Bitcoin Stands on a Knife-Edge amid a Backdrop of Geopolitical tension and Failing Narratives
We live in unprecedented times. Mainstream narratives are collapsing all around in real-time us and the macro thesis for Bitcoin (and crypto) appears to be drawing closer.
In this edition, we discuss everything from geopolitics (of which I am no expert), macro cases for and against Bitcoin price-appreciation and of course the technical picture in its immediacy.
Let’s dig in.
Russia Favours Bitcoin as Geopolitical Tensions Mount over Ukraine
Russia has pulled a 180 degree flip on its cryptocurrency approach in a bid to side-step prospective US sanctions should conflict escalate in the contested country of Ukraine.
The u-turn, however, has brought up some significant questions relating to the triad of geo-political affairs, fiat-currencies and bitcoin adoption.
Check out the full article here!
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.
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Bitcoin Retraces at Weekly Resistance
Bitcoin/Dollar retreated nearly 10% after failing to push through weekly resistance at around $44,600.
The coin has so far respected S/R pockets and is poised to make another decisive move this week, possible in the next few hours.
If the BTC/USD pair respects resistance on the daily time-frame, then the lowest price that could still result in an a local uptrend would be a move to $38,500. Should that floor price fall through, then a test of the monthly-super-trend should be well on the cards. However, if we zoom into medium time-frames, the immediate price-action doesn’t seem as dire.
Specifically, the H4 200-EMA can often indicate larger trend reversal, and potentially, trend continuation. As you know, we look for reversal signals on medium to low-timeframes, which could eventually play out on higher-time frames — or at least that’s generally how it’s understood.
Back in August 2021, BTC/USD broke above the exponential moving average in an explosive rally which eventually printed a bearish RSI divergence on H4. The divergence played out but the 200-EMA acted as a pivot where buyers came in.
BTC/USD is in that same situation currently re-testing this moving average. While there are no absolutes, a bounce from this moving average informs us whether this reversal has legs or not.
Notably, the open interest to market-cap ratio has inched lower since late January (H12), showing that there is less leveraged-trading in the system. This means that (while still possible) the risk for a liquidation cascade is lower at $42,000 than it was at $33,800.
Funding rates are marginally positive, though nothing that warrants concern. Prices trending higher on decreasing leverage in the system could indicate that derivative-markets may become subsidiary to spot markets — which is generally a good thing as retail tends to buy more than it sells.
This dynamic comes at a time when crypto exchanges aren’t holding back on advertisements during the US super-bowl. In fact, both Coinbase and FTX spent millions to get access to the biggest sports event in the country. Meanwhile, much of the concern surrounding Ukraine-Russia is increasingly seen as inconsequential and over-hyped by legacy media outlets — who curiously seemed very eager about conflict these past few days. Of course, war is never good so this is a positive development. Meanwhile, disillusionment with the covid-19 narrative, which turns out to have been practically made up is also on the rise as Canada’s Trucker convoy sparks even more protests and convoys all over the world — most recently in France and Israel.
Trust in the fiat-backed political system is at all time lows. The great awakening of the sovereign individual — untethered from legacy self-serving bureaucracies — may be close. The ingredients are there at least.
On the flip side, the US continues to talk about rate hikes, but given how wrong they’ve been on every inflation target and their own economic outlook, confidence in FED policy has dropped off a cliff edge. It may be too late for the FED to do anything. Regardless, interest rate hikes and the potential for ww3 seem to be the primary arguments among bears.
As you may know, I find neither compelling.
Catch you later.
p.s. This is my opinion. It is not financial advice.
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Originally published at https://mailchi.mp.