In this issue:
- Bitcoin analysis
- Ethereum analysis
- Latest happenings
- Listening material
Bitcoin is down -1% week-on-week as it faces mid-range resistance in an indecisive market.
Bitcoin exchanges hands at $24,000 at the time of writing, with local price-structure offering compelling reasons for a modest retracement in the immediate short term.
Briefly, BTC/USD is within a rising wedge structure — a technically bearish pattern with a target of $20,700. Whether price ever reaches that level is another question.
After the Monday open ($24,300), price pumped to $25,200 only to retrace all gains in the following hours. Consequently, price-action on the H4 time-frame printed a number of bearish divergences such that price trended higher, while the Relative Strength Index created lower highs.
Additionally, price also swept a key high (last week’s high) and has yet to sweep last week’s low ($22,650). Typically, deviations of key levels tend to open the door for price to traverse and sweep the other side of liquidity. Given the local context, an H4 close below $23,700 makes a swing lower more probable.
On the flipside, reclaiming $24,300 (Mon. open) means another impulsive attempt to break long-term mid-range resistance. If successful, an impulsive move to $26,000-$27,000 is on the table. However, ‘fake-out’ moves should be a serious consideration given that price is beginning to face sell-side pressure from market participants that shorted the $30,000 breakdown.
It goes without saying that Bears will defend their positions as prices traverse higher. In my view, this BEARlin wall will be torn down sooner or later.
Ethereum/Dollar is down -1.7% week-on-week. Unlike Bitcoin/Dollar, ETH has already eclipsed its June high of $1,974, spurred by a second wind stemming from the ‘merge hype’.
From trough to peak, ETH/BTC has soared 67% in just over two months. It has essentially gone vertical, lending credence to arguments advising caution on this pair from here on out.
Still, ETH/USD is below last week’s low as well as its opening price this week ($1,937). This opens the door for prices to slide towards $1,650 if Bitcoin/Dollar weakness takes hold.
Given the impulsive move on ETH/BTC which has not built consolidation levels below, the second largest crypto is on shaky ground in my view.
Regardless, reclaiming $1,975 on H4 opens the door to $2,300. Conversely, a fresh local low below $1,850 means a sweep of last-week’s low is probable.
Having said all that, there is a strange smell of ‘psyops’ in the air. The local bearish setup is too perfect. Admittedly, this is no reason to not take it seriously. But on a larger time-frame, Bitcoin has not experienced much of a relief rally when considered in its full context.
Bear in mind, the crypto market has never seen this amount of continuous forced selling ever, and fundamental market-shifting events have happened (bankruptcies).
While a local downturn shouldn’t be surprising, I find it hard to entertain over-the-top doom scenarios without having to challenge decades of easy monetary policy. Confident doom-porn advocates have a lot of convincing to do, both in terms of printing new lows, but also in terms of fundamental arguments.
The ‘this time it’s different’ mantra goes both ways, and until there is tangible evidence that the Federal Reserve won’t take the path of least resistance when push comes to shove (i.e. that they’ll tighten and create a depression), then a crack-up boom in the months ahead is more likely in my view. Bear in mind, a Powell ‘pivot’ does not mean restarting ‘QE’, but pausing or lowering ‘QT’.
The bar for a robust reversal in risk assets is very low.
- Michael Saylor: Bitcoin Will Demonetize Gold.
- Report: BlackRock New BTC Trust Lays Foundation for Central Bank Adoption.
- Crypto Lender Hodlnaut Freezes Withdrawals Citing “Market Conditions”
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 or financial advice. While I cannot promise perfection I do my best to be honest and transparent.
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