While for bulls surely a welcome change to the pain experienced for the past year, the current upside seen in Bitcoin and other cryptocurrency assets is likely to not be a sustainable change into a greater bullish trend.
We find the price overextended, a healthy pullback has not occured. The asset is below its Volume Weighted Average Price. Periodic volume profiles indicate that most of volume during this uptrend has occured at its local low and the current moment in time. During this movement, volume has been almost exclusively positive, which allows us to assume that buying has been constant during the whole move, while selling has been almost nil. This could potentially be dangerous if this volume consists to a large degree of highly leveraged long positions or there is not enough participant conviction, since this could lead to greatly increased anxiety and panic if price starts declining for any reason - whether it be global markets or economically relevant events influencing the asset, or large participants using the opportunity to sell their holdings - and then to rash and exponentially increasing panic selling, or forced liquidations executing sell orders at market. The VRVR, set to aggregate a period starting with the spring that set off the 2021 bullrun, calculates a POC of $9431.65. We can also see that price is trading below and currently approaching a major trendline that was formed back then.
Sentiment as perceived has largely been either enthusiastic or anxious, which combined with the potentially dangerous technical nature of this movement rings alarm bells. Social media is also palpably bullish.
Latest BTC CME Futures data is reporting majorly bearish dealer positions (306 long / 3576 short - ATH) and slightly bearish leveraged fund positions (5217 long / 6612 short).
Ongoing micro- and macroeconomic issues serve as another pillar in forming our bias. Personal savings as reported are at lows not seen since 2008 and quantitative easing - likely a major contributing factor to the paradigm-changing 2021 bullrun - seems unlikely. While equity markets have recovered to some extent, their upside can realistically also only be limited in these conditions.
Disclaimer: This idea does not constitute investment advice and should not be considered an offer to sell or recommendation to buy any asset. Any decisions made based on the information contained in this idea are the sole responsibility of each individual. Any investments made or to be made shall be with your independent analysis based on your financial situation and objectives. While researched and used to the best of our knowledge and belief there is no guarantee for the factuality and accuracy of information in this text.
Nice write up. I think we may come to remember this time as one of the biggest bull traps in bitcoin history.
vnaeli
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@TheDataGuyLOL, no, it will be the smallest (if it went down from here).
In 2014 bear market April saw growth from 350 to 670, this time we only had 25% growth so far. In 2018 bear market price grew from 6000 to 12000 before cashing to 3000 a year later. To be exact, every cycle in history produced bigger bull traps than this one, this will be the smallest top-of-a-cycle bull traps in Bitcoin cycles.
@vnaeli, hard to compare this cycle with any other. We will have to see. This is the first time cryptocurrency sees a real economic downturn and certain factors that have supported previous cycles have now turned for the worse. The 2020-2021 bullrun was likely to some extent fueled by massive QE (federal reserve printing 25% of M2 money supply within 2 years), check out ticker WM2NS. This is the first time in cryptocurrency history the Fed is tightening instead of easing. Personal savings and expandable income are at lows not seen since 2008 - years before BTC came online (ticker PMSAVE). Institutions and big money are running risk off, with "BTC Short" strategies of great popularity. CME dealer positions are ATH short as well. There will likely be little to no money inflow into the (high risk) asset class, and as far as I have seen leveraged buying on futures is the majority of volume with spot CVD being negative around 20000-21000. I believe that these conditions could cause a complete deviation from history and possibly bring us to lows that are currently still unimaginable.
Ether2020
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@MoritzBruckner, cannot say it better! Perfect analysis, and I agree 100% with you! Thanks!
Yelli_trades
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@TheDataGuyLOL, agree overall, looking for shorts
nagihatoum
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@TheDataGuyLOL, lulz.
AvenueWork
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This will not age well. Thx for sharing!
MikeMM
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How the hell does this garbage have 128 likes lol. still so far to go up.