BTC: the trend towards capitulation
已更新
In line with my previous analyses of Bitcoin and the crypto space, we are still in the mark down phase. We hit my local top target perfectly (see my idea linked below: Bitcoin: the big short squeeze) and are about to decide where to go next...
Unlike inflation suggests, cash is stil your best bet to maximise buying power at the bear market macro lows. Many analysts don't dare to say but I have been saying it since early December: the crypto space is trending towards capitulation.
We have a few important reasons for this mark down phase:
- raising interest rates (starting in March)
- balance sheet reduction Fed
- geopolitical tension around Urkaine
- regulation and tax on crypto (Biden's crypto bill)
The first two happenings are already major enough to drain liquidity across the risk on markets. In order to control inflation the fed will drain liquidity on equities, crypto and the housing market resulting in more demand for work and the USD. With more demand in the labor market and less jobs available, inflation will be tamed on the CPI, however I do believe commodities / energy will stay expensive.
The Fed's new policy combined with political unrest, will shift focus further into commodities and risk off assets. Gold is surging against both the USD and Bitcoin and is just shy 10% from its ATH. If we add Biden's crypto bill it won't get any better. The US government has huge deficits on its balance sheets and it won't surprise me if they like to squeeze the crypto millionaires into a hefty gains tax. Unfortunately, the normal man suffers from the shaky policies of sub par politicians.
Lastly, if we look at price action since the early majority stepped into this market pre-2018, we see a nice upward channel on Bitcoin, where we have traded the upper ranges more than the lower zones. A retest of the middle of the channel (currently around 30K) would make sense. It is at this point where we can define a bounce upwards or capitulation.
On the left chart you see BTC's 2 weekly price action with Heikin Ashi candles still showing the red trend inside a channel downwards. A break of the channel upwards and a flip of the candles turning green could see us retest bull market structure at around 50K. A break below 39K in the coming week could lead us back towards the local swing lows at around 33K. This is a crucial level for anyone holding a (hodl) long position in crypto (BTC or alt coins) - if we break this level and retest the yellow dotted trend line as resistance we can prepare for another 40 to 60% drop in the crypto market.
On the right chart you can see the local support and resistance levels based on the 2 weekly trend. (in my previous idea, linked below you'll find the weekly levels) As you can see we are at the crossroads between a mark down and mark up phase being 28% away from a bull market and 26% away from capitulation. Thus, a tricky zone for trades in any direction, be cautious. It will be interesting to see how market makers will prepare during the weekend for next week's price action, will they drop during the weekend frontrunning institutions or will they mark up price and take the shorts out before another drop down?
We will have to wait and see what happens and I do not have a crystal ball but all confluences and data combined I do conclude we are up for a wild ride in crypto until Q2 / Q3 of this year. In the best way you take advantage of any scenario that could unfold with a hedge strategy up or down. I hope this idea and chart are useful for you all and I appreciate a like or a comment, I am here to help you win from institutions or markets makers, so good luck to you all!
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
Unlike inflation suggests, cash is stil your best bet to maximise buying power at the bear market macro lows. Many analysts don't dare to say but I have been saying it since early December: the crypto space is trending towards capitulation.
We have a few important reasons for this mark down phase:
- raising interest rates (starting in March)
- balance sheet reduction Fed
- geopolitical tension around Urkaine
- regulation and tax on crypto (Biden's crypto bill)
The first two happenings are already major enough to drain liquidity across the risk on markets. In order to control inflation the fed will drain liquidity on equities, crypto and the housing market resulting in more demand for work and the USD. With more demand in the labor market and less jobs available, inflation will be tamed on the CPI, however I do believe commodities / energy will stay expensive.
The Fed's new policy combined with political unrest, will shift focus further into commodities and risk off assets. Gold is surging against both the USD and Bitcoin and is just shy 10% from its ATH. If we add Biden's crypto bill it won't get any better. The US government has huge deficits on its balance sheets and it won't surprise me if they like to squeeze the crypto millionaires into a hefty gains tax. Unfortunately, the normal man suffers from the shaky policies of sub par politicians.
Lastly, if we look at price action since the early majority stepped into this market pre-2018, we see a nice upward channel on Bitcoin, where we have traded the upper ranges more than the lower zones. A retest of the middle of the channel (currently around 30K) would make sense. It is at this point where we can define a bounce upwards or capitulation.
On the left chart you see BTC's 2 weekly price action with Heikin Ashi candles still showing the red trend inside a channel downwards. A break of the channel upwards and a flip of the candles turning green could see us retest bull market structure at around 50K. A break below 39K in the coming week could lead us back towards the local swing lows at around 33K. This is a crucial level for anyone holding a (hodl) long position in crypto (BTC or alt coins) - if we break this level and retest the yellow dotted trend line as resistance we can prepare for another 40 to 60% drop in the crypto market.
On the right chart you can see the local support and resistance levels based on the 2 weekly trend. (in my previous idea, linked below you'll find the weekly levels) As you can see we are at the crossroads between a mark down and mark up phase being 28% away from a bull market and 26% away from capitulation. Thus, a tricky zone for trades in any direction, be cautious. It will be interesting to see how market makers will prepare during the weekend for next week's price action, will they drop during the weekend frontrunning institutions or will they mark up price and take the shorts out before another drop down?
We will have to wait and see what happens and I do not have a crystal ball but all confluences and data combined I do conclude we are up for a wild ride in crypto until Q2 / Q3 of this year. In the best way you take advantage of any scenario that could unfold with a hedge strategy up or down. I hope this idea and chart are useful for you all and I appreciate a like or a comment, I am here to help you win from institutions or markets makers, so good luck to you all!
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
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