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Tuesday Inferno market report

Tuesday Inferno market report

Analysis

TL;DR The picture looks positive, but we’re not counting on anything – this is bitcoin, after all.

 

Bitcoin has held the $5k level after the huge move we saw a week ago, indicating this wasn’t a simple pump-and-dump. This move has some legs. All the same, we’re not complacent about this market.

 

In positive news, BTC is trading above its 200-day moving average, which currently stands around $4,650. Meanwhile the 50-day MA stands at $4,200. That’s not a large difference, and assuming price stays in its current range we can expect a ‘Golden Cross’ in the relatively near future. This is the reverse of the ‘Death Cross’ we saw back in April last year, which traders took as a very bearish signal. The 4h RSI is no longer overbought, so a move to the upside is becoming increasingly possible.

 

However, the RSI is still massively overbought on the daily. We have seen something like a double top on the 4h. Meanwhile Longs are climbing and Shorts have dropped. That potentially sets things up for a long squeeze – when lots of traders are long, a whale can push the market downwards, liquidating those longs and sending the market even lower.

 

In short, we can’t say definitively whether this is a fakeout/bulltrap, or the real deal: a new bull market. Breaking $5,400 would help, and breaking $6,000 (and consolidating above) would be outstandingly bullish. $4,200 remains the last significant resistance, broken last week, and may need to be revisited and retested as support.

 

One issue we are concerned about is that huge, 20k BTC order last week. Someone spent around $100 million across three exchanges (Coinbase, Kraken, Bitstamp) within the space of an hour, in a co-ordinated buy. Oliver von Landsberg-Sadie, CEO of cryptocurrency firm BCB Group, commented:

There has been a single order that has been algorithmically-managed across these three venues, of around 20,000 BTC. If you look at the volumes on each of those three exchanges – there were in-concert, synchronized, units of volume of around 7,000 BTC in an hour.

 

That is interesting at the very least, and potentially suspicious. Buying on exchanges with that amount of money is inefficient. Slippage can be – and was, in this instance – significant. It pushed the price up almost $1,000. So why would you do that? Clearly, because you wanted to tell the market something, as well as simply buy the coins.

 

The question is, was there an ulterior motive? Was this the first stage of a well-funded pump-and-dump, or the true bull market?

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