As I do every week, I review the previous week’s analysis and then explain my vision for the week ahead. Here we go!
Disclaimer: This article is not intended as investment advice or as an inducement to invest. It is strictly for informational purposes only. You are solely responsible for the trading and investment decisions you make.
Debriefing the past week
I was hoping for a direction, but in the end Bitcoin and its friends decided to stay frozen at the week before. This is certainly due to the expected announcements coming this week on the US side!
However, what we see is that the first phase of the yellow scenario has taken place. The question, will the second phase take place as described? Or, will it be different? Let’s take a look at the arguments from both sides!
Analysis of the week
On the side of the pessimists (bears), the arguments are the same ones I took last week. The FTX affair has left a bitter taste to professional investors, and we can see it in the $GBTC chart (Grayscale Bitcoin, basically, it’s “fake” BTC made available to be traded by institutions) :
What we can see on this side is that Bitcoin is not being bought up by the professionals at all! On the contrary, it continues to be sold and the previous bearmarket’s lows are slowly being addressed (which sucks big time, let’s not lie!).
A second argument continues to revolve around altcoins, indeed they continue to be traded with a lot of leverage, especially in buying. With a hope of “buy the dip” or “catch the dip” which amounts to the same thing. However, a feeling like this must disappear, if we want to find a healthy market recovery!
For the analysis, nothing has changed since last week. Indeed, we see that the Open Interests continue to climb (number of open positions) and that the funding changes between positive and negative. But if we had a lot of people positioned to sell, the latter would be very negative! Outch. This means that a bearish attack (without necessarily making new lows) would allow exchanges like Binance to make a lot of money!
Unlike the previous week, I’m starting to get some bullish arguments, thankfully! And yet, they remain few and far between (and controversial)!
The first is the chartist pattern being formed. On the first Bitcoin chart, we can see an ascending right triangle shape that is forming:
This type of pattern represents resistance work. Let’s say that the flat of the triangle at the top is a straight line, constantly sold by the operators. They sell, sell, sell, etc. Nevertheless, an area that is worked too often eventually breaks! Why does this happen? Simply because the sellers will not be able to sell anymore after a while. And this is frequently the case in this kind of figure. Then we can have a bullish breakout, which is more likely than a bearish one (but let’s not forget that a pattern like this implies that a lot of liquidity is accumulating in the SOUTH… Always stay alert)
The second argument is monetary policy. Certainly, the inflation figures show that it continues to grow, blah blah blah. Whose fault is that? In short! What we are most interested in are the rates! Indeed, for the last few months, the FED (equivalent of the ECB in Europe) has been raising lending rates by 75 points each time (0.75%). However, it would have decided to slow down this rise, because it would manage (it seems) to manage inflation. This is a good omen for investors, an increase of 50 points (0.5%) is therefore to be expected! However, fingers crossed that they do not change their minds!
You’ve got arguments from both sides, what will your forecast be? More bullish or bearish?
Personally, I will stay on my Bear side with a return to the bottom of the range around $16k! We could still have a little liquidity chase to the north before going back to the basement, but all it would take is for the FED to break its word to see an additional storm on the markets! Not sure if the previous low point will hold if rates rise more than expected!
Anyway, we’ll see, see you Tuesday for the inflation figures and Wednesday for the rates! This week promises to be volatile and should give a clear direction to the market for the next weeks/months to come! In the meantime, I hope you have a good week and we’ll see you next Monday.
Entrepreneur & Dad, passionate about cryptocurrencies, I describe for you the technical analysis. Cofounder of Cryptocademia, a free platform to learn all you want/can about blockchain ! Meet you there at https://www.cryptocademia.com
My job: look at charts and interpret them for you.
Beware, I do not know all the truths.