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Inferno Saturday market update

Inferno Saturday market update

Analysis

Yesterday we focused on the Tether and Bitfinex news that pushed the price of bitcoin down by 10% at one point – and alts much further. As a follow-up, we’ll look at the state of the markets and give a more technical view of what’s going on.

 

The pattern of activity from recent weeks looks somewhat similar to the one at the end of the bear market in 2015: an immediate bounce after the crash to the low ($155 in January 2015, $3,100 in December 2018, both of which coincided with 200 WMA), a more gentle retest of that low and the 200 MA, a sharp rise above prior resistance ($300 in 2015, $4,200 in 2019) to a higher high ($310 in 2015, over $5,000 in 2019), and then faltering at the 50-week MA and…

 

At this point in 2015, the price fell to once again test the 200-week MA. For 2019, that final step has not yet been written. It is worth noting, though, that the Golden Cross (200 and 50-day MA crossover) was quickly followed by a Death Cross, before the second Golden Cross heralded the new bull market. We have recently seen a Golden Cross in bitcoin for the first time since 2015. Can we expect the same scenario to play out?

 

It’s also interesting that in 2015, the immediate catalyst for the fall from the 50 MA was a round of FUD caused by the ‘stress test’ (attack) on the network that was an early feature of the scaling debate (which ultimately resolved in SegWit implementation). At the time, there were questions about the overall sustainability of Bitcoin, and these concerns gave traders the catalyst they needed to sell. The market wasn’t ready for an uptrend at that point, but needed an excuse. Something very similar may have happened this time with Tether and Bitfinex. History doesn’t repeat, but it does rhyme.

 

Looking at other technicals, we see bearish divergence on the daily RSI – price had been going up, but RSI (momentum) falling. We might well expect that to continue since bitcoin was clearly overbought. While $5k currently remains intact, a bullish scenario would be a retest of the $4,200 support that was resistance only last month. If that holds, it would be a very positive sign. If not, then we could see a return to lower levels including, potentially, that 200 WMA once again.

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