BTC Weekly Outlook (FA&TA)
Updated
Key Fundamentals:
1. Smart money action:
The on-chain smart money actions are now stable at a bullish level and are higher than the July level when we had the 10k break out. This not only is similar to the on-chain developments before prior bull runs, but also indicates a strong support at 10k. Institutional investors showed picked up interest in the crypto space as Grayscale raised 900M in Q2 (its ATH quarter since inception). The 900M won’t be available for exiting until at least October 1st this year. And small likelihood that this group will exit at all. Yes, 900M is not significant when compared to the mkt cap (let’s put aside the whole thing about how BTC mkt cap is inflated, for now). However, it does indicate a switch in accredited/institutional investors’ view on the crypto space – where the money comes from to push the next ATH.
2. Miner action:
Both hash rate and difficulty have recovered, and miner capitulation has ended. With miner capitulation historically marking market bottoms, this is a bullish long-term sign.
3. Market Sentiment:
Overall market sentiment is now overly bearish. For the seller group sentiment, this group remains in a bull trend, but the current price has already slightly dropped below the actively trading group’s purchase price. This means a decrease in willingness to sell, leading to a decrease in supply, which will ultimately increase price. Assuming bull market, we are in the golden accumulation zone. The black stars in the chart above indicate the past incidents when the price gets close to the active group’s purchase price. These were overall great swing trading entries with fairly good R:R setups. The trend will switch to the bear side indicating an exit once the price drops further from these areas.
4. Margin & Futures Market Actions:
Currently, the margin market is overly bearish (across different exchanges, see chart below), and open interest is picking up. This indicates another short-term long scalp opportunity. As for the CME institutional traders’ positions, the trend remains bullish. Do note CME positions are for futures, and thus acts as a leading indicator rather than a coincident indicator. In early bull runs (and when there’s still time to the future maturity), it’s also in the whales’ interest to push the price down, lowering average cost. Check out the March resemblance. Similar occurrence for the 6k to 3k drop (but less CME oriented).
5. Global Market Impacts:
To ease the COVID impacts, the Fed is using all means to boost the economy, which means a continued rise in inflation. This will fundamentally push up the value of gold, bringing up bitcoin along the way as the main value proposition of bitcoin remains store of value rather than remittance.
6. CME Gap:
90% of historical BTC CME gaps get filled sooner or later (generally created by weekend BTC movements when the CME’s closed). Yes, we still have a $300 gap open on 7/25. However, after such a long time, the gap filling (big if here) will be more of a result of general market movements rather than the cause. Many are now aware and talking about this opened gap, but the problem is the more people getting onboard means the less likelihood of the event happening.
Key Technicals:
1. Resistance at 11.3k. Support at 9.8-9.9k (If we drop below here, trend will likely turn bearish). Nothing new this week.
2. Elliot wave: wave (ii) of III potentially over at this point. Wave (ii) as a zigzag. BTC doesn’t tend to rise in a steep line after a sharp drop, so we’ll likely consolidate for a while.
3. RSI neutral:
As expected last week, we attempted at the MAs, leading to a bullish week. Currently, I don’t think much could be said about the daily RSI. It’s failing the MAs but finding support around 40 – bull market support.
4. MACD bullish:
potential up-cross from the negative side soon.
Do you agree or disagree? All thoughts and critics are welcomed!
1. Smart money action:
The on-chain smart money actions are now stable at a bullish level and are higher than the July level when we had the 10k break out. This not only is similar to the on-chain developments before prior bull runs, but also indicates a strong support at 10k. Institutional investors showed picked up interest in the crypto space as Grayscale raised 900M in Q2 (its ATH quarter since inception). The 900M won’t be available for exiting until at least October 1st this year. And small likelihood that this group will exit at all. Yes, 900M is not significant when compared to the mkt cap (let’s put aside the whole thing about how BTC mkt cap is inflated, for now). However, it does indicate a switch in accredited/institutional investors’ view on the crypto space – where the money comes from to push the next ATH.
2. Miner action:
Both hash rate and difficulty have recovered, and miner capitulation has ended. With miner capitulation historically marking market bottoms, this is a bullish long-term sign.
3. Market Sentiment:
Overall market sentiment is now overly bearish. For the seller group sentiment, this group remains in a bull trend, but the current price has already slightly dropped below the actively trading group’s purchase price. This means a decrease in willingness to sell, leading to a decrease in supply, which will ultimately increase price. Assuming bull market, we are in the golden accumulation zone. The black stars in the chart above indicate the past incidents when the price gets close to the active group’s purchase price. These were overall great swing trading entries with fairly good R:R setups. The trend will switch to the bear side indicating an exit once the price drops further from these areas.
4. Margin & Futures Market Actions:
Currently, the margin market is overly bearish (across different exchanges, see chart below), and open interest is picking up. This indicates another short-term long scalp opportunity. As for the CME institutional traders’ positions, the trend remains bullish. Do note CME positions are for futures, and thus acts as a leading indicator rather than a coincident indicator. In early bull runs (and when there’s still time to the future maturity), it’s also in the whales’ interest to push the price down, lowering average cost. Check out the March resemblance. Similar occurrence for the 6k to 3k drop (but less CME oriented).
5. Global Market Impacts:
To ease the COVID impacts, the Fed is using all means to boost the economy, which means a continued rise in inflation. This will fundamentally push up the value of gold, bringing up bitcoin along the way as the main value proposition of bitcoin remains store of value rather than remittance.
6. CME Gap:
90% of historical BTC CME gaps get filled sooner or later (generally created by weekend BTC movements when the CME’s closed). Yes, we still have a $300 gap open on 7/25. However, after such a long time, the gap filling (big if here) will be more of a result of general market movements rather than the cause. Many are now aware and talking about this opened gap, but the problem is the more people getting onboard means the less likelihood of the event happening.
Key Technicals:
1. Resistance at 11.3k. Support at 9.8-9.9k (If we drop below here, trend will likely turn bearish). Nothing new this week.
2. Elliot wave: wave (ii) of III potentially over at this point. Wave (ii) as a zigzag. BTC doesn’t tend to rise in a steep line after a sharp drop, so we’ll likely consolidate for a while.
3. RSI neutral:
As expected last week, we attempted at the MAs, leading to a bullish week. Currently, I don’t think much could be said about the daily RSI. It’s failing the MAs but finding support around 40 – bull market support.
4. MACD bullish:
potential up-cross from the negative side soon.
Do you agree or disagree? All thoughts and critics are welcomed!
Note
Bull run emotional cycle: depression, disbelief, hope, optimism, belief, excitement, thrill, greed, euphoria. Which phase do you think we are in? My pick is disbelief. 
Note
After the drop to 10k, the market sentiment has been on the bear side (bearish, not overly bearish yet). This means, despite some short-term drop potential, the chance of us dropping to 9k this week is low.
Note
Smart money accumulating. Long after the CME gap from 10.5k closes.
Note
Are you in profit? W/ 50% USDT mkt cap increase (since 12k), and Grayscale's all-time-high quarter again in Q3, BTC fundamentals are solid and indicate further bullish momentums to come.
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