A DEEP TECHNICAL DIVE ON 2023 BTCTECHNICAL OUTLOOK
Overall, we anticipate a short-term bearish market trend for Bitcoin, with a potential bearish bias before a potential upward movement, likely occurring towards the end of 2023.
Below, I present the key point of interest, where I would consider initiating long or short trades based on the prevailing market conditions at that time.
Additionally, the chart below illustrates the potential reactions that can be expected at said point.
Once the price reaches this area, I will employ a combination of the RSI indicator to assess market momentum, and the Lorentzian classification algorithm to determine entry points. While it is evident that the market will already be bearish at that stage, I prefer to witness a pullback after the price closes below the trendline before entering a bearish trade. This pullback could range from a retracement of 20% to 100%. Within this range, I will be prepared to initiate a short position once the specified conditions are met, relying on a sell signal generated by the aforementioned indicators or any other technical confirmation.
For a more accurate assessment, let us shift our focus to the 4-hour timeframe. Here, we observe that we are presently within a bearish channel. However, I anticipate a temporary retracement to the upside before resuming the downward movement. This expectation is supported by the fact that we are approaching slightly oversold conditions on the daily timeframe. Nevertheless, it is important to note that I maintain an overall bearish outlook on this timeframe as well. I emphasize my predictions accordingly.
Additionally, it is worth noting the presence of a significant wick on the 4-hour timeframe originating from the downside. This particular region could potentially serve as a point of rejection, contributing to the current market conditions we are experiencing.
If you are looking to trade the pullback this would be a good time to go long once he 4H candle closes and the oscillators are still oversold on the 4H timeframes.
As far as technical sentiment goes across all indicators we can see that we have a number of indicator showing a bearish trend however the oscillators are mostly neutral. Which is a good sign meaning that there is still room for the market to push down without any retracements.
FUNDUMENTAL OUTLOOK
Based on the most recent fundamentals above I conclude the following below.
🔹Bearish Sentiment:
Declining Active Wallets: The number of active Bitcoin wallets, both for sending and receiving funds, has been decreasing significantly since mid-April. This trend suggests a decline in user activity and may indicate that rising fees associated with Bitcoin transactions are discouraging users from engaging with the network.
Rising Fees: The hype surrounding BTC NFTs and BRC-20s has contributed to increasing fees for interacting with the Bitcoin network. Higher fees can deter users from conducting transactions and lead to a decrease in overall network activity.
🔹Bullish Sentiment:
Increased Transactions: The number of daily Bitcoin transactions has grown by 89% from mid-April to mid-May, indicating a surge in activity. This growth can be attributed to the recent BRC-20 craze and the implementation of native solutions for NFTs and issuable tokens on the Bitcoin network.
Weakening Correlation with Ethereum: Bitcoin's correlation with Ethereum, the second-largest cryptocurrency, has reached its weakest point since two years ago. This suggests that the price movements of Bitcoin and Ethereum are becoming increasingly non-correlated. Some analysts interpret this as investors considering Ethereum an emerging market after its transition to PoS, while Bitcoin is seen as a hedge asset.
Overall, the analysis suggests a mixed sentiment for Bitcoin. While increased transaction activity and the weakening correlation with Ethereum may indicate some bullish factors, the decline in active wallets and rising fees contribute to a bearish sentiment. It is important to consider additional market factors and conduct further analysis to make a more comprehensive assessment.
