Yesterday I made an analysis where we made a case for the bulls. Today, I want to look at the bearish side of things. I'm not switching from bull to bear, I'm only looking at what the market gives us. Looking at both perspectives is key in trading.
In yesterday's analysis we looked at the 200-week SMA and the weekly RSI values. Historically, the 200-week SMA combined with the weekly RSI being oversold gave a very good signal of the bottom, see below.
Like mentioned earlier, in today's analysis I want to make a case for the bears.
The main problem for the bulls lies in the fact that we're currently trading bearish because the world-economy is getting worse. Inflation is ramping up quickly and is not slowing down at all (just last week we had a terrible CPI number coming out, causing the current fall).
The FED is failing at combating inflation effectively. This means that at some point they have to start raising the interest rates more than the current 0.5% every two months, which will cause even more distress in the markets.
In the end it's quite simple. The stock market has no reason to trade bullish as long as the FED is unable to combat inflation. If stocks keep falling, so will Bitcoin. Whether you like it or not, BTC is highly correlated to the stock market. We can trade at the 200-week SMA or even the 300-week SMA, if stocks keep selling off they will take BTC down too.
Also, tomorrow we have a FED interest decision. There's a high probability that they will come with bad news because of the latest inflation numbers, which will obviously be bad for the crypto and stock market.
My worst case scenario would be a fall to $10K. In past bear markets BTC fell around 85% from top > bottom, which brings us to $10K. The 300-week SMA might also offer some support, like it did during the corona crash.
Nevertheless, if you're a long-term investors with multiple years as your trading horizon, from now on it would be a great time to start dollar-cost-averaging into the market.
In yesterday's analysis we looked at the 200-week SMA and the weekly RSI values. Historically, the 200-week SMA combined with the weekly RSI being oversold gave a very good signal of the bottom, see below.
Like mentioned earlier, in today's analysis I want to make a case for the bears.
The main problem for the bulls lies in the fact that we're currently trading bearish because the world-economy is getting worse. Inflation is ramping up quickly and is not slowing down at all (just last week we had a terrible CPI number coming out, causing the current fall).
The FED is failing at combating inflation effectively. This means that at some point they have to start raising the interest rates more than the current 0.5% every two months, which will cause even more distress in the markets.
In the end it's quite simple. The stock market has no reason to trade bullish as long as the FED is unable to combat inflation. If stocks keep falling, so will Bitcoin. Whether you like it or not, BTC is highly correlated to the stock market. We can trade at the 200-week SMA or even the 300-week SMA, if stocks keep selling off they will take BTC down too.
Also, tomorrow we have a FED interest decision. There's a high probability that they will come with bad news because of the latest inflation numbers, which will obviously be bad for the crypto and stock market.
My worst case scenario would be a fall to $10K. In past bear markets BTC fell around 85% from top > bottom, which brings us to $10K. The 300-week SMA might also offer some support, like it did during the corona crash.
Nevertheless, if you're a long-term investors with multiple years as your trading horizon, from now on it would be a great time to start dollar-cost-averaging into the market.
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