Bitcoin - The massive selloff might lurk behind a corner
Shortly after our last idea on Bitcoin, it started to manifest weakness. Accordingly, we remain bearish and maintain our price targets at 17 500 USD and 15 000 USD. That is mainly due to the persistence of bearish fundamental factors. However, technical indicators across weekly and monthly time frames also support our views. Therefore, we think the cryptocurrency market is preparing for another leg down which will most likely culminate into a selloff that will drive the price of Bitcoin below our price targets. Despite that, we would like to monitor the price action and adjust price targets as the trend progresses.
A several worrying developments
Over the past few weeks, market participants have experienced the downfall of a stablecoin Luna and many (predominantly small-cap) cryptocurrencies. Additionally, they saw the Celsius Network pause withdrawals and transfers to its more than 1.7 million users who hold more than 151 000 Bitcoins at this “cryptocurrency bank.” In our opinion, we will see more trouble in this sector, especially among institutions that offer “stacking” and similar (allegedly) “risk-free” investments which guarantee unsustainable returns over a short time. Another problem on the horizon is the prospect of higher interest rates and economic tightening in the USA and around the globe. That will drag the price of cryptocurrencies to new lows against fiat money. In addition, the next issue arises with the upcoming regulation regarding stablecoins and token issuance. Again, we think that will negatively impact the market. Indeed, we believe there lies the possibility of the U.S. regulator to legally mandate exchanges to back a significant portion of their tokens by fiat money. If so, that could potentially trigger a massive selloff as we deem cryptocurrency exchanges like Bitfinex unable to fulfill this (hypothetical future) requirement. Therefore, we voice a big word of caution to market participants.
Illustration 1.01
Medium and long-term moving averages support the bearish thesis for BTCUSD.
Technical analysis - daily time frame
RSI broke below 30 points which is extremely bearish for BTCUSD. Stochastic also turned bearish. DM+ and DM- remain bearish. MACD flattens. Overall, the daily time frame is bearish.
Illustration 1.02
In merely 212 days, Bitcoin declined over 70% from its all-time high value.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
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.
A several worrying developments
Over the past few weeks, market participants have experienced the downfall of a stablecoin Luna and many (predominantly small-cap) cryptocurrencies. Additionally, they saw the Celsius Network pause withdrawals and transfers to its more than 1.7 million users who hold more than 151 000 Bitcoins at this “cryptocurrency bank.” In our opinion, we will see more trouble in this sector, especially among institutions that offer “stacking” and similar (allegedly) “risk-free” investments which guarantee unsustainable returns over a short time. Another problem on the horizon is the prospect of higher interest rates and economic tightening in the USA and around the globe. That will drag the price of cryptocurrencies to new lows against fiat money. In addition, the next issue arises with the upcoming regulation regarding stablecoins and token issuance. Again, we think that will negatively impact the market. Indeed, we believe there lies the possibility of the U.S. regulator to legally mandate exchanges to back a significant portion of their tokens by fiat money. If so, that could potentially trigger a massive selloff as we deem cryptocurrency exchanges like Bitfinex unable to fulfill this (hypothetical future) requirement. Therefore, we voice a big word of caution to market participants.
Illustration 1.01
Technical analysis - daily time frame
RSI broke below 30 points which is extremely bearish for BTCUSD. Stochastic also turned bearish. DM+ and DM- remain bearish. MACD flattens. Overall, the daily time frame is bearish.
Illustration 1.02
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
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.
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