Bitcoin: dead cat bounce topping out
Telah dikemas kini
Before we get into more specific details of the price movement, let me explain why I see more downside in this market:
1. Clearly, we haven’t seen the capitulation bottom. If you follow every single Bitcoin bear market you can see that it always ends with a sell off on high volume and that hasn’t happened here yet. Everyone is still in profits. You got hurt only if you bought in the last month of a bubble:
Hodlers on hopium are still in the market and the rallies only get weaker and more corrective, showing that there is no fuel for a retrace. This can continue for some time, but when we get out of this zone the move will be brutal.
2. Why we get this environment is because there is nobody willing to buy because:
a. Retailers leave the market scared of losing money. Whatever there is in the news, there is always not enough FOMO to even push to previous highs. We need ppl to sell into the bottom to make the climb higher easier. (after capitulation)
b. Bitcoin ETF likely won’t get approved any time soon as the SEC will probably take the time. I’m not a pro here so you can read this thread to get more insight: twitter.com/jchervinsky/status/1021795224958455810?s=21
c. Tether stopped printing USDT: i.imgur.com/LK3S4JG.png What’s more you can see how they recently started returning it back from the BFX wallet to the Treasury. This behavior usually signals that the rally is over for bitcoin: omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz
3. NVT and NVT Signal (ratios used to measure the market cap of Bitcoin relative to the use of the network for transferring value) show extreme overbought levels. There are no fundamental changes in the technology, therefore we can still use it. Lightning Network is tiny relative to the size of Bitcoin blockchain transaction volume.
i.imgur.com/Q5U1ouj.png
i.imgur.com/MVTCDCJ.png
NVT Signal has never failed and 6 last times it was this high the price of Bitcoin dropped 73% from the top on average. Think about it.
4. Bitcoin isn’t really correlated to any financial asset, but sometimes it follows volatile moves in the stock market. It’s not that strange. Both crypto and stocks are highly speculative, irrational and risky. Especially, at this stage of an economic cycle. This is Bitcoin and S&P500:
End of the last bear market:
2018:
I won’t get any deeper into it here, but maybe I’ll cover it in the next trading ideas, the stock market can get a correction soon and it can easily take bitcoin with it. Just look at this chart:
Now, let’s review technicals:
1. We are getting closer to the end of the 30 day cycle. This doesn’t give any exact information about the next price move, but the top for this rally will very likely be set somewhere here.
2. There are hidden bearish divergences formed on 1D chart (suggesting continuation of the downtrend) and regular bearish divergences on 4H (suggesting the top of the impulsive move up is in = change in trend)
Indicators: RSI, MACD Histogram, OBV Oscillator
3. TD Sequentinal showing perfect sell signal on daily:
1. Clearly, we haven’t seen the capitulation bottom. If you follow every single Bitcoin bear market you can see that it always ends with a sell off on high volume and that hasn’t happened here yet. Everyone is still in profits. You got hurt only if you bought in the last month of a bubble:
Hodlers on hopium are still in the market and the rallies only get weaker and more corrective, showing that there is no fuel for a retrace. This can continue for some time, but when we get out of this zone the move will be brutal.
2. Why we get this environment is because there is nobody willing to buy because:
a. Retailers leave the market scared of losing money. Whatever there is in the news, there is always not enough FOMO to even push to previous highs. We need ppl to sell into the bottom to make the climb higher easier. (after capitulation)
b. Bitcoin ETF likely won’t get approved any time soon as the SEC will probably take the time. I’m not a pro here so you can read this thread to get more insight: twitter.com/jchervinsky/status/1021795224958455810?s=21
c. Tether stopped printing USDT: i.imgur.com/LK3S4JG.png What’s more you can see how they recently started returning it back from the BFX wallet to the Treasury. This behavior usually signals that the rally is over for bitcoin: omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz
3. NVT and NVT Signal (ratios used to measure the market cap of Bitcoin relative to the use of the network for transferring value) show extreme overbought levels. There are no fundamental changes in the technology, therefore we can still use it. Lightning Network is tiny relative to the size of Bitcoin blockchain transaction volume.
i.imgur.com/Q5U1ouj.png
i.imgur.com/MVTCDCJ.png
NVT Signal has never failed and 6 last times it was this high the price of Bitcoin dropped 73% from the top on average. Think about it.
4. Bitcoin isn’t really correlated to any financial asset, but sometimes it follows volatile moves in the stock market. It’s not that strange. Both crypto and stocks are highly speculative, irrational and risky. Especially, at this stage of an economic cycle. This is Bitcoin and S&P500:
End of the last bear market:
2018:
I won’t get any deeper into it here, but maybe I’ll cover it in the next trading ideas, the stock market can get a correction soon and it can easily take bitcoin with it. Just look at this chart:
Now, let’s review technicals:
1. We are getting closer to the end of the 30 day cycle. This doesn’t give any exact information about the next price move, but the top for this rally will very likely be set somewhere here.
2. There are hidden bearish divergences formed on 1D chart (suggesting continuation of the downtrend) and regular bearish divergences on 4H (suggesting the top of the impulsive move up is in = change in trend)
Indicators: RSI, MACD Histogram, OBV Oscillator
3. TD Sequentinal showing perfect sell signal on daily:
Nota
4. Red line on the main chart is the downtrend log resistance. As the upward momentum is exhausted (see divergences) we won’t probably break it. But if we do, I see it going to 10-12k. This won’t invalidate the setup since we’re still overvalued, that’ll just make the drop more painful. What’s more it gives you a very good R/R trade if you set a stop loss above it and 0.618 level.5. Rising broadening wedge forming = continuation
Measured move to 4K:
Short the euphoria.
Nota
5 minutes from the publishing and I'm already rekt xDNota
Some lower time frame action:Nota
What freaks me out the most is this longs closing on Bitfinex:Nota
I am almost flat right now with a small short, actually. Don't want to go against the trendNota
To add to my position I want to see something like this:1. SFP at the important level
2. Daily Heikin Ashi turn red
3. No corrective move to the downside (no bullish patterns)
4. No significant bull divs on higher time frames
You see, as an analyst I think bitcoin has topped out, but my rules as a trader don't allow me to enter a position because I want to follow the trend. Saved me so many times.
Nota
Looks like we got rejected here:Have in mind that we have some bullish divergences on lower tfs and the last trade date for bitcoin CME July futures contract is on Friday, July 27th (neutral for price action, but brings in volatility)
Nota
4h:Nota
Here comes the bounce. I'm shorting it. Very good RRNota
Looks like the bullish cycle is over. Since the primary trend is bearsih, we are likely to go south in the next 30 daysNota
There are also 10-15W cycles in bitcoin (the chart below is approximate). Looking at it, I think we will bottom before EOY somewhere in Sep-OctNota
technically this is a bull flag with bull divs and the target at 10k and 7,8k is a massive support, but who cares Nota
Half way done.Nota
Mamma mia! Looks like everyone is extremely bearish at the moment. If we're not going to pump here (and I think we won't), this should be the final sell off before the REAL bottom. If you are trying to countertrade the herd, keep in mind that the moves like this usually last longer than they should when you think about them. When we went from 10K to 20K sentiment was extremely bullish and valuations were extraordinary high, but we still went up like crazy because there was no one to sell. The market reversed ONLY after there were no potential buyers left. And if you bet against the move up then, you'd lose. Same thing here. Nota
They injected $220 mil for a 13% move up. Imagine what's going to happen when all this dollars return back to the Tether Treasury (they always do)omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz
Penerbitan berkaitan
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.