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Tuesday Inferno market report

Tuesday Inferno market report

Analysis

TL;DR Consolidation continues with bitcoin’s channel-bound trading. The overall direction is still gently downwards, but it is fair to expect this relative calm to end soon.

 

Let’s start by recapping the big picture: for the past five weeks, bitcoin has been correcting since its near-moonshot to $13,880. It has traded within a broad channel, posting lower highs, though not yet lower lows. BTC came close to putting in another lower low on Sunday night, but bounced at $9,111 (Bitstamp).

 

There has been a lot of talk of an ultimate bottom in the $8,000 range. There’s prior support around $8,800, the 100-day MA just below that, the futures gap around $8,500, the 50% fib at $8,500, and the 21-week EMA now just above $8,000. There ought to be strong demand in the $8,000s, but as we explored yesterday, when ‘everyone’ thinks something is going to happen, there’s a good chance it won’t. 

 

RSI on the weekly is out of overbought territory now, back around 60, and around 42 on the daily. The 100-day moving average is rising to meet price. Volumes are dropping, price action becoming less volatile. Wait for it: these are the circumstances in which a big move occurs.

 

Meanwhile, contrarians might be encouraged by the increasing amount of bear talk. The Fear and Greed Index is down to 22, having touched levels not seen since bitcoin bottomed out at the beginning of the year. Goldbug Peter Schiff – never a fan of bitcoin – has warned that volumes are too low to sustain bitcoin’s price, that we have peaked below the 2017 bubble top, and that the ‘2019 low will not hold’.

 

At the same time, Tether’s market cap has hit a high of $4 billion, a proxy for the amount of money waiting on the sidelines. And Bakkt have confirmed their intention to launch in Q3, pending final regulatory approval on their storage solution.

 

Fundamentals are therefore strong, while sentiment is calmer – if not subdued – after the irrational bullishness of Q2. Many investors with a long-term outlook will see this as an opportunity. Of course, others will give in to their fears. Bitcoin is down over 30% from its recent peak, and they are scared it will keep dropping.

 

It’s all part of the fun of crypto.

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