The Crypto Comms #38; Resting Liquidity
In technical analysis, words have probabilistic implications — there are no certainties, only indicators analysis and fact-based convictions. That said, Bitcoin technically ‘confirmed’ its reversal trajectory by reclaiming pivotal moving averages. In this context, which macro draws on liquidity should be considered?
In this issue:
- Bitcoin analysis
- Opinion: Crypto Vs. AI
- Latest happenings
- Listening material
Bitcoin has defied gravity, up 12% week-on-week, exchanging hands at $22,900 at the time of writing. The scarce asset is well above its cost-basis ($19,800), and it could be argued that BTC is in the early stages of a new bull run. Historically, when price flirts with its long-term realised average, this tends to indicate the end of a bear market. When BTC/USD heads North of its realised price, it offers confluence for continued positive momentum, while also being a support area to consider bidding.
Is Bitcoin trending?
On a weekly time-frame, Bitcoin is below the 200-EMA (blue), but above the 20-EMA (white). BTC hasn’t reclaimed the latter moving average since March 2022. The price squeeze between moving-averages will either confirm a larger trend reversal (i.e. bull run), or result in a rejection (with ample wiggle room between the averages). Provided Bitcoin doesn’t lose the $19,860 (20-ema), there is a convincing case to be made for upside continuation in the weeks ahead.
Additionally, it’s evident that big money is on the side-lines in this disbelief rally; but perhaps not for much longer. Per Glassnode data, the stablecoin-supply-ratio (SSR) oscillator is showing significant capital rotation into Bitcoin from stablecoins. After over 400 days of funds flowing in the opposite direction (BTC into stablecoins), what are the odds that this radical shift is short lived?
Indeed, Bitcoin appears to be in the initial stages of a trending market. And if the macro environment is as terrible as it looks, a crack-up boom scenario is definitely in the cards.
On a long-term time horizon, there are three striking liquidity levels; $30,700, $42,900, $57,700. Each level represents an order bloc of +/-2%. These targets will be taken out gradually, and potentially over a period of months and maybe even years, before Bitcoin makes another attempt at the elusive 6-digit area.
Locally, liquidity levels of interest are confined by Monday’s range. The 12-hour 20-ema rests at $21,600 at the time of writing (ticking higher every 12 hours). If there has been a tangible regime change, whereby side-lined buyers are eager to get exposure, then this moving average presents a potential front-running opportunity. Short-term plays into 200-weekly EMA resistance are fair game.
Meanwhile, the US government is going through the pointless theatre as to whether to raise the debt-ceiling again. US national debt stands at $31.5 trillion, after having surpassed the $30Tn number in October. Of course, the debt-ceiling will be increased.
Not only is there bipartisan agreement to increase it, but US politicians have proposed eliminating the debt ceiling all together, which would allow unlimited borrowing. This is the status-quo minus the theatrics.
Bureaucrats already have unlimited bank accounts — now they’re proposing that it should be formalised. They’re done pretending.
Buy Bitcoin and Litecoin.
- Digital Currency Group’s Genesis Global files for bankruptcy protection
- EU’s final vote on MiCA regulation postponed until April
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Tuesday. I am not perfect and this is not a science — nor is this newsletter analysis a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.
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