In the past five months, we showed multiple odd developments on the 1-minute charts, which included sharp upticks in the price of Bitcoin, often leading to new highs which lasted only a few seconds during the weekend or shortly after the close in the futures market (in generally illiquid markets). In addition to that, we noted that many of these price movements looked artificial and unhealthy to sustain the rally in the long term. As a result of that, combined with tight monetary policies, worsening economic conditions, and other factors that are typically bearish for risk assets like Bitcoin, we concluded that the market has not bottomed out. Accordingly, we maintained our bearish outlook beyond the short term with the notion that Bitcoin would return to its 2022 lows over time.
During the same period, we noticed that sentiment among retail investors turned extremely bullish and arguably even more so than on previous rebounds. We warned about this deceitful nature of bear market rallies several times in the past year, always outlining those same developments - people getting overly bullish while dismissing the reality and surrendering to so-called “FOMO” (while telling everyone else that they are missing out on a “lifetime opportunity” if they are not invested). This theme became central to the cryptocurrency market and even stronger with the recent banking fiasco in the U.S. and Europe, prompting many people to revolt against “irresponsible” bankers and governments by buying Bitcoin.
However, before the weekend (and two weeks after our warnings about retail investors ending up holding the bag), big news came out regarding the U.S. government and its sale of Bitcoins seized thanks to the Silk Road bust (a stash of about 50 000 Bitcoins). The U.S. administration reportedly sold approximately 9 861 Bitcoins valued at about $216 million in March 2023. Furthermore, the government seeks to unload the remaining 41 139 Bitcoins during the course of the current year (in multiple batches).
We expect this to be conducted with the maximum benefit to the government. Moreover, if we were to take any lesson from commodity traders within the U.S. government in the past year, we would point out their successful game in the oil market, where they happened to sell oil at highs last year, only to seek a refill of Strategic Petroleum Reserves near the lower end of $70 in 2023. That leads us to speculate that the U.S. government does not foresee much higher prices (from the current level) at which it would otherwise sell its stash. Overall, we think the whole situation is growing increasingly ironic because of the fact that so many people seek to buy Bitcoin in order to get away from the system, and instead, the government will dump its holdings into their hands, leaving them with less than what they paid for at the end.
Illustration 1.01 Illustration 1.01 shows the daily chart of BTCUSD. The red and green arrows indicate particular technical developments which raise questions about the rally's sustainability (the rising price accompanied by declining volume and divergence between the price and RSI). The yellow arrow indicates an area of interest, which we will pay close attention to in the following days.
Technical analysis Daily time frame = Neutral Weekly time frame = Bullish (weak trend)
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
⋅
Australia's regulator revoked Binance's derivatives license. As a result, the exchange is required to close any existing derivative trades of its clients by 21st April 2023.
Trade active
⋅
Bitcoin attempts to break above Sloping resistance.If it suceeds, and then also breaks above Resistance 1, it will be bullish in the short term.
Comment
⋅
The picture became cropped after posting. Here is the original chart.
that's because the US government is run by morons.
Free_Loader
⋅
@aplhowarth …or, more likely, the government is looking for even bigger morons. If the government is giving, you run in the other direction, at least that’s how it used to be. Nowadays people can’t get off its tit.
aplhowarth
⋅
@Free_Loader there's a clear analogue for what is happening now. 1999-2000 then PM Gordon Brown sold half of the UK'S gold reserve. The sale of the US's Bitcoin is said to be in four installments and a quarter is already gone according to what I have read. If it was going to be an issue, it would've been by now. There's clearly enough demand to absorb the US government's stupidity and ineptitude
Moonboy1
⋅
How ridiculous. Simple math: the “gov-dump-fud” equates to < 1% of CS. Of course they dump BTC, they want focus on FedPay….
@Tradersweekly, I came off a bit exaggerated. My bad. Great analysis firstly! I can learn a lot obviously. My point is that is what’s most expected given the impulse moves on well-respected areas of confluence driven on mostly bearish sentiment. Look at Delta > 1D, it has to pop sometime, right?
Wick12
⋅
So if you really wanted to know the impact of dumping ~10,000 btc you would find the wallet and the date sold. My guess is it was March 9th wick down because stupid is, stupid does
Tradersweekly
⋅
@Wick12, It was supposedly on 14th March 2023 (but do not take me for a word) and it did not have much impact on the price. But it may cause more damage next time if the market becomes even less liquid.
AngryBuffel
⋅
@Wick12, really large orders are executed by bots using limit orders, otherwise you get ridiculous amounts of slippage while executing the order
AngelaCat
⋅
Great view as always. Investors remain optimistic, too optimistic. I think we should also see the risk of profit taking increasing, especially as recession concerns are likely to rise again if further economic data point to a slowdown in economic activity. Higher energy prices also increase the risk that inflation will rise again, this risk has not been banished, even if the US economy slows down.