Last week, we drew attention to Bitcoin deviating too far from its moving averages. We noted that such extreme deviation made a good case for a significant rebound in the price of Bitcoin before further downside. After a few days, we saw the first attempt of Bitcoin to retrace toward its 20-day SMA, which failed at $26,800. After this failure and Bitcoin falling back to $26,000, we said technicals stayed bearish on the daily chart. However, we also mentioned one quite bullish development off the chart that caught our attention. Specifically, we discussed the growing trend in the number of Bitcoin addresses with large holdings and how they often tend to precede an uptick in the price of Bitcoin. Subsequently, we stated yesterday that a combination of bearish technicals and bullish accumulation among big players could lead to a volatile move to either side. Only a few hours after the statement, Bitcoin skyrocketed above $28,000, fully retracing to the 20-day SMA.
Going back to April 2023 and July 2023, we saw a similar phenomenon with large players accumulating and later rug-pulling retail investors (we outlined these instances back then). These precedents, combined with some other factors, make a good case that we could see the same end to the current rebound, especially if the stock market’s relief fizzles out.
For more clues, we will pay close attention to RSI, MACD, and Stochastic on the daily time frame. To keep a bearish thesis alive, we would like to see MACD stay below the midpoint and RSI with Stochastic start flattening (and eventually reversing back to the downside). Furthermore, we would like to see Bitcoin fail to hold above the 20-day SMA. Besides that, we want to see the number of Bitcoin addresses with large holdings start to tick down (suggesting offloading to retail’s hands). We will provide more thoughts on the asset with the emergence of new developments in the market.
Illustration 1.01
Illustration 1.01 shows the daily chart of BTCUSD and two simple moving averages. The yellow arrow highlights the price retracement toward the 20-day SMA.
Illustration 1.02
Illustration 1.02 shows the daily chart of RSI. The yellow arrow indicates a bullish breakout above 30 points. To bolster
Technical analysis gauge
Daily time frame = Slightly bullish
Weekly time frame = Slightly bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.
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.
Going back to April 2023 and July 2023, we saw a similar phenomenon with large players accumulating and later rug-pulling retail investors (we outlined these instances back then). These precedents, combined with some other factors, make a good case that we could see the same end to the current rebound, especially if the stock market’s relief fizzles out.
For more clues, we will pay close attention to RSI, MACD, and Stochastic on the daily time frame. To keep a bearish thesis alive, we would like to see MACD stay below the midpoint and RSI with Stochastic start flattening (and eventually reversing back to the downside). Furthermore, we would like to see Bitcoin fail to hold above the 20-day SMA. Besides that, we want to see the number of Bitcoin addresses with large holdings start to tick down (suggesting offloading to retail’s hands). We will provide more thoughts on the asset with the emergence of new developments in the market.
Illustration 1.01
Illustration 1.02
Technical analysis gauge
Daily time frame = Slightly bullish
Weekly time frame = Slightly bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.
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.
Comment:
One more thing to mention: Yesterday, Grayscale won a minor victory against the SEC regarding the conversion of its Grayscale Bitcoin Trust to spot Bitcoin ETF. However, the court did not mandate the SEC to do the conversion (it mandated to review why the SEC was against it). Furthermore, recently, a lot of news about Bitcoin ETF tended to positively impact the price. However, generally, these upticks proved to be only temporary. That would be something to consider while watching the current relief.
Comment:
Bitcoin erased nearly all of its gains from a spike to the upside.
Comment:
Bitcoin dropped below $26,000 (below the price level from which the spike began on Tuesday). We continue to maintain a notion that Bitcoin will fall to the area around $24,000 (and likely go further down from there).
Comment:
Data from yesterday suggests that the number of Bitcoin addresses with holdings exceeding 1,000 or more tokens ticked down. That indicates big players took this opportunity to liquidate some of their positions. Our stance remains unchanged.
Comment:
The weekly time frame is turning increasingly bearish, with RSI and Stochastic pointing to the downside and MACD hovering slightly above the midpoint. If MACD breaks below zero, it will strongly bolster a bearish case going forward.
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