Bitcoin - Do not get ahead of the market
Updated
With Bitcoin jumping above 20 000 USD, we again see a rise in bullish ideas all over the place, claiming bottoms, new all-time highs, and even trend reversal in spite of bearish macroeconomic factors. Despite that, however, elevated volatility and wild swings in the price do not concern us. Quite the contrary, they give us confidence as the market sentiment reflects what it should be in the bear market - constant swings in the mood of market participants, people trying to get ahead of the market, and tremendous moves in single stock/cryptocurrency titles.
As grim as it sounds, we believe these signs will grow more apparent in the coming weeks as the volatility is set to continue higher, sparking more risk-aversion and another leg down in the market. Our thesis comes from the premise that the FED will increase interest rates in November 2022, further crashing the market in order to beat high inflation.
In our opinion, these macroeconomic factors, combined with technical ones, foreshadow a new low for Bitcoin in 2022 and a continuation lower in 2023. Additionally, the lack of liquidity reflected in low monthly volumes suggests Bitcoin is not gaining any interest among new investors, which is an obstacle for the trend to reverse; meanwhile, this lack of liquidity has been responsible for wild moves up and down in the past months.
At the moment, we pay close attention to the resistance level at 20 381 USD, which is the 27th September 2022 high. For the short-term, it would be bullish if the price managed to break above this level and stay there. However, a failure of the price to hold above the resistance will suggest a return to the lower end of the range, in which Bitcoin has been trading for the past few weeks.
Despite the short-term bullish potential in Bitcoin, we have no reason to backtrack on our bearish views. Accordingly, we stick to our price targets at 17 500 USD and 15 000 USD. We will update our thoughts as time progresses.
Illustration 1.01
Yesterday, we showed several signs of exhaustion accompanying the price rise and subsequent breakout above the resistance level. We said that the breakout would be bullish; however, it became quickly invalidated when the price fell back below the resistance level. That is yet another sign of exhaustion. Despite that, the short-term trend is neutral/slightly bullish; therefore, we will remain very cautious today and closely monitor the price action and volume levels.
Technical analysis - daily time frame
RSI is slightly bullish; however, it is showing signs of exhaustion already. MACD is neutral; if it breaks above the mid-point, it will be bullish. Stochastic is bullish. DM+ and DM- are bullish. The daily time frame is slightly bullish, with a very weak trend.
Illustration 1.02
Illustration 1.02 displays the daily chart of BTCUSD and particular levels of interest.
Technical analysis - weekly time frame
RSI is neutral. Stochastic is also neutral. MACD points to the upside but stays in the bearish zone. DM+ and DM- are bearish. Overall, the weekly time frame is bearish; but the trend grew substantially weaker over the past few weeks.
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.
As grim as it sounds, we believe these signs will grow more apparent in the coming weeks as the volatility is set to continue higher, sparking more risk-aversion and another leg down in the market. Our thesis comes from the premise that the FED will increase interest rates in November 2022, further crashing the market in order to beat high inflation.
In our opinion, these macroeconomic factors, combined with technical ones, foreshadow a new low for Bitcoin in 2022 and a continuation lower in 2023. Additionally, the lack of liquidity reflected in low monthly volumes suggests Bitcoin is not gaining any interest among new investors, which is an obstacle for the trend to reverse; meanwhile, this lack of liquidity has been responsible for wild moves up and down in the past months.
At the moment, we pay close attention to the resistance level at 20 381 USD, which is the 27th September 2022 high. For the short-term, it would be bullish if the price managed to break above this level and stay there. However, a failure of the price to hold above the resistance will suggest a return to the lower end of the range, in which Bitcoin has been trading for the past few weeks.
Despite the short-term bullish potential in Bitcoin, we have no reason to backtrack on our bearish views. Accordingly, we stick to our price targets at 17 500 USD and 15 000 USD. We will update our thoughts as time progresses.
Illustration 1.01
Yesterday, we showed several signs of exhaustion accompanying the price rise and subsequent breakout above the resistance level. We said that the breakout would be bullish; however, it became quickly invalidated when the price fell back below the resistance level. That is yet another sign of exhaustion. Despite that, the short-term trend is neutral/slightly bullish; therefore, we will remain very cautious today and closely monitor the price action and volume levels.
Technical analysis - daily time frame
RSI is slightly bullish; however, it is showing signs of exhaustion already. MACD is neutral; if it breaks above the mid-point, it will be bullish. Stochastic is bullish. DM+ and DM- are bullish. The daily time frame is slightly bullish, with a very weak trend.
Illustration 1.02
Illustration 1.02 displays the daily chart of BTCUSD and particular levels of interest.
Technical analysis - weekly time frame
RSI is neutral. Stochastic is also neutral. MACD points to the upside but stays in the bearish zone. DM+ and DM- are bearish. Overall, the weekly time frame is bearish; but the trend grew substantially weaker over the past few weeks.
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.
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BTCUSD started to fall after we pointed out several signs of exhaustion. 
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