Bearish breakout, increasing volume, and no capitulation yet
Bitcoin dropped below the lower bound of the narrow range, bolstering the bearish odds. Simultaneously, volume started to pick up, hinting at increasing selling pressure. In addition to that, the price dropped below 20-day SMA and 50-day SMA; ideally, we would like to see a crossover between these two moving averages, which would further confirm the downtrend. As for our stance, we remain bearish and maintain our price targets at 15 000$ and 13 000$. Our views are based on a combination of technical and fundamental factors. We expect the persistence of tight monetary policy to weigh on the stock market, which is highly correlated with cryptocurrencies. As a result, more stock market weakness will negatively affect Bitcoin and drag it lower over time.
This thesis is also supported by the market sentiment, which does not show signs of capitulation. Contrarily, too many market participants still try to catch the bottom and leverage up in this so-called “lifetime” opportunity. However, we think these investors are making their moves prematurely and will likely get washed out in the next wave of selling, enforcing even stronger selling pressure down the road. Furthermore, as if it was not enough, cryptocurrency-related institutions continue to experience issues, opening the question of what company will fall victim to the bear market next. Because of that, we voice a caution to the market participants and dismiss an overly bullish narrative in the cryptocurrency market.
Illustration 1.01
Illustration 1.01 displays the daily chart of BTCUSD. Yellow arrows indicate breakouts above and below the narrow range.
Technical analysis
Daily time frame = Slightly bearish
Weekly time frame = Neutral
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.
This thesis is also supported by the market sentiment, which does not show signs of capitulation. Contrarily, too many market participants still try to catch the bottom and leverage up in this so-called “lifetime” opportunity. However, we think these investors are making their moves prematurely and will likely get washed out in the next wave of selling, enforcing even stronger selling pressure down the road. Furthermore, as if it was not enough, cryptocurrency-related institutions continue to experience issues, opening the question of what company will fall victim to the bear market next. Because of that, we voice a caution to the market participants and dismiss an overly bullish narrative in the cryptocurrency market.
Illustration 1.01
Technical analysis
Daily time frame = Slightly bearish
Weekly time frame = Neutral
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.
Trade active:
As of 27th December 2022, MicroStrategy held approximately 132,500 units of Bitcoin acquired for $4.03 billion at an average price of $30,397 per bitcoin, which translates to almost 46% loss for the overall position.
Trade active:
Our stance remains unchanged as nothing extraordinary is happening in the cryptocurrency space. We will provide a new update on BTCUSD soon.
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