The Crypto Comms #19
A swift crypto sell-off took the market by storm as participants scrambled to get on the right side of the trade. Does this mean risk-assets are preparing for another meltdown?
Let’s dig in.
In this issue:
- Bitcoin analysis
- Ethereum analysis
- Latest happenings
- Listening material
Bitcoin/Dollar broke down to a low of $20,700 following a swift market sell-off last Friday. The pair lost nearly 18% of its value from peak to trough before finding support.
BTC/USD is down a modest 0.25% on the day, and is poised to make another move shortly. On a daily time-frame, price broke down from the falling wedge, perfectly hitting the technical target.
With price accepting below the quarterly volume-weighted average price, BTC/USD has taken a bearish posture, opening the door to $19,000 and $17,600 once again.
However, the inefficient gravitational blast lower has opened up the possibility for a robust reversal to around $24,000.
Presently, all eyes are on immediate overhead resistance at $21,700 and $22,200, respectively. Price has been chopping around with indecisive half-hearted attempts to either side so far. But if resistance is flipped into support, the runway towards last week’s high is open once again.
The market’s reaction to higher levels is a key indicator as to whether the mean reversion is back in play or dead on arrival.
Notably, short-liquidations have been on a steady decline since November 2021, with declining interspersed spikes appearing throughout the bear market. The Bearlin wall has held strong so far. But as buyer interest picks up at depressed levels, and as a macro pivot looms, how long will it be before cracks turn into fissures?
Ethereum/Dollar lost 24% from peak to trough, but on lower-timeframes ETH/USD has maintained a cleaner setup than BTC/USD.
A price-to-RSI triple bullish divergence has developed on the H4 as price rests on the Quarterly VWAP.
ETH/USD overhead resistance rests at $1,700-$1,740. On the flip-side, continuation downward opens the door to $1,337 and the larger pivot point at $1,270.
As alluded to earlier, if pumps are met with fierce selling for risk assets, then it’s likely a liquidity grab (filling the inefficiency) before sellers step in to push prices to new lows.
The context of ‘psyops’ mentioned last week is still compelling given the somewhat pathetic ‘mean reversion’ crypto risk-assets just witnessed.
A $30,000- $35,000 Bitcoin price would also fill multi-month-old CME gaps while also resolving inefficiencies in a relatively illiquid market (compared to when QE was in full swing).
In terms of the economic calendar for the week, Friday’s US PCE data print for July could be consequential. Specifically, US PCE data could indicate that inflation has peaked in the eyes of the Fed, despite being a secondary indicator.
If PCE (personal consumption expenditure) comes down and surpasses expectations, the Fed will have the political capital to pivot.
This would be bullish for risk-assets as markets head into the end of the month.
- The Looming Crypto Privacy War.
- Citigroup: UK inflation to Reach 18.6% in Q1 2023.
- Tether Disclosures Reveal $28.9 billion in US Treasury Bills.
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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