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Analysis

Inferno: Long-term market report

It’s the Easter holiday, so we’ll take a break from our short-term market analysis to look at the big picture.

In our opinion the picture for bitcoin is more uncertain than ever for the short term, good for the medium term and excellent for the long term.

 

The context for short-term uncertainty is that single huge buy of 20,000 BTC, which took place suddenly after 15 months of the bear market. When BTC abruptly trades $1,000 higher, you have to be mindful of the possibility it will crash just as fast. At the same time, this did paint a higher high, and a degree of confidence has returned to the crypto market as a result. Traders are balancing their disbelief that this happened and that it could continue with their growing optimism.

 

In the medium-to-long-term, of course, we believe that bitcoin has a bright future. Whether the bear market has ended or not, it’s closer to the end than the beginning and all the indications are that adoption will continue apace in the coming years.

 

There are several zones of interest for the coming days and weeks:

  • The $4,900-5,000 area, which has acted as support since the move up, and will act as resistance if price drops below it.
  • $4,200: the major resistance that BTC broke at the beginning of April to create a higher high. A retest of this level as support would be potential confirmation or invalidation of the new uptrend.
  • 200-weekly moving average retest. This will doubtless be a strong buy zone, from around $3,500 down to around $3,200.
  • Lower than $3,100 – our previous low for this cycle – and we can expect a drop into the $2,000 range and another leg down for the bear market.

 

Major analysts are split between different scenarios, with some bullish and some bearish, and some still holding to their belief that sub–$2k prices are likely.

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Tuesday Inferno market update

Last night saw a slide below $5k, followed by a bounce. Are lower price coming for BTC?

 

After an extremely bullish week at the start of this month, the last weekly candle closed on Sunday as a doji: a candle with a flat body, indicating a narrow trading range, and wicks up and down.

 

Dojis typically signal indecision, and that’s exactly what we’d expect after a $1,000 rally through multiple support lines. Many traders will be taking profit, disbelieving that prices can go higher in the near term. Others are convinced the bull market is on. The market is at a point of inflection, and once again it’s decision time. This kind of situation also calls for extreme caution on the part of traders, who risk being burned heavily if they make a wrong move – or converserly, profiting handsomely if they call the market right.

 

Last night, BTC sold back down into the $4,900 range, as it has done several times now, bouncing off a gently-rising support line. The last few 4h candles have show rising price on faltering volume. At this point, indications are still that the market favours a downward move. RSI on the daily is still close to the 70 (overbought) area.

 

Against that, we are clearly seeing a measure of confidence return to the crypto markets, and a Golden Cross is looming as the 50-day moving average rises to meet the 200-day moving average. BTC is currently trading above both, which is theoretically bullish.

 

However, we are still wary after that huge spike in price, brought about by just one large buyer. It’s entirely possible his motives were bad: to manipulate the market into thinking the bullrun was here, then sell the coins he had bought at the top. At the moment, we simply don’t know how this will turn out. The overall trend is unclear.

 

In other news, Binance has announced it is delisting BSV following Craig Wright’s legal action against @hodlonaut, and Calvin Ayre’s insults towards the exchange. Several other major crypto services have joined Binance and stated that they will no longer be supporting BSV.

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Friday Inferno market update

It’s been quite a fortnight, but we’re now staring at a moment of choice for bitcoin.

 

After last week’s incredible spike upwards, we might have expected bitcoin to correct immediately. In fact, after some initial volatility, it actually pushed higher – topping $5,466 (Bitstamp) on Wednesday afternoon.

 

Given that all the indicators on the longer-term timeframes were already screaming overbought, this was remarkable. Predictably, it was only a short-term move to the upside, and yesterday saw the sell-off we expected from that, bringing the price back down to its current level of just over $5,000.

 

This a key line for bitcoin, since that original move higher took BTC above $5k. The question now is whether it will hold onto gains, or whether it will retrace further – potentially a lot further. There’s a case for suggesting we will retest the $4,200 line that proved strong resistance, and that may be support now. If that fails, then there is a serious question mark over whether the bear market is, indeed, over. If BTC falls back into its previous range, then this looks like a manipulation spike (powered by that mystery 20,000 buy) or the end of a fourth wave in an Elliott wave cycle – with a final fifth wave to play out lower.

 

Leading analysts are divided on this. Tone Vays is bearish, still expecting sub-$3k prices and a bottom sometime in the autumn. Alessio Rastani is similarly bearish, having called for a relief rally to $5,000 before this happened. Others like Willy Woo and Murad Mahmudov believe the bottom is in for bitcoin.

 

Right now, at the time of writing, BTC is holding $5,000 – just – having dipped below it recently. Despite the fall from almost $5,500, RSI for the daily has only just dropped out of overbought territory, indicating just how significant that move higher was. 50 and 200 moving averages for the daily are converging, and a ‘Golden Cross’ (the opposite of the Death Cross we saw last April) will occur in the near future unless there is another significant move to the downside. Price is currently well above the 200 MA.

 

It has been a tough week for alts, with heavy losses, powered by BTC’s falls. Alts traders are clearly looking to BTC for cues about the direction the market will take, and hedging for what they believe may happen next.

 

And whatever happens next will be significant – whichever way the market decides to go.

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Tuesday Inferno market report

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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Friday Inferno market update

It’s been quite the week, but the big question is, of course – what next?

 

Bitcoin made incredible gains this week, surging over $1,000 to hit a high of $5,345. Not only was this a huge rise in its own right, but it was a landmark moment in the bear market: this was the first convinving higher high bitcoin has posted in over 15 months. It was the first indication that the bear market might be over. But it is a ‘might’, because the end of this story has not yet been written.

 

Bitcoin was hugely overbought, with the RSI well over the 70 mark on almost every timeframe – and over 90 on some. A correction was highly predictable and likely: after such a frenzy of buying, profit-taking is to be expected. Consequently the price fell by $500 to put in a local low around $4,800. The 1-day chart displays a rather bearish doji candle, and bitcoin struggled to hold $5,000. At the time of writing, the price sits at $4,940.

 

Many metrics unsurprisingly point to overbought conditions. These include on-chain metrics like NVT as well as technical indicators like RSI. (NVT Signal hit 155, which can be considered into overbought territory.) But there’s no underplaying the significance of that move.

 

So, what next? Is this a bull trap, before another leg downwards? Is this the top – or near the top – of an Elliott Wave 4, with a final 5th wave to come?

 

At the very least, technical analysis would suggest we need to retest $4,200, the zone of the breakout; old resistance should become new support if this move is to continue. That may not happen for a while but it would be characteristic of the market if it did. Despite the fact that $4,200 still lies over $600 to the downside, consolidating above that would actually be bullish.

 

Meanwhlie we now have resistance at $5,000. Should bitcoin’s price break above that again, we have a zone of interest around $5,500. Then, of course, there is the ultimate barrier to overcome: $6k, which proves such strong support on the way down.

 

If $6,000 is broken and price consolidates above that, the bull market is definitely on.

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Tuesday Inferno market report

TL;DR sometimes you just need to take a Green Day.

 

Boom! Bitcoin has always surprised us, but no one saw this one coming.

 

After tracking along and struggling to push above resistance at $4,200, the picture was unclear for bitcoin. We have just ended the week, month and quarter up, after closing around $4,100. Then, out of nowhere, came a huge green candle, the likes of which we have not seen for many months.

 

Bitcoin smashed through two major resistance layers at $4,300 and $4,500, currently sitting just below $4,800. BTC leaped almost $900 in just an hour. And there was VOLUME. Many, many times the average volume for preceding weeks. This was a very convincing move, with evident confidence from traders. Bitcoin has undeniably put in a higher high for the first time in many months. It peaked over $5,000 (Bitstamp), more than 20% up on the previous day. That doesn’t prove we’re heading further up, but this is an extremely promising development.

 

Of course, this was unsustainable in the short term and we’ve had a pullback. The thing to watch now is whether BTC bounces off old resistance, which should now become new support. That is what will critically show whether this is sustainable. For now, it appears to show – tentatively – that the bear market is over. We will hopefully see confirmation of that in the coming hours and days. The daily 200 MA is currently around $4,600, which will also be a key point to watch.

 

There will be volatility in the short term. The wick on the 4h candle shows that. But make no mistake: this was a very, very meaningful move.

 

Alts moved up too but did not follow BTC to the same extent. The alts cap has clearly been rising over last 3 months now. Alts mostly moved down against BTC, though easily held their USD value. We will also be watching carefully what happens here, whether money moves back into the alts and powers them massively higher, or whether traders are more conservative and seek to keep funds in BTC ahead of anticipated further moves to the upside.

 

It’s exciting times, guys. Welcome to the ride.

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Friday market report

TL;DR the wait continues and it’s not looking any better.

 

The bitcoin market has displayed little new activity over recent days. Wednesday saw a lift from the high $3,800s back above $4,000, but it has not met with the further gains needed to cement a proper rally. Overnight bitcoin posted a high of $4,050 – once again a lower low.

There is a clear resistance band in the area from $4,050 to $4,200, and as we can see, traders sold as soon as bitcoin approached this band. Moving out to the daily chart, we can see that the market has rejected this resistance zone no fewer than five times already this year, and this may be the sixth. Each time, the price comes down a little more (with the exception of the fakeout back in February).

 

Volatility has now been very low for an extended period of time – longer even than the calm we saw in the autumn before bitcoin crashed below $6,000. It’s fair to expect that this consolidation will result in a big move, whether to the upside or the downside. When it does come, it will give the market a strong steer as to which direction to take next. If it goes up, breaking the resistance band at $4,200, we can expect much higher moves. Ultimately the target of that rally could be as high as $6,000, where traders will meet extremely heavy resistance. To the downside, we have all our old support levels, including the 200 WMA – which is now around $3,450. On that weekly chart, the picture is very clear: price has been rising slowly, with downward-sloping volume. Traders are buying less and less BTC at (slightly) higher and higher prices each week. Unless something significant changes, then sooner or later that process will reach its logical conclusion and the number of buyers will reach equilibrium with sellers – and then it’s downwards.

 

On Sunday the week, month and quarter end on the same day. That will be a significant day for bitcoin, because all of those candles matter for traders looking to take longer-term positions. Price at the close on Sunday will be an important factor to pay attention to.

 

It’s not all bad, of course. It’s worth noting that many alts have posted very strong gains recently. Over just the last week, BAT has painted a major green candle and is now flirting with its all-time high in BTC terms.

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Tuesday crypto market report

TL;DR the next 24 hours are critical.

 

Bitcoin has seen a lower high again, with its recent failure to hold the $4k level. After the fakeout and consolidation in the high $3,900s, yesterday bitcoin dumped back down to a low of $3,850 – the 200 MA on the 4h – before bouncing back to around $3,900.

 

This move broke the rising support line we have seen painted over the past several weeks, since early February. At the time of writing, the price is sitting right on that line; we will pay keen attention to where it closes. However, what we can say is that there are multiple resistance zones to the immediate upside. To the downside, we have the 50-day MA at $3,800, the 100-day at $3,700, and historic support at $3,600.

 

On the weekly chart, the picture becomes much clearer. We have a series of flat candles, with price rising weakly on very little volume. The trading range is very small – we have not seen this lack of volatility for around two years.

 

In wider crypto news, we see repeated research and reports stating that up to 95% of crypto trading volumes are fake – something that many traders have long known, but that is now being quantified and coming to much wider attention. This plays into the narrative of a low-volume price rise, ahead of a potential wave 5 or significant move to the downside.

 

Meanwhile there is no more news on the bitcoin ETF, with no approval expected from the SEC until nearer the end of this year. Bakkt, too, is quiet: the CFTC has said they are diligently working on Bakkt’s application, but it’s another ‘no news’ situation – an update that tells us nothing new.

 

These are conditions – fundamental and technical – that beg for a big more. The underlying picture for Bitcoin is great: rising hashrate, strong network and so on. But the sentiment and the immediate picture for traders is bleak.

 

Embrace the darkness. And enjoy it while it lasts.

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Friday Inferno market roundup

Bitcoin does it again with a ‘surprise’ move to the downside.

 

Earlier this week the picture was bullish, with bitcoin breaking through the $4k barrier once again and – critically – this time appearing to consolidate there. Yesterday, the price inched higher, touching $4,055 (Bitstamp), suggesting that BTC might be about to make a break for the resistance zone just above, at $4,100–$4,200. That would have been game changing.

 

It was not to be. As has happened so many times before, we saw a sudden and hard move downwards. This was another high-volume dump, back below $4k, going as low as support around the $3,900 zone.

 

In terms of major support and resistance levels in play, this actually changes relatively little. There is still that significant resistance zone at $4,200. Should bitcoin break that, it would be a higher high and that would be one signal that the bear market could be over. (It would not be conclusive, but since we have not yet had a higher high, it is required and would be a positive development.)

 

Meanwhile, BTC is still trading above the 50-day and 100-day moving averages. We also have a rising support line that started with the low of 8 February. That currently stands at around $3,900. $4k stands as psychological resistance and now, as the rough area of the last high. Price is being squeezed, with only a ~$100 band to play in – and getting smaller all the time. Once again, it’s decision time.

 

Meanwhile, we have some good and bad news from the wider Bitcoin ecosphere. This week we have had the news that exchanges are faking trading volumes by an average of 800%. Just a handful post legitimate volumes, while others exaggerate activity by up to 100x.

More positively, hashrate is rising back towards its all-time high again, after a slump at the end of last year when mining became unprofitable for smaller rig owners.

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Tuesday Inferno market update

TL;DR The calm persists…

 

We’ll start by zooming out to the daily chart, because there’s comparatively little new on the shorter-term timeframes. Looking at the daily, we can see that bitcoin has, essentially, drifted sideways for three months now. After the fall to $3,100, the vast majority of the action has taken place within the band between around $3,500 and $4,000.

 

Bitcoin is trading in a range. This is characteristic of a post-capitulation market – just like we saw after capitulation in 2015. However, it’s also possible that this is another consolidation before a final move lower, as we saw in October and November. We recently saw another short-term move above $4,000, but bitcoin was unable to maintain that level. That painted a lower high, once again – not a bullish sign. On the other hand, there’s an absence of highly bearish factors too.

 

Looking at this another way, this could be a fourth wave in an Elliott Wave cycle – a corrective wave up before a final fifth wave lower. Right now, the charts can be read in different ways, and that’s exactly what crypto analysts are doing. There is no clear direction to the market, and the signals are very mixed. For all but the most expert traders, emotion and hope will colour the analyses, which is much what we see on Crypto Twitter. This is a time of potentially huge opportunity, the bottom of the cycle – but it’s time of risk, too, if it turns out we have another fall on the cards.

 

Playing into the bigger picture, Google Trends searches for bitcoin are not showing the increasing volume that typically pre-figures a price rise. In the past, searches have correlated closely with action. Watch for an uptick in action: it’s a useful indicator.

Lastly, the Lightning Network is growing fast, with well over 1,000 BTC now locked in almost 40,000 payment channels. LN adoption will be massively important in the next bull cycle, since it ensures the ability to make micropayments.

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