Buy The RIP: Macro Indicators Say Bitcoin Has Bottomed
Bitcoin had better days. But every bear market bottom is a new beginning, and this is the correct approach to Bitcoin and cryptocurrency markets.
Bitcoin/Dollar has gone through seven weeks of non-stop selling, rug-pulling and any positive tailwinds for the time being as sentiment dives to record lows. But allow me to present the hopeful case in this hour of widespread panic, misery and dread.
Dear readers,
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is 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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El Salvadorian President Nayib Bukele to Host 44 countries to Discuss Bitcoin
On Sunday May 16, the President of El Salvador, Nayib Bukele said that 44 countries will meet in El Salvador on Monday to discuss the Bitcoin standard.
Read the full article here!
Technically Speaking
Macro Indicators Say Bitcoin Has Bottomed
Bitcoin/Dollar dropped 44.5% in a non-stop seven-week downtrend, closing at $31,300 on Sunday. After the devastating fall to the 200-weekly exponential moving average ($26,600), BTC/USD gained 17% over the weekend, marginally holding the $30,000 psychological level on a weekly basis.
As mentioned, price-action has been characterised by a severe acceleration downtrend, exacerbated by the 80,000 Bitcoin distribution by the Luna Foundation Guard (LFG) last week.
So far, it’s been absorbed by the market without too much turmoil (high liquidity), and LFG now hold only 313 BTC.
At the time of writing, BTC/USD exchanges hands at $29,700, showing both low ( LTF) and high-time frame signs of reversing.
Besides the potential LTF inverse head & shoulders structure discussed in the telegram chat, BTC/USD has closed the week within a macro falling wedge structure, the target of which is the top of the wedge ($69,000).
In the immediate short term, both $33,000 and $36,000 would likely offer pockets of resistance where sellers step back in. However, the systemic risk event has passed and the Luna Foundation no longer have enough bitcoin to distribute and move the market.
In the unlikely event that BTC/USD steers south to make fresh lows, the lowest price-point I see this going is $24,000, followed by a swift recovery from which the Bitcoin price never returns.
Bitcoin has also reached its macro support zone on the logarithmic growth curve. This curve is a statistical approach which uses historical data to anticipate future prices. In this case, historical log. growth data is used to develop a price-trajectory into the future.
Meanwhile, dormancy flow, which is the ratio of the current market capitalisation to the annualised dormancy value has also hit historic levels.
$BTC entity adjusted dormancy flow just reached a level not seen since January 14. 2015. pic.twitter.com/AuXiZ8Xqlz
- Chris on Crypto (@ChrisOnCrypto1) May 16, 2022
All in all, Bitcoin is within a macro-bottoming & accumulation phase with historically significant tailwinds buttressing the argument for a long-term reversal. Notably, the process can involve weeks and sometimes months of ranging behaviour, but after a never-seen-before 7-week strong downtrend, the possibilities for upside are very compelling.
p.s. This is my opinion. It is not financial advice.
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Christopher Attard
Founder of Chris on Crypto
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Originally published at https://mailchi.mp.
