The Bullish Case for the Short-Term
Fundamentals:
Bitcoin has historically done well in October, but we know that seasonality only puts the probabilities on our side rather than being any absolute indicator. The USDX has had a bit of a sell off followed by a retracement back to near the Swing High and next week will likely reveal more about the general direction of the markets across the board unless everything trades flat in a limp manner. While I have a difficult time believing the USDX / DXY has topped while we continue to deal with inflation and other global threats to stability over the upcoming years, we do know in the short-term that Central Banks like the Bank of Japan have already intervened directly at least once to try hold the USD down and to keep their own currencies afloat. It would also make sense with the midterms coming up that equities either trade sideways or have a weak rally (as opposed to dumping) in order to reflect better on the powers that be going into November.
Technicals:
There is plenty of potential Liquidity for Buy Orders in the 25k-36k based on previous Highs where we know large Short Positions either Trail or Set their Stop Losses (which are of course Buy Orders). Breakout Long traders would also be interested in buying above a breakout.
And, while I do not trade based on traditional notions of Support / Resistance , I learned from my trading mentor that classical ideas of Support flipped to Resistance (and vice versa) can apply to areas of Order Flow that are based on Weekly and Monthly HTF macro values. In this case, I would be surprised to see Price make it past the 36k area in a Rally scenario without facing considerable Selling Interest during any initial attempt to get back above that range.
The Bearish Case for the Short-Term
Fundamentals:
The Fed continues to remain steadfast to their hawkish stance and Powell has stated they will continue to raise interest rates. I am not an expert in global affairs, so I will not even attempt to address supply chain issues and other global conflicts. The Stock Market has historically performed better after elections than leading up to them. BTC has decoupled for brief moments from tech stocks before, but correlations and inverse correlations seem all over the place at the moment, so your guess for which seasonal tendencies and correlations to pay attention to is as good as mine. This is my first time trading and investing in such a macro environment, so I am learning a lot as these crazy times unfold.
Technicals:
There is plenty of Liquidity in the form of Sell Orders down below as well. Depending on the exchange used to measure Price, the last two Bear Markets in the 2013 cycle and 2017 cycle had a drawdown of roughly 84-86% from their peak to trough. If we want to assume history will repeat during this cycle, then the current Low of around -74% would have further potential to the downside, which would place us closer to the $11, 000 range. This would also align with the last time there was institutional interest when MicroStrategy first bought BTC in the 10-12k range in 2020. However, there has obviously been lots of institutional interest in BTC at current Prices anywhere below 20k, so I personally disagree with any traders who are guessing the bottom will be 10k or even lower than that (e.g. Gareth Soloway could potentially be right about the 12k range but 3~4k seems highly unlikely).
Long-Term Outlook:
I am personally Bullish on crypto as a whole, so I am biased. I try to keep my biases in check when making short-term trades using Technical Analysis but I remain Bullish in the long-term from the DCA Buy & Hold investor perspective. Increased regulations and involvement from companies like Blackrock are concerning to the crypto ethos, but all these shifts could bode well for Price Action going into the next Bull Market cycle sometime after the next BTC halving in 2024.
While I am aware that large volume means that there is a ton of selling at current levels, I would argue that large volume near the Lows of a large range (from peak to trough) is better interpreted as accumulation rather than distribution. Smart Money (large funds, whales, etc.) sell into strength during Bull Markets. They would have no interest in selling at these levels other than to hedge small gains or to function as Market Makers who suppress Price into trading sideways in order to engineer liquidity above and below a range while making the retail investor crowd bored (uninterested) with a particular asset / market during long-term periods of accumulation.
Also note that there is a high % of HODLers at the moment as we continue to see large amounts of BTC leaving exchanges.
Fundamentals:
Bitcoin has historically done well in October, but we know that seasonality only puts the probabilities on our side rather than being any absolute indicator. The USDX has had a bit of a sell off followed by a retracement back to near the Swing High and next week will likely reveal more about the general direction of the markets across the board unless everything trades flat in a limp manner. While I have a difficult time believing the USDX / DXY has topped while we continue to deal with inflation and other global threats to stability over the upcoming years, we do know in the short-term that Central Banks like the Bank of Japan have already intervened directly at least once to try hold the USD down and to keep their own currencies afloat. It would also make sense with the midterms coming up that equities either trade sideways or have a weak rally (as opposed to dumping) in order to reflect better on the powers that be going into November.
Technicals:
There is plenty of potential Liquidity for Buy Orders in the 25k-36k based on previous Highs where we know large Short Positions either Trail or Set their Stop Losses (which are of course Buy Orders). Breakout Long traders would also be interested in buying above a breakout.
And, while I do not trade based on traditional notions of Support / Resistance , I learned from my trading mentor that classical ideas of Support flipped to Resistance (and vice versa) can apply to areas of Order Flow that are based on Weekly and Monthly HTF macro values. In this case, I would be surprised to see Price make it past the 36k area in a Rally scenario without facing considerable Selling Interest during any initial attempt to get back above that range.
The Bearish Case for the Short-Term
Fundamentals:
The Fed continues to remain steadfast to their hawkish stance and Powell has stated they will continue to raise interest rates. I am not an expert in global affairs, so I will not even attempt to address supply chain issues and other global conflicts. The Stock Market has historically performed better after elections than leading up to them. BTC has decoupled for brief moments from tech stocks before, but correlations and inverse correlations seem all over the place at the moment, so your guess for which seasonal tendencies and correlations to pay attention to is as good as mine. This is my first time trading and investing in such a macro environment, so I am learning a lot as these crazy times unfold.
Technicals:
There is plenty of Liquidity in the form of Sell Orders down below as well. Depending on the exchange used to measure Price, the last two Bear Markets in the 2013 cycle and 2017 cycle had a drawdown of roughly 84-86% from their peak to trough. If we want to assume history will repeat during this cycle, then the current Low of around -74% would have further potential to the downside, which would place us closer to the $11, 000 range. This would also align with the last time there was institutional interest when MicroStrategy first bought BTC in the 10-12k range in 2020. However, there has obviously been lots of institutional interest in BTC at current Prices anywhere below 20k, so I personally disagree with any traders who are guessing the bottom will be 10k or even lower than that (e.g. Gareth Soloway could potentially be right about the 12k range but 3~4k seems highly unlikely).
Long-Term Outlook:
I am personally Bullish on crypto as a whole, so I am biased. I try to keep my biases in check when making short-term trades using Technical Analysis but I remain Bullish in the long-term from the DCA Buy & Hold investor perspective. Increased regulations and involvement from companies like Blackrock are concerning to the crypto ethos, but all these shifts could bode well for Price Action going into the next Bull Market cycle sometime after the next BTC halving in 2024.
While I am aware that large volume means that there is a ton of selling at current levels, I would argue that large volume near the Lows of a large range (from peak to trough) is better interpreted as accumulation rather than distribution. Smart Money (large funds, whales, etc.) sell into strength during Bull Markets. They would have no interest in selling at these levels other than to hedge small gains or to function as Market Makers who suppress Price into trading sideways in order to engineer liquidity above and below a range while making the retail investor crowd bored (uninterested) with a particular asset / market during long-term periods of accumulation.
Also note that there is a high % of HODLers at the moment as we continue to see large amounts of BTC leaving exchanges.
Time. Price. Liquidity.