In the above chart, I've drawn attention to periods where BTC/USD volume on Coinbase declined to current levels. Even today, during this move below 30k, volume is fairly low. In this market, the most important thing is liquidity. When volume dries up like this, it's a lot harder for larger players to get the price they want (whether it's to buy or sell). I wrote an article about liquidity not too long ago. When volume declines to low levels, it means the market has become disinterested at current prices. This often means price will need to exit the range to the upside or downside. The green boxes show periods where price moved upwards shortly after the volume decline. Red shows moments where price moved down. The 6k descending triangle is a classic example of bearish continuation after buyer exhaustion.
It's been a long week, so I apologize if this analysis comes out a bit disorganized. Anyway, I'm not saying that a move up WILL happen here. In fact, I do my best not to speak in absolutes, since the world is always changing. What I do know is that it can pay off to prepare for the unexpected, and it can especially pay off to do the exact opposite from what the herd is telling me to do. I've seen many analyses recently calling for a violent breakdown. Bears seem fairly euphoric as well, with the fear/greed index lingering at historic lows for the longest period in this market's history. And indeed, Bitcoin has broken down from the small channel I've been watching AND my purple trendline. Shorting seems very obvious here, as every $1000 level is quickly become resistance. It's almost too obvious. And volume is now increasing. My own personal sentiment is the opposite of how it was when Bitcoin was above 60k.
On my Gemini chart, there is a trendline which shows that Bitcoin can also head slightly lower and produce a failed low. A breakdown below that trendline could also present the same target I have on Coinbase - near $24-25k.
Based on this, if we are to see bearish continuation this week, I expect Bitcoin to drop towards the mid-low 20k's. There is a secondary purple trendline on my Coinbase chart, where I've placed a red X for a potential reversal zone. Price can drop even lower than that and recover back above the trendline. Perhaps we really do need to see another "panic low." But on the bullish side, I am still holding out for a test of mid-40k's, so I set a target at the important 46K level. If Bitcoin is to resume a bullish trend, I believe it first needs to break and hold 46K convincingly for several weeks. Below is what I'd expect to see, if we somehow get bullish continuation later this year. Something like this can also occur with a brief test of the lower purple trendline
Taking the uncomfortable trade is to buy at these levels. It genuinely feels bad. I've done it several times over the last couple months, and even added a little more today. I am prepared to add lower if necessary as well. I also acknowledge my mistake in not reducing risk when the market was at higher levels (though I'm still well in profit, since purchasing during the last bear market). This is an adventure for me, and a good lesson to learn as a young adult. I recognize the possibility that crypto valuations collapse as a result of too much leverage in the system––my most recent post is about this. I am still leaning towards reducing some risk at the 46K level, if we get there.
This is not financial advice. These are just my thoughts, and they should be used for speculation/entertainment only.
-Victor Cobra
コメント
⋅
And…voila. Bear trap. Selling below 30k would have indeed been a poor choice, at least in the short term. Seemed almost too obvious. Now we have to see how price reacts to $32-33k. Weren’t they supposed to be resistance? Didn’t every 1K level get turned into resistance? Why are we suddenly above 31K? Volume matters, and it just wasn’t a convincing breakdown yet. Chart updates today.
コメント
⋅
Volume is low, but price is back in the small wedge, after breaking below yesterday. Still needs to get above the purple trendline and break out of the wedge for further price appreciation. And this needs to happen with volume. Above 33K-34k, and things will become even more interesting. 35k is the main level to break, if Bitcoin is to test the 40k's.
コメント
⋅
Funding is still very negative on Binance futures, which is quite interesting. This could provide fuel for a bit of a short squeeze. Volume hasn't even come in yet, showing how little interest there really is, at current prices. Normally a bearish retest of a prior support occurs on low volume, except funding tells me that this is being overwhelmingly shorted.
コメント
⋅
So far rejected from the purple trendline. The biggest resistance here should be around the 33k level, for this reason.
コメント
⋅
Well, looks like Bitcoin cleared 33K and 35k fairly easily. That’s what happens when volume drops off and liquidity dries out in a range. Holding above 38k is pretty important, but I especially don’t want to see price roll back over and drop below 35k again.
The consistent negative funding on Binance futures ended up correctly predicting a short squeeze, which took price on the exchange briefly up to 48.1K.
I believe that you are hitting the nail on the head with this analysis.
For whats it worth, JP Morgan analysts put out a piece stating that only 5% of Bitcoins float was available for trading, which is quite incredible. So if that is the case, then your low volume thesis is spot on and something I have been watching for weeks.
Big money is accumulating here where they can and it may be like gold and silver physical markets where there just isn't any to buy. Unlike those markets, there aren't enough bitcoin derivatives at this stage to hold it down when the move to the upside happens.
TruePrimeOne
⋅
@Stone881, why would they accumulate here at 30K when they can push the price down to 10K.
VictorCobra
⋅
@TruePrimeOne, The long term narrative for Bitcoin’s price appreciation begins to really fall apart below 13.8K (2019 high). And it already starts to become shaky if Bitcoin drops to 20k. I think it’s also important to measure Bitcoin’s performance versus the stock market for clues as to what big money is doing.
-Victor Cobra
TruePrimeOne
⋅
@VictorCobra, Yeah i see it going lower to those levels. The monthly has no support at 30k. The trend is down, and while the price is resting here in this range the trend has continued down. Until the higher time frames, like the weekly and monthly flip I would not get in, or have a tight stop loss. On the weekly you had a massive head and shoulders. Followed by a bearish descending triangle. If anything i believe more people will be trapped here around 30K range who believe its the bottom, and will get squeezed out of their position. While history doesn't exactly repeat, it rhymes.
VictorCobra
⋅
@TruePrimeOne, Certainly possible, and the charts look ugly on most timeframes. But it's also possible Bitcoin is simply building a new support level, above the previous all-time high. There's not much HISTORICAL support here, but we're making history right now :) The fact that everything looks so ugly means that plenty of sellers would also be trapped here, in the event that price doesn't go too much lower. Either way, I'll buy if price drops towards the $13-20k zone....depending on the global economic picture at that time. Also looking at DXY. It could be breaking out here, which would be bad for markets in the medium term.
-Victor Cobra
TruePrimeOne
⋅
@VictorCobra, Its not a matter of if, but when are going going to test that level of support at the lower ranges. We did a massive clip up from 10K to 60K, and no where along that rise did we come back and re-test support at those levels, let alone at the previous all time high. We will come back, maybe its a wick, maybe its a continuation lower to 12-10k range. We will test it. I just think there is a higher probability that we test the lows before we climb back up. I can see you use the MACD, take a look at whats happening with BTC on the monthly with the MACD. A bearish cross is forming.
VictorCobra
⋅
@TruePrimeOne, Yeah I see that. I still think Bitcoin can test the mid-40k zone before revisiting those lower levels though, as I've mentioned in my recent posts. So I will most likely be selling some crypto on a bigger bounce. I may decide not to, depending on how strong the market looks at those levels. On the monthly I tend to agree - we could easily be in a longer bear market. All the signals are there. It's just not appealing for me to sell near range lows. We'll see!
-Victor Cobra
TruePrimeOne
⋅
@VictorCobra, Good stuff man, and great convo. Keep it up and continue to make some profit. im not bullish or bearish myself i just want to make profit no matter what the direction.
VictorCobra
⋅
@TruePrimeOne, Likewise! Good luck to you. I don't think anything is set in stone. This may be bottom, it may not be. But regardless, hope we both do well.
-Victor Cobra
ckbears90
⋅
@TruePrimeOne, lies. We hit 30k and past it. Then came back before all time high.
For whats it worth, JP Morgan analysts put out a piece stating that only 5% of Bitcoins float was available for trading, which is quite incredible. So if that is the case, then your low volume thesis is spot on and something I have been watching for weeks.
Big money is accumulating here where they can and it may be like gold and silver physical markets where there just isn't any to buy. Unlike those markets, there aren't enough bitcoin derivatives at this stage to hold it down when the move to the upside happens.