I think this will be my last update on Bitcoin during this consolidation period below $31k. The period could end soon, but regardless of when the next big wave occurs, this is an attempt to illustrate, in advance, the WHY behind the next move.
As I've mentioned several times already, the monthly 9 EMA (orange) and the 50 MA (red) seem to be quite important. This is the closest the two monthly moving averages have been to crossing in Bitcoin's history. This illustrates really how much momentum has stalled. Any large move to the downside from here should cause those moving averages to cross, which could flip algorithms to sell at those resistances rather than buy. This could ultimately generate quite a bit of profit for short sellers.
However, a new wave down has not yet occurred. On the left, you can see that Bitcoin might be trading in a large ascending broadening pattern, with volatility INCREASING as time moves on. A break down from this pattern, therefore, I believe is likely to produce new lows. The ascending trendline currently corresponds with the monthly MA support - so, my assumption is that if the market is STRONG, any test of that trendline and MA support should produce a strong bounce. However, if we see a test and buyers fail to show up, that could signal serious weakness.
Let's look at a couple other factors across the crypto market. For instance - Litecoin. LTC seems to have broken out of its bear market downtrend and retested it as support. It should NOT go much lower than the $95-96 area if it is to continue to the upside. The breakout needs to sustain, otherwise it's at risk of failing. Bitcoin will need to do the same, if it breaks out of the $30-31k range.
The TOTAL crypto market cap is still a bit weak, and trading right near major horizontal resistance
TOTAL2 (altcoins) appears to be in trouble. It's very close to weekly moving averages. A death cross just occurred, so any downside from here could leave the impression on the viewer (or algorithm) that it has entered a much longer downtrend. This support level is really all that remains.
Overall, I would say crypto is not out of the woods - though Bitcoin is fairly close to a technical breakout. However, the only "positive" news has been the Bitcoin ETF filings from major investment firms. The grayscale negative premium has also finally reversed to the upside. This is likely only due to speculation - there is no guarantee at all that a Bitcoin ETF would appreciate in value. In fact, there are examples where ETFs never again reach their initial listing price. Bitcoin has very little practical usage outside of trading, in my opinion. It is not currently a growing industry, but a contracting one.
I also believe the next "black swan" event could be right around the corner. Binance is not in a good state (no surprises there). Michael Saylor is in too deep, with leverage. Stablecoins are the only corner of the market yet to be regulated. These are the perfect ingredients for another market catastrophe. I think it's wise to manage risk, despite the potential for a budding uptrend.
As always, this is not meant as financial advice, but for speculation and entertainment only. Thank you for reading! My next post will be a more comprehensive market analysis, looking at what's going on beyond crypto. Let's face it, crypto has very little baring on the real economy.
As I've mentioned several times already, the monthly 9 EMA (orange) and the 50 MA (red) seem to be quite important. This is the closest the two monthly moving averages have been to crossing in Bitcoin's history. This illustrates really how much momentum has stalled. Any large move to the downside from here should cause those moving averages to cross, which could flip algorithms to sell at those resistances rather than buy. This could ultimately generate quite a bit of profit for short sellers.
However, a new wave down has not yet occurred. On the left, you can see that Bitcoin might be trading in a large ascending broadening pattern, with volatility INCREASING as time moves on. A break down from this pattern, therefore, I believe is likely to produce new lows. The ascending trendline currently corresponds with the monthly MA support - so, my assumption is that if the market is STRONG, any test of that trendline and MA support should produce a strong bounce. However, if we see a test and buyers fail to show up, that could signal serious weakness.
Let's look at a couple other factors across the crypto market. For instance - Litecoin. LTC seems to have broken out of its bear market downtrend and retested it as support. It should NOT go much lower than the $95-96 area if it is to continue to the upside. The breakout needs to sustain, otherwise it's at risk of failing. Bitcoin will need to do the same, if it breaks out of the $30-31k range.
The TOTAL crypto market cap is still a bit weak, and trading right near major horizontal resistance
TOTAL2 (altcoins) appears to be in trouble. It's very close to weekly moving averages. A death cross just occurred, so any downside from here could leave the impression on the viewer (or algorithm) that it has entered a much longer downtrend. This support level is really all that remains.
Overall, I would say crypto is not out of the woods - though Bitcoin is fairly close to a technical breakout. However, the only "positive" news has been the Bitcoin ETF filings from major investment firms. The grayscale negative premium has also finally reversed to the upside. This is likely only due to speculation - there is no guarantee at all that a Bitcoin ETF would appreciate in value. In fact, there are examples where ETFs never again reach their initial listing price. Bitcoin has very little practical usage outside of trading, in my opinion. It is not currently a growing industry, but a contracting one.
I also believe the next "black swan" event could be right around the corner. Binance is not in a good state (no surprises there). Michael Saylor is in too deep, with leverage. Stablecoins are the only corner of the market yet to be regulated. These are the perfect ingredients for another market catastrophe. I think it's wise to manage risk, despite the potential for a budding uptrend.
As always, this is not meant as financial advice, but for speculation and entertainment only. Thank you for reading! My next post will be a more comprehensive market analysis, looking at what's going on beyond crypto. Let's face it, crypto has very little baring on the real economy.
Comment:
Alright, last line of support before $26.8-27k.
Comment:
There's the trendline touch. Looks like a small initial bounce