Bitcoin - Systemic cracks have started to appear
Updated
During the current week, Bitcoin gained slightly, and in the process, it constituted a new high at 24 280.30 USD. However, since then, it has started to move sideways and struggled to move higher. Because of that, we will continue to pay close attention to the volume and technical indicators.
We think BTCUSD might continue a little bit higher in the short-term; however, in the medium and long term, we remain bearish. That is mainly due to bearish fundamental factors like higher interest rates, economic tightening, and looming recession. We expect these factors to weigh on the U.S. economy and stock market, eventually dragging the price of cryptocurrencies lower.
Furthermore, systemic cracks are appearing in the cryptocurrency sector, beginning with the recent fallout of the Luna stablecoin token, followed by the bankruptcy of Celsius Network, and the spill-over effect into other institutions.
The list of affected companies by restrictions on withdrawals of funds/cryptocurrencies and bankruptcies continues to grow. Voyager, Sky-Bridge Capital, and CoinFlex now welcome the latest addition to the list: Zipmex. These are, however, just a few to name. We expect the list to grow in the future with many cryptocurrency projects going bust.
Besides these issues, we also foresee more threats from the U.S. regulator, which will further complicate the situation by tightening market conditions via setting new rules for stablecoins and token issuance. These are several reasons why we are very careful with calling the bottom. Indeed, we think it would be premature.
Illustration 1.01
Above is the setup we introduced to our readers a while ago; it still remains valid.
Technical analysis - daily time frame
Stochastic performed a bearish crossover; however, it stays in the upper area. MACD strives to break through the midpoint, further bolsters the bullish case. RSI is bullish. DM+ and DM- are bullish too. Overall, the daily time frame is bullish.
Illustration 1.02
The daily chart shows Bitcoin struggling to move higher; simultaneously, a declining volume can be observed. This development suggests buyers are harder to find after the recent bullish breakout and BTC trading between 23 000-24 000 USD.
Technical analysis - weekly time frame
RSI is bullish. MACD strives to reverse to the upside. Stochastic points to the upside but remains in the bearish area. DM+ and DM- are bearish. Overall, the weekly time frame is neutral/slightly bullish.
Illustration 1.03
Interestingly, the price of BTCUSD fully retraced to its medium-term moving average. That hints at a strong correction of the downtrend in progress.
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.
We think BTCUSD might continue a little bit higher in the short-term; however, in the medium and long term, we remain bearish. That is mainly due to bearish fundamental factors like higher interest rates, economic tightening, and looming recession. We expect these factors to weigh on the U.S. economy and stock market, eventually dragging the price of cryptocurrencies lower.
Furthermore, systemic cracks are appearing in the cryptocurrency sector, beginning with the recent fallout of the Luna stablecoin token, followed by the bankruptcy of Celsius Network, and the spill-over effect into other institutions.
The list of affected companies by restrictions on withdrawals of funds/cryptocurrencies and bankruptcies continues to grow. Voyager, Sky-Bridge Capital, and CoinFlex now welcome the latest addition to the list: Zipmex. These are, however, just a few to name. We expect the list to grow in the future with many cryptocurrency projects going bust.
Besides these issues, we also foresee more threats from the U.S. regulator, which will further complicate the situation by tightening market conditions via setting new rules for stablecoins and token issuance. These are several reasons why we are very careful with calling the bottom. Indeed, we think it would be premature.
Illustration 1.01
Above is the setup we introduced to our readers a while ago; it still remains valid.
Technical analysis - daily time frame
Stochastic performed a bearish crossover; however, it stays in the upper area. MACD strives to break through the midpoint, further bolsters the bullish case. RSI is bullish. DM+ and DM- are bullish too. Overall, the daily time frame is bullish.
Illustration 1.02
The daily chart shows Bitcoin struggling to move higher; simultaneously, a declining volume can be observed. This development suggests buyers are harder to find after the recent bullish breakout and BTC trading between 23 000-24 000 USD.
Technical analysis - weekly time frame
RSI is bullish. MACD strives to reverse to the upside. Stochastic points to the upside but remains in the bearish area. DM+ and DM- are bearish. Overall, the weekly time frame is neutral/slightly bullish.
Illustration 1.03
Interestingly, the price of BTCUSD fully retraced to its medium-term moving average. That hints at a strong correction of the downtrend in progress.
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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The idea was updated in the following post: 
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