Bitcoin - Rally continues but restrictions on withdrawals too!
Updated
In the previous post, we abandoned our bearish price targets as the trend turned neutral. We also noted that we saw short-term upside potential near 24 000 USD while still seeing medium/long-term downside potential coinciding with 2022 lows. Since then, Bitcoin bounced up and retraced above 20-day and 50-day SMAs, which hints at a powerful correction. Due to that, we will pay close attention to the volume. Any new peaks in the price accompanied by declining volume will raise caution to us.
Nevertheless, we currently foresee more upside potential for BTCUSD near the 26 500 USD price tag. Indeed, in extreme conditions (ones like in the Ethereum over the past week), BTCUSD could go as high as 32500. Although, at the moment, we doubt that will happen. Our rationale comes from the premise that the FED is expected to increase interest rates during its upcoming meeting, which will further slow down the U.S. economy. As a result, we view this as detrimental to the stock market and cryptocurrencies.
Due to that, we speculate that what we are currently seeing in the cryptocurrency market might potentially be the ultimate bull trap on the horizon. We draw this conclusion from mounting calls for the bottom and sky-high prices despite the prospect of a global recession; this sentiment does not align with what typically occurs when market participants capitulate. Additionally, a large magnitude of the moves up (also in the stock market) is reminiscent of a classic bear market rally rather than a bull market.
Illustration 1.01
The picture above shows the setup we showed in the previous post on BTCUSD, however, with adjusted support levels and bullish/bearish levels. Yellow arrows indicate the bullish breakout and retracement to the 50-day SMA.
The cascading effect
A few weeks ago, we warned investors that the Celsius Network restricted transfers of cryptocurrencies to its more than 1.7 million users holding approximately 151 000 Bitcoin in their frozen accounts. Back then, we noted that this was just the beginning of what would come later and what could potentially have a spillover effect. Shortly after that, the Celsius Network filed for Chapter 11 bankruptcy, leaving its clients uneasy. Meanwhile, several other financial institutions similar to the Celsius Network started to pause withdrawals or went bankrupt.
The list of affected companies:
Celsius Network
Voyager
CoinFlex
Sky-Bridge Capital (cryptocurrency fund)
These are just a few to name. However, these developments start to hint at structural problems in the cryptocurrency market. We expect more companies to be affected in the short-term/medium-term future. Because of that, we voice a word of caution.
Technical analysis - daily time frame
RSI, Stochastic, and MACD are all bullish. If MACD breaks above 0 points, then it will bolster the bullish case in the short term. The daily time frame is bullish.
Illustration 1.02
Long-term moving averages remain bearish.
Technical analysis - weekly time frame
RSI is bullish. MACD is bullish, however, in the bearish area. Stochastic oscillates in the bearish area while pointing to the upside, which is slightly bullish. Overall, the weekly time frame is slightly bullish/neutral.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Nevertheless, we currently foresee more upside potential for BTCUSD near the 26 500 USD price tag. Indeed, in extreme conditions (ones like in the Ethereum over the past week), BTCUSD could go as high as 32500. Although, at the moment, we doubt that will happen. Our rationale comes from the premise that the FED is expected to increase interest rates during its upcoming meeting, which will further slow down the U.S. economy. As a result, we view this as detrimental to the stock market and cryptocurrencies.
Due to that, we speculate that what we are currently seeing in the cryptocurrency market might potentially be the ultimate bull trap on the horizon. We draw this conclusion from mounting calls for the bottom and sky-high prices despite the prospect of a global recession; this sentiment does not align with what typically occurs when market participants capitulate. Additionally, a large magnitude of the moves up (also in the stock market) is reminiscent of a classic bear market rally rather than a bull market.
Illustration 1.01
The picture above shows the setup we showed in the previous post on BTCUSD, however, with adjusted support levels and bullish/bearish levels. Yellow arrows indicate the bullish breakout and retracement to the 50-day SMA.
The cascading effect
A few weeks ago, we warned investors that the Celsius Network restricted transfers of cryptocurrencies to its more than 1.7 million users holding approximately 151 000 Bitcoin in their frozen accounts. Back then, we noted that this was just the beginning of what would come later and what could potentially have a spillover effect. Shortly after that, the Celsius Network filed for Chapter 11 bankruptcy, leaving its clients uneasy. Meanwhile, several other financial institutions similar to the Celsius Network started to pause withdrawals or went bankrupt.
The list of affected companies:
Celsius Network
Voyager
CoinFlex
Sky-Bridge Capital (cryptocurrency fund)
These are just a few to name. However, these developments start to hint at structural problems in the cryptocurrency market. We expect more companies to be affected in the short-term/medium-term future. Because of that, we voice a word of caution.
Technical analysis - daily time frame
RSI, Stochastic, and MACD are all bullish. If MACD breaks above 0 points, then it will bolster the bullish case in the short term. The daily time frame is bullish.
Illustration 1.02
Long-term moving averages remain bearish.
Technical analysis - weekly time frame
RSI is bullish. MACD is bullish, however, in the bearish area. Stochastic oscillates in the bearish area while pointing to the upside, which is slightly bullish. Overall, the weekly time frame is slightly bullish/neutral.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade active
The rally shows signs first signs of weakness. We will watch out for more signs of exhaustion and possible failure of BTC to push toward higher prices.
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