BlackRock’s Bitcoin ETF) launched options trading on Tuesday. They introduced weekly options for Bitcoin on Thursday, giving investors so many more options for their crypto investing strategy. On launch day, I sold December $45 puts for $0.90—a 2% return for one month and 15% below the current price. That’s incredible, especially since selling puts on up days isn’t the smartest thing to do. Imagine the juicy premiums we will see on down days! Of course, selling puts means you must be ready to purchase the stock and the risk on getting assigned with an asset like Bitcoin is especially high.

The options chain on IBIT is by far the best and will continue to be the best as IBIT is the dominant ETF in the space. For this reason, I am sticking to IBIT for any and all bitcoin ETF plays. This is yet another massive step forward for the crypto space. Exciting news for bitcoin is coming at us so fast—it’s hard to keep up!

IBIT

Speaking of options, have you checked out MSTR lately? Things are absolutely wild. As you may have heard, MicroStrategy is executing a Bitcoin treasury strategy where they are selling shares of MSTR to finance huge Bitcoin purchases. Short sellers were squeezed to death all week as MSTR ripped higher moving over 60% from this Mondays low to Thursday’s high. On Thursday, MSTR printed a $173 candle, as selling finally kicked in and MSTR plummeted.

During this drop options premiums went through the roof. The expected move over the next two weeks is $200—on a $400 stock! At one-point Thursday, the $280 strike (two weeks out) was paying $26.00, nearly a 10% return for two weeks at 25% below the current price! For context, a “good” benchmark is 1% per four weeks on a put sale. If you’re selling these puts, be prepared to own those shares because anything can happen.

 MSTR