Bitcoin: Bears Still In Control.

2022年5月1日

Bitcoin is trying to establish yet another double bottom like formation, but there is no reason to get excited. Momentum across the board is bearish which means any buy signals are likely to be limited and/or lack follow through. Focus more on the levels ahead that offer some possibilities, NOT try to guess where Bitcoin is going next.

In case you haven't noticed, Bitcoin does not trade in isolation. It is affected by other markets like? The S&P500. On Friday, the S&P generated a sell signal and closed near its lows. This week, there is a possibility that the main support breaks which can lead to a more dramatic sell off. If the S&P can't rally, Bitcoin is going no where. Rising rates (see the bond market, see the U.S. Dollar) put bearish pressure on everything, especially highly speculative instruments like Bitcoin and alt coins.

So what to do now? Everyone tries to figure out the next move, point A to point B. Let the market figure it out and instead be prepared for the possibilities and potential setups that can develop at point B.

On my chart, there are two areas that I am watching that can potentially become point B. The 36K support OR the 40K resistance. I don't know which level the market will choose, but I will at least be prepared for some type of price action at either one of these levels.

IF 36K is reached, I will be looking for long setups BUT with very limited expectations. A reversal at this level does NOT guarantee any kind of sustainable change of the bearish environment. Knowing this means profit targets should be very conservative and expectations should be low.

IF 40K is reached, it is an area to be watching for new sell signals. The current environment favors a bearish scenario. This is where higher expectations are within reason. A test of 35K is still possible over the next few weeks. I don't short Bitcoin, so for me, this means I stay out completely.

Reacting price changes at the moment or other random information is the least effective thing you can do. Prepare in advance, have a plan. As long as the rising rate environment continues to assert itself (just watch the U.S. Dollar or bond market), bullish expectations or any dreams of a magical rally should be extremely limited. The cycle will change at some point, BUT the change will be a process which has yet to begin.

Thank you for considering my analysis and perspective. I hope you find it helpful.