The situation is starting to be reminiscent of 2021 late summer

Bitcoin has been on an impressive winning streak for the past two months, seeing its market cap dominance rise more than 8%. Furthermore, today, it broke above $42,000, hitting values unseen since April 2022. While that is getting bulls drunk with greed, a few developments stand out to us. By now, probably many of you know that we have been tracking the number of Bitcoin addresses very closely this year. As a matter of fact, we pointed out the dynamics associated with movements among these addresses during Bitcoin’s peak in April and July 2023, as well as shortly before the start of the most recent rally that erupted on 16th October 2023. Interestingly, the number of Bitcoin addresses with balances exceeding 1,000 BTC is just slightly below the level at which large speculators began to sell into retail’s hands in April and July 2023. We would say that is a somewhat worrisome development as the vibes are starting to match those of the 2021 summer, with bulls feeling invincible and many news reports of shorts getting liquidated in large quantities. With that said, the reality is that Bitcoin remains a speculative asset, and weakness in the stock market is likely to weigh on its performance. Just like since mid-October 2023, we continue to wait on the sidelines. However, we are growing increasingly suspicious about the market’s overall health (including stocks and crypto).

Illustration 1.01
Illustration 1.01 displays the daily chart of BTCUSD and three trendlines (parallels).

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of multiple indicators.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for an individual investor to take any trade action. Therefore, your own due diligence is highly advised before entering a trade.