Crypto exchanges face lawsuit barrage as btc trades above $7,000
This newsletter will be a bit more technical than usual as generic news tends to distort what’s really going on in the markets. Let’s dive into the data.
Bitcoin grinds higher
For better or worse, those following me on Instagram are enjoying (or dreading) some bitcoin price calls, and while it may seem like bitcoin is ready to push back into infinity, the reality is that a sustained recovery won’t be that easy after the major 40% plus capitulation candle on the 12th of March.
From a technical standpoint, as bitcoin trades above the $7,000 mark, it’s possible that this thing slowly keeps edging higher towards the $9,200 CME futures gap, which has a tendency to be filled, as with the previous gap (featured below). Before reaching that ultimate target though, bitcoin must convincingly break passed its previous highs at $7,300 (CME futures) and confirm the $7,000 level as support. As soon as this happens, we’ll be off to the races towards $8,000, where a strong rejection is likely due to massive amount of traded volume in the range. Standard TA dictates that previous support becomes resistance and this area lines up with a lot of trading volume.
The Moving average convergence divergence (MACD) is also looking bullish on both the daily and weekly time frame, suggesting that this correction has some juice in it.
While the fact remains that bitcoin and the other cryptoassets continue to regain lost ground, with bitcoin up 5.37% at $7,165, and Ethereum up 8% at $154 at the time of writing, there is no such thing as a straight line up. In fact, I wouldn’t be surprised to see bitcoin trading back within the $6,000 range in April/May. The bearish picture is also quite compelling, with bitcoin currently sitting at the .618 Fib level (measured from the 7th of March), where the initial stages of the dump began. Technically, it is entirely possible for bitcoin to retest the 200 WMA at $5,600, where buying pressure would flip in favour of the bulls once again. That being said, this bearish scenario seems less likely as bitcoin continues to demonstrate clear strength as we approach the halving event.
Weekend stop hunting is in the air!
Weekend trading is rarely fun in crypto, as lower volumes mean that big players can easily go on a stop-loss hunting spree; and that’s exactly what happened during the weekend chop! Several “scam wicks” suggesting breakouts to either side quickly left short term trades gasping for air as bitcoin appreciated and dropped within minutes in some cases. This is why setting a stop loss above one’s entry position is arguably one of the safest ways to trade the minute and hourly charts — though admittedly not the easiest to pull off.
In any case, the above 45-minute chart isn’t relevant for the long-term picture, but serves as insight into what happens on the lower time-frames during the weekend — not pretty.
No bailouts required: BTC Hashrate increases 10%
On the plus side, bitcoin’s hashrate has also recovered 10% since the local low as both new and old miners commit to the bitcoin network amidst this uncertainty. Should bitcoin continue to perform in spite of global markets (which would be the real test), the decoupling effect would be a major victory for the asset’s narrative. However, bitcoin only needs to maintain relative stability should a continued sell-off across global markets persist.
Exchanges come under fire
On Friday a heavy barrage of lawsuits were filed against some of the biggest cryptocurrency exchanges around, including Binance and Bitmex. The lawsuits allege a number of securities violations and will undoubtedly be contested in the coming months to years. However, some complexities may arise given that many of the defendants are not US-based. The coordinated series of lawsuits were issued by the same firm that represents plaintiffs in litigation against Craig Wright (aka faketoshi) and Bitfinex. Under ordinary circumstances, it’s entirely possible for these lawsuits to take years to get settled so given the current covid-19 climate, there’s no telling how long this will really drag on.
Counter indicator? Mike Novogratz might give up on btc as it trades above $7,000
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Originally published at https://mailchi.mp.
