BTC is at an interesting juncture with the macro backdrop and the technicals giving us two different short term narratives.
Microstrategy yesterday indicated that they were planning a $750m BTC purchase (following a fund raise driven by selling off stock), we are looking good to have a September rate pause (CME currently rating this as 80% likely), the spot ETF applications are on the horizon and we're entering the final straight towards the 2024 halving.
So it's hard not to be bullish on BTC with both short term and long term macro analysis pointing up.
However - the technicals in the short term aren't so keen. On the 3day chart we are currently breaking below the 50 and 20 Moving averages. A trip towards the lower trendline looks almost inevitable with the extremely thin volume that has been a staple of the summer.
I'm believe that the 20EMA (I'm using daily MA's on this chart) crossing below the 50 will confirm this move. We isolated the crossing of the 20MA above the 50 back in May which preceded the test of $30k, hopefully the reverse move isn't so impactful.
I would guess that the reason that the technicals and fundamentals aren't aligning is because we are seeing a liquidity grab from smart money ahead of the ETF's or even for the ETF's.
Supply of BTC is, given the news stories outlined above and shifting economic sentiment, likely short. As of July 3rd the number of addresses sending BTC to exchange addresses had decreased by over 80% (source: crypto quant) which represented the biggest decline in inflows in Bitcoins history. This probably leaves BlackRock etc. unable to fulfil their buy orders and we might be witnessing a driving down of price from July's illiquid consolidation area to Sub
29K
triggering long traders SL's and creating their own liquidity pool.
Where the technicals could start reflecting the bullish fundamentals would be if we can hold and confirm the lower trendline when the institutional buys kick in. This would firm up a bullish longer term technical, the broadening wedge shape which BTC has been drawing since the turn of the year. A run up towards the top trendline after skirting the lower trendline would be my mid to long term expectation.
We can see the repeating bull flag pattern tracking down to the trendline where back in June price fell down to and bounced from our trendline. This was supported by the 200MA so should the trendline breakdown, the 200MA becomes the next inflection point that the liquidity grab could target.
My play here is to accumulate (DCA) down to the lower trendline with a long target of $39.4k (the top of an unfilled CME gap from May '22), I'm avoiding shorting this trip down out of fear that the spot ETF's are signed off and we get a sudden pump.
Let me know what you think!
Microstrategy yesterday indicated that they were planning a $750m BTC purchase (following a fund raise driven by selling off stock), we are looking good to have a September rate pause (CME currently rating this as 80% likely), the spot ETF applications are on the horizon and we're entering the final straight towards the 2024 halving.
So it's hard not to be bullish on BTC with both short term and long term macro analysis pointing up.
However - the technicals in the short term aren't so keen. On the 3day chart we are currently breaking below the 50 and 20 Moving averages. A trip towards the lower trendline looks almost inevitable with the extremely thin volume that has been a staple of the summer.
I'm believe that the 20EMA (I'm using daily MA's on this chart) crossing below the 50 will confirm this move. We isolated the crossing of the 20MA above the 50 back in May which preceded the test of $30k, hopefully the reverse move isn't so impactful.
I would guess that the reason that the technicals and fundamentals aren't aligning is because we are seeing a liquidity grab from smart money ahead of the ETF's or even for the ETF's.
Supply of BTC is, given the news stories outlined above and shifting economic sentiment, likely short. As of July 3rd the number of addresses sending BTC to exchange addresses had decreased by over 80% (source: crypto quant) which represented the biggest decline in inflows in Bitcoins history. This probably leaves BlackRock etc. unable to fulfil their buy orders and we might be witnessing a driving down of price from July's illiquid consolidation area to Sub
29K
triggering long traders SL's and creating their own liquidity pool. Where the technicals could start reflecting the bullish fundamentals would be if we can hold and confirm the lower trendline when the institutional buys kick in. This would firm up a bullish longer term technical, the broadening wedge shape which BTC has been drawing since the turn of the year. A run up towards the top trendline after skirting the lower trendline would be my mid to long term expectation.
We can see the repeating bull flag pattern tracking down to the trendline where back in June price fell down to and bounced from our trendline. This was supported by the 200MA so should the trendline breakdown, the 200MA becomes the next inflection point that the liquidity grab could target.
My play here is to accumulate (DCA) down to the lower trendline with a long target of $39.4k (the top of an unfilled CME gap from May '22), I'm avoiding shorting this trip down out of fear that the spot ETF's are signed off and we get a sudden pump.
Let me know what you think!
Trade active:
Looks like the liquidity grab is now in effect.
With BTC derivatives making up around 70% of total traded BTC volume and the US retail market holding the biggest share of overall retails 17% of supply (Glassnode) I was pretty surprised that yesterdays announcement that coinbase would bring BTC futures to the US market was met with a dump.
Our previous analysis might be on point here, the news met with a sell off to liquidate longs taken on the back of ostensibly bullish news - creating liquidity in an illiquid low supply and low volume market.
The dump has taken us down to our broadening wedge's lower trendline. In the last analysis we anticipated skirting and bouncing at this point - lets see if this plays out. So far so good.
Let me know what you think?
With BTC derivatives making up around 70% of total traded BTC volume and the US retail market holding the biggest share of overall retails 17% of supply (Glassnode) I was pretty surprised that yesterdays announcement that coinbase would bring BTC futures to the US market was met with a dump.
Our previous analysis might be on point here, the news met with a sell off to liquidate longs taken on the back of ostensibly bullish news - creating liquidity in an illiquid low supply and low volume market.
The dump has taken us down to our broadening wedge's lower trendline. In the last analysis we anticipated skirting and bouncing at this point - lets see if this plays out. So far so good.
Let me know what you think?