Bitcoin's market share is set to increase
Updated
In the previous article on Bitcoin, we discussed the possibility of another fake breakout above the resistance at $26,800. We stated that we expected the rally to be bought by retail, which seems to be confirmed by the latest data from LookIntoBitcoin, showing the number of small Bitcoin addresses (with balances below 100 BTC) increasing and the number of large addresses (with balances exceeding 1,000 BTC) falling (in the past few days). To keep the bearish thesis alive (about BTCUSD dropping to $24,000), we want to see Bitcoin fail in breaking above the resistance near $27,500. In addition, we want to see RSI, Stochastic, and MACD start flattening on the daily time frame and eventually start pointing to the downside. Furthermore, we want to see the number of large Bitcoin addresses trending flat or down, suggesting whales are still not buying (at least outside the futures market).
To reevaluate our view, we want to see Bitcoin march higher, breaking above $27,500 and then $28,142 (accompanied by the growth in the number of large Bitcoin addresses). On top of that, we want to see all mentioned technical indicators continue rising on the daily time frame, with MACD fully breaking above zero (and holding ground above this level).
Now, to move on to a different topic, what caught our attention in the past few days is that the recent jump in the price of Bitcoin was once again accompanied by news about Bitcoin Spot ETF (in reference to Gary Gensler’s testimony in front of U.S. Congress) and the government shutdown in the USA. Interestingly, a similar uptick occurred among many altcoins (while Bitcoin’s dominance decreased and USD strengthened). In fact, we would say that the USD has been behaving unusually strongly recently, similar to how it behaved during last year’s stock and cryptocurrency market selloff. That is raising our suspicion, and we think that we might be seeing merely a deceitful move higher (in altcoins), intended to suck in retail and create exit liquidity for big players who seek to cash out altcoins into Bitcoin and Bitcoin into fiat money. As a result, we are on high alert.
Illustration 1.01
Illustration 1.01 shows the daily chart of MACD. The yellow arrow highlights MACD’s attempt to enter a bullish area above the midpoint; if successful, it will be slightly bullish in the short term.
Technical analysis gauge
Daily time frame = Slightly bullish
Weekly time frame = Bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.
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.
To reevaluate our view, we want to see Bitcoin march higher, breaking above $27,500 and then $28,142 (accompanied by the growth in the number of large Bitcoin addresses). On top of that, we want to see all mentioned technical indicators continue rising on the daily time frame, with MACD fully breaking above zero (and holding ground above this level).
Now, to move on to a different topic, what caught our attention in the past few days is that the recent jump in the price of Bitcoin was once again accompanied by news about Bitcoin Spot ETF (in reference to Gary Gensler’s testimony in front of U.S. Congress) and the government shutdown in the USA. Interestingly, a similar uptick occurred among many altcoins (while Bitcoin’s dominance decreased and USD strengthened). In fact, we would say that the USD has been behaving unusually strongly recently, similar to how it behaved during last year’s stock and cryptocurrency market selloff. That is raising our suspicion, and we think that we might be seeing merely a deceitful move higher (in altcoins), intended to suck in retail and create exit liquidity for big players who seek to cash out altcoins into Bitcoin and Bitcoin into fiat money. As a result, we are on high alert.
Illustration 1.01
Illustration 1.01 shows the daily chart of MACD. The yellow arrow highlights MACD’s attempt to enter a bullish area above the midpoint; if successful, it will be slightly bullish in the short term.
Technical analysis gauge
Daily time frame = Slightly bullish
Weekly time frame = Bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.
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.
Note
Overnight, we saw Bitcoin move abruptly to the upside, breaking two critical levels. Interestingly, this move was accompanied by an uptick in Bitcoin's dominance (from 49.82% to 50.40%), confirming our previous assessments about Bitcoin sucking in cash from altcoins. In addition to that, the number of Bitcoin addresses with 1,000 BTC or more in balance continued to trend flat. Meanwhile, the number of Bitcoin addresses with 100 BTC or more in the balance increased (in fact, the number has been growing since the start of September 2023). We highlighted a similar phenomenon before Bitcoin’s peak in April 2023 and July 2023, when smaller whales seemed to push the price higher, which was followed by big players selling into retail’s hands (once the price moved significantly higher). As if this was not enough, one more phenomenon (similar to one in the period leading to prior peaks) resurfaced overnight. We are talking about the abrupt move in the price of Bitcoin that can be observed on a 1-minute chart (shown in Illustration 1.02). Besides that, we also saw MACD break above the midpoint on the daily chart, which is quite bullish. As a result of these developments, our thesis about Bitcoin falling to $24,000 became invalidated (as the short-term trend turned bullish). However, we are very skeptical about the current price action and its sustainability.Illustration 1.02
Illustration 1.02 shows the 1-minute chart of BTCUSD. The yellow arrow indicates a spike in the price, similar to the ones we showed earlier this year. Previously, these spikes preceded very bullish price action in Bitcoin.
Note
We are paying close attention to Resistance 2; a failure of the price to stay above this level will ressurect bearish odds.
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