What is the current state of the markets, and what can we expect?
While the cryptocurrency market has been moving sideways for a long period with dwindling volume, other markets remain highly volatile. The S&P500 and NASDAQ are only about ~8% away from their all-time highs, despite the dollar's recent strength over the past month. It's noteworthy that the cryptocurrency market is currently not correlating with the stock market, whereas this has been the case in the past. Because the cryptocurrency market is currently so stagnant, it's also challenging to predict. In this edition of the Trade Letter, we will provide a general market update, analyzing the following assets: BTC, SPX, DXY, and GOLD.
Macro Monday #185 : ECG R Wave
The short lived uptick in BTC price didn’t make it quite to the 50% retracement level. On the bright side the order block is still holding support. I remain cautiously bullish, especially with the RSI creeping up slowly, at least until the 24,770.5$ swing low is taken out for good. However there are no trade opportunities on the daily timeframe except the long mentioned in past updates with an invalidation under the order block and targets of the 50% retracement level and the previous high range of around 30,800 - 31,800$.
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No more rate hikes as a recession is coming. How will Bitcoin react?
The likelihood of a potential rate hike is significantly increasing, as we've had several key triggers aiming at a potential pause. Not only a potential pause of the policy, designed by the FOMC, but also a potential recession seems apparent. How will that correspond to a potential bullish case for crypto and Bitcoin? Let's talk about that in the current update of the Trade Letter!
Trade Letter #182 : Living on the Edge
Bitcoin has been consolidating at around 26,000$ since its corrective drop on August 17, keeping the market on edge. The RSI has slowly been creeping back up towards the 30 mark, but still has some ground to cover. As long as the bullish order block holds and RSI keeps grinding to the upside, there isn’t much to update on the technical side. Further weakness would be signaled through daily candle closes under the bullish order block (<24,824$) while the first level to break for some upside optimism is the 0.5 fib level of our current range (28,307,46$).
Uncertainty has been prevailing in the cryptocurrency market for a while now, and since the drop of BTC from $30k to $26k, this uncertainty has only escalated, resulting in extreme weakness in altcoins. The market's uncertainty is further intensified by very tight consolidations that are consistently followed by highly volatile movements. This is a consequence of the imbalance between open interest and market liquidity. Due to the high open interest, price movements are very explosive, as the liquidations that occur cannot be absorbed due to insufficient liquidity. This is primarily a result of the disappearance of major market makers since the LUNA and FTX crash. As a result of the weakness in BTC and ETH, altcoins are also facing significant challenges. Currently, we observe that during every 0.5% drop in BTC, altcoins decline between 5 and 10%, indicating extreme weakness. For this reason, it is advisable to be very cautious and avoid forcing trades. Many altcoins simply appear very weak, making it not even worth paying attention to them. In this edition of the tradeletter, I will highlight a number of altcoins that I am interested in. These could include both long and short positions, as I currently find BTC highly unpredictable.
The final flush?
In the tradeletter from last week I tried to warn all of you that it was very likely that we were going to see a move lower on BTC. Well we all know what happened next.. The flush was quite harsh and to be honest I did not expect the price to drop this far, but why did it drop this far? The harsh drop on Bitcoin, and the entire cryptomarket, came due to the fact that we have very low liquidity in the marketplace. There is no volume to trade effectively, all moves are fueled by borrowed money and the interest in crypto is really low. All these things simply create a very bad trading environment. However, what should we expect from crypto in the coming days? In this tradeletter we are going to make a deepdive into BTC to see what we should look out for.
Trade Letter #179 : Everyone’s Awake Now
BTC price plummeted about 12% on Thursday. While we had mentioned a good possibility that price could dip towards 27.5k, the correction was faster and deeper than anticipated, causing more crypto positions to get liquidated than during the FTX collapse in November 2022. The positive view is that the price is holding the daily bullish order block between 24,824 - 26,087$. As long as we do not see daily candle closes below 24,824$ (may vary between trading pair and exchanges) there is still technical hope over the short to medium term. The RSI is currently around 21, far into the overextended negative territory. I will be watching this week whether a positive divergence will start forming here while price still holds the order block level.
Markets are Puking on Bitcoin, Will the Bear Market Continue?
In the latest 24 hours, we've seen the biggest liquidation crash on the markets since FTX last year. What does that tell us? Are we going to continue dropping south on the markets or will we have a sweet recovery coming up to cover the market environment?