VictorCobra

Bitcoin Roadmap For The Months Ahead - Looking For Liquidity

GEMINI:BTCUSD   Bitcoin / U.S. Dollar
In my first video from yesterday, I spoke about the 9 month EMA , and why the monthly close today could be a pretty important indicator as to whether we'll see bull market continuation or not. I think beginning a bear market here would be unfortunate for crypto, as it would prove the diminishing returns theory. While Bitcoin might remain attractive to institutions, retail investors looking for quick gains might become turned off. I will strongly consider taking some profit on the next major bounce, depending on its strength. However, the monthly hasn't closed yet. Bitcoin will need to close today well above $36k to look somewhat decent. Yesterday, a bullish monthly close seemed fully possible, but it looks more likely we will see a bearish close today. We'll see. Anything is possible. It's even possible the monthly close will turn out to not mean much (just as I have suggested that the death daily cross might not mean much).

In the main chart, you can see the curved structure I drew many weeks ago. You can also see a mini-bearish channel forming (light blue). Since Bitcoin has failed to make a larger bounce and break out of the yellow resistance, it has extended outwards, and may end up forming what could be drawn as a straight line once we near September. Of course, a breakout prior to that would be bullish , but this is how long Bitcoin can take to make a more significant upside move. It could take even longer than that, if Bitcoin finds itself at a lower price range by then.

There are two colored zones marked on this chart. They are both areas where I'd expect to see a lot of high-volume price action, so I consider them liquidity zones. Lots of sellers want to get out between $46k and $65k, while lots of buyers want to purchase Bitcoin below $20k. This makes it a likely place where price would find strong demand, and it should serve as extremely strong support. The precise bounce level from that zone would be hard to time (if it gets there). Much below $13.6-13.8k, and I will consider Bitcoin's long term uptrend to be broken. I think that would be the "max pain" scenario. Since it was broken to the upside in 2020, it has not been tested as support. If we are to assume that this space will continue to grow in value, I would prefer liquidity to be tested in the blue zone above as well. Even if we are ultimately headed to sub-$20k prices, I would like to see $46k+ become strong resistance. That is where I may reduce some more crypto risk.

I am finally leaning neutral to bearish on the market, but that doesn't mean Bitcoin can't move up from here. There is a positive development on this chart, in the form of the broken downtrend held as support. Bitcoin has also bounced from a pretty important trendline on my Coinbase chart:
We can also observe that the TOTAL crypto market cap has simply tested the highs from January as support. There's a long way to fall if that level breaks down - back towards the previous all-time high.
The role stablecoins play in the market cap shouldn't be ignored either, as the crypto space can evolve to have less demand for non-stablecoins over time. This would be an interesting bearish scenario for Bitcoin , Ethereum , and other major cryptocurrencies.

Here's USDT dominance, showing that spikes clearly coincide with large Bitcoin drops. Based on this, we may indeed be near a bottom, unless of course USDT dominance breaks above resistance:
USDC dominance is even more striking. Perhaps this is also telling us something potentially bullish about the market, at least in the short term. This is why I think I could take some profit at higher levels, even if we get a longer bear market and new lows later this year.
TLDR:
In order to move up, we will need to see Bitcoin break my mini-bearish channel and then break the yellow curved resistance. Maybe now that I'm becoming more bearish , prices can finally reverse :)

This is not financial advice! This is meant for my personal use, for speculation, and for entertainment.

-Victor Cobra

Comment: I'll just add - the reason why the $13k-20k zone has a lot of liquidity is because it should be a high area of demand, but ALSO would be an area where a lot of market participants would panic sell, believing Bitcoin would never recover. This is why it's the "max pain" scenario. But if Bitcoin maintains this range (28k-40k) on a weekly closing basis, it has a chance to build a solid base into the fall months. I'll become more short term bullish if Bitcoin can break and hold above the 46-50k zone on a weekly close with strong volume.
Comment: If Bitcoin continues up from here and breaks ATH, $120k-130k is the next target for me (roughly double the previous top).
Comment: Interesting....Bitcoin has arguably snuck out of this downtrend. The curved resistance lies overhead around $45k at the moment. It would probably be hard for BItcoin to crack that level. If it breaks through, and holds above the curved downtrend, that could signal a reversal. For now, I'm leaning towards selling some crypto on the next bounce, based on the monthly close below the 9 EMA
Comment: Still holding the trendline
Comment: Should really have extended the curve to include the rally from January 2021. It brings the current resistance up slightly, closer to $46k
Comment: Since the curved resistance is a little arbitrary, it's possible Bitcoin has already broken it.
Comment: A more local downtrend:
Comment: Although Bitcoin is now below my trendline on Coinbase, it's possible that price is breaking out of the curved downtrend on my Gemini chart. I redrew it with the most touches, and this is the result:
Comment: Interestingly, although Bitcoin closed below the 9 month EMA in June, TOTAL never closed below. So there's still a possibility that we're just seeing a shorter bear market after such a parabolic rise (which is healthy).

Related Ideas