Bitcoin Futures Data Suggests A Decisive Thrust Is Around the Corner

Bitcoin market action is at a cross roads which could weigh in on whether the cycle will extend well into 2022 or turn into an explosive rally in the weeks ahead.

Let’s dig in.

Kraken Intelligence Report: Litecoin Data Suggests Crypto Entering “Price Discovery” Mode

The report starts out by noting that Litecoin is the most successful Bitcoin fork which has a tendency of taking the spotlight when the market least expects it.

Check out the full article here!

Dear readers,

The purpose of this newsletter is to provide context to cryptocurrency markets. This analysis takes time to write-up and it’s released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service. While I cannot promise perfection I do my best to be honest and transparent. I am also working on keeping my wording simple and to the point. Please bear with me.

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Technically speaking

Decisive Bitcoin Move on The Horizon?

This brings the coin’s retracement from all time highs to -22.44%, which is within the confines of typical ‘healthy consolidation / profit taking’.

With the monthly close less than 48 hours away, BTC/USD has probably demarcated the local low for the time being. In order for bulls to have a shot at all time highs, the resistance area around $59,500 needs to flip into support. The technical falling-wedge structure suggests that an explosive move could bring the crypto closer to all-time high territory. This would coincide with an S/R pivot flip and subsequent retest of the range high.

On the daily time-frame, BTC/USD is not in a down trend as there is no ‘lower high’ structure that would confirm this, nor have prior lows been taken. As such, all, current price-action is a correction within an uptrend.

Notably, revisiting the range low without forming a ‘lower high’ is likely indicative of an imminent darth maul liquidation candle. In that case, the weekly super-trend support rests at $44,460. If Bitcoin revisits this support, which is not unlikely (now or later in this cycle) in the case of a lengthening cycle, holding this level on a closing basis is critical to the bull-market thesis.

Perpetual futures markets tell a story of explosive price-action. While BTC/USD is trending higher on the daily and weekly time-frames, futures data suggests that a liquidity event is around the corner.

Per the above chart, the open interest to market cap ratio is at a pivotal point. Both 1.8 and 1.4 values are directly correlated with market direction. If the OI/MCap ratio trends higher along with the bitcoin price, the systemic risk for a downside liquidity event increases and could coincide with a ‘dead cat bounce’ scenario in preparation for strong sell off.

Bear in mind, this chart largely indicates that a liquidity event is near, it doesn’t necessarily forecast in which direction. This is clear when you consider recent history. That being said, funding rates are slightly positive, but nothing that would merit concern in the context of recent history.

The data is born out of a context of negative market sentiment, with the fear and greed index showing a value of 33, slightly up from 27 yesterday.

All in all, the stage is set for an interesting couple of months. From where I’m standing, I feel obligated to outline both scenarios — as nothing is set in stone, especially when one considers lower time-frames. One thing is certain, however, BTC/USD is far healthier at these prices than it was back in Q1 and early Q2.

Catch you later.

p.s. This is my opinion. It is not financial advice.

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Christopher Attard
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