In July of last year, I wrote about what I thought we could see as a "best case scenario" for the crypto market. So far, even the current bounce has been fairly weak by historical standards. I've been pessimistic about this market, but even I expected more. Here's the original post:
The market really needed to make a strong move a bit sooner. Since last July, we have seen a pretty substantial bounce for Litecoin, but even then it's far down from its long term uptrend, with still a ways to go to look bullish on bigger timeframes.
The video I published today essentially summarizes everything I feel the need to talk about at the moment EXCEPT perhaps for DXY and the broader equity market. Here's DXY, showing a potential bottom on the weekly.
This could take a little time to play out, and may require a bounce off the 100 MA (yellow). Keep in mind, a golden cross has already occurred but price became very overextended to the upside. Should it get back above the 50 MA (red), it could spell continued trouble for equities and crypto.
SPX appears to be trending into bullish territory, breaking above the established downtrend and flirting with the 100 week MA. This price action could prove tricky for traders. Shenanigans aren't just limited to crypto. A break back down into the downtrend would signal a false breakout and would be an incredibly bearish development.
Now, why would the market be bearish if all the bad news is priced in, and we're headed for the once-mythical soft landing? Well, I argue that we are rather experiencing a slow unwinding of a massive asset bubble. This slow unwind is tricky because it gives the appearance to those with lots of money that things are okay. But my experience is that things really are not okay. Individuals and businesses are very much struggling. And the ballooning credit market says as much. Just because inflation is showing signs of easing up does not mean economic pressures will get better right away. In fact, I believe there is a significant delayed effect, which is why the FED has been so aggressive. It's a complex puzzle, and one can only speculate about how things will evolve. My best guess is that we have not seen the last of the "black swan" events in crypto, and we perhaps have not even seen the first one in traditional markets.
Other important things of note:
Bitcoin is perhaps flirting with a major downtrend line. A heavy rejection here could confirm the resistance.
On the weekly, Bitcoin is just shy of the 200 MA, as a death cross looms for the first time in Bitcoin's short history. Losing momentum here could be catastrophic for price in the medium-term.
It is quite significant that despite a bounce from the $15.5k low to $24.2k Bitcoin is still below these major moving averages. For contrast, in the last bear market, Bitcoin found support at the 200 week MA.
On the monthly, Bitcoin is also flirting with the bearish cross of the 9 EMA over the 50, which has never happened before. Bitcoin needs to sustain above both to create a new bullish trend. As shown on the righthand chart for this analysis, some pretty low levels could be reached if those moving averages cannot be reclaimed. Supports and resistances are outlined on the chart.
As I mentioned in my video from today, the Bitcoin/SPX ratio still looks pretty bad, and could be just confirming a long term reversal to the downside. In fact, the weekly death cross is already occurring as we speak on that chart.
Also of note is ETH/BTC, which remains stubbornly high and flirting with a long term uptrend. Currently, the ratio sits just above the 100 week MA (yellow on this chart).
I'm watching for a major breakdown for the ETH/BTC ratio, regardless of what Bitcoin does. If Bitcoin drops during that move, I think ETH/USD could see some new bear market lows and break this long term trendline:
On the weekly, Ethereum seems to be in a better position than Bitcoin, in terms of moving averages. It's sitting ABOVE the 200 week, and just below the 50. Breaking above the 50 could signify a move towards the 100 and the $2400-2500 level.
Now, what about the shenanigans? Clearly the market is yet again at a critical juncture. Players in the crypto space seem to be taking advantage of the lack of liquidity to drive prices up. Rather than in the futures market, these moves seem to be triggered by stablecoins on the spot market, much like the 2017 run. So, can they manufacture a new all-time high? Or will the pressures from sellers be too strong near these historical levels, leading to new lows?
This question of course remains to be seen. Bitcoin and Ethereum may remain interesting alternative savings/investment vehicles, but I think they are unlikely to truly facilitate any meaningful positive change. They are just another way to hoard wealth, and not viable currencies. Therefore, it's just static money. The last thing we need right now is static money. We need to get going, in terms of improving infrastructure, sustainability, education, and access to healthcare. I fear we are trending towards a stagnant, internal, escapism-driven future where our brains, bodies, and money remain immobilized.
I expect some interesting market moves over the coming weeks. What happens around these moving averages should be telling. Honestly, I wouldn't even discount something insane like this happening, though I think a rejection near current levels is a bit more likely. You can see my opinion is that regardless of how high things go, the rally will not sustain.
In the short term, you can see on the lefthand chart that I think it's possible we see a quick retest of the zone between $19.8k and $20.5k. What happens on that retest could also be very telling. Short-term structure:
Thanks again for watching and speculating about the market with me. Please don't hesitate to reach out if you'd like to stay in contact or talk about this stuff one on one. I enjoy conversation. This is meant for speculation and entertainment only, not as financial advice.
-Victor Cobra
The market really needed to make a strong move a bit sooner. Since last July, we have seen a pretty substantial bounce for Litecoin, but even then it's far down from its long term uptrend, with still a ways to go to look bullish on bigger timeframes.
The video I published today essentially summarizes everything I feel the need to talk about at the moment EXCEPT perhaps for DXY and the broader equity market. Here's DXY, showing a potential bottom on the weekly.
SPX appears to be trending into bullish territory, breaking above the established downtrend and flirting with the 100 week MA. This price action could prove tricky for traders. Shenanigans aren't just limited to crypto. A break back down into the downtrend would signal a false breakout and would be an incredibly bearish development.
Now, why would the market be bearish if all the bad news is priced in, and we're headed for the once-mythical soft landing? Well, I argue that we are rather experiencing a slow unwinding of a massive asset bubble. This slow unwind is tricky because it gives the appearance to those with lots of money that things are okay. But my experience is that things really are not okay. Individuals and businesses are very much struggling. And the ballooning credit market says as much. Just because inflation is showing signs of easing up does not mean economic pressures will get better right away. In fact, I believe there is a significant delayed effect, which is why the FED has been so aggressive. It's a complex puzzle, and one can only speculate about how things will evolve. My best guess is that we have not seen the last of the "black swan" events in crypto, and we perhaps have not even seen the first one in traditional markets.
Other important things of note:
Bitcoin is perhaps flirting with a major downtrend line. A heavy rejection here could confirm the resistance.
On the weekly, Bitcoin is just shy of the 200 MA, as a death cross looms for the first time in Bitcoin's short history. Losing momentum here could be catastrophic for price in the medium-term.
It is quite significant that despite a bounce from the $15.5k low to $24.2k Bitcoin is still below these major moving averages. For contrast, in the last bear market, Bitcoin found support at the 200 week MA.
On the monthly, Bitcoin is also flirting with the bearish cross of the 9 EMA over the 50, which has never happened before. Bitcoin needs to sustain above both to create a new bullish trend. As shown on the righthand chart for this analysis, some pretty low levels could be reached if those moving averages cannot be reclaimed. Supports and resistances are outlined on the chart.
As I mentioned in my video from today, the Bitcoin/SPX ratio still looks pretty bad, and could be just confirming a long term reversal to the downside. In fact, the weekly death cross is already occurring as we speak on that chart.
Also of note is ETH/BTC, which remains stubbornly high and flirting with a long term uptrend. Currently, the ratio sits just above the 100 week MA (yellow on this chart).
I'm watching for a major breakdown for the ETH/BTC ratio, regardless of what Bitcoin does. If Bitcoin drops during that move, I think ETH/USD could see some new bear market lows and break this long term trendline:
On the weekly, Ethereum seems to be in a better position than Bitcoin, in terms of moving averages. It's sitting ABOVE the 200 week, and just below the 50. Breaking above the 50 could signify a move towards the 100 and the $2400-2500 level.
Now, what about the shenanigans? Clearly the market is yet again at a critical juncture. Players in the crypto space seem to be taking advantage of the lack of liquidity to drive prices up. Rather than in the futures market, these moves seem to be triggered by stablecoins on the spot market, much like the 2017 run. So, can they manufacture a new all-time high? Or will the pressures from sellers be too strong near these historical levels, leading to new lows?
This question of course remains to be seen. Bitcoin and Ethereum may remain interesting alternative savings/investment vehicles, but I think they are unlikely to truly facilitate any meaningful positive change. They are just another way to hoard wealth, and not viable currencies. Therefore, it's just static money. The last thing we need right now is static money. We need to get going, in terms of improving infrastructure, sustainability, education, and access to healthcare. I fear we are trending towards a stagnant, internal, escapism-driven future where our brains, bodies, and money remain immobilized.
I expect some interesting market moves over the coming weeks. What happens around these moving averages should be telling. Honestly, I wouldn't even discount something insane like this happening, though I think a rejection near current levels is a bit more likely. You can see my opinion is that regardless of how high things go, the rally will not sustain.
In the short term, you can see on the lefthand chart that I think it's possible we see a quick retest of the zone between $19.8k and $20.5k. What happens on that retest could also be very telling. Short-term structure:
Thanks again for watching and speculating about the market with me. Please don't hesitate to reach out if you'd like to stay in contact or talk about this stuff one on one. I enjoy conversation. This is meant for speculation and entertainment only, not as financial advice.
-Victor Cobra
Comment:
I realize I forgot to actually include the SPX chart here. Below, you can see weekly moving averages and the broken downtrend. My opinion is that regardless of how high it goes, economic pressures over the coming years should cause it to revert back towards even lower levels - mostly due to the fact that QE/money printing since 2008 didn't do much to allow for sustainable long term infrastructure/education/healthcare investment.
Comment:
Since this post, it looks like BItcoin retreated to the more shallow area of support around $21.5k before heading higher. However, this rejection off $25k and the weekly death cross is concerning for bulls, especially if it cannot break through without first heading down below $20k.
Comment:
Perfect test of the cross.
Comment:
A break back below the 9 week EMA (orange, near $21.3k) would probably send Bitcoin to at least test the $18k zone.
Comment:
Took a while, but finally hit that level I was looking at.
