I want to keep this post short and will give you a quick update on Bitcoin. These last days have been rough for everyone and it felt like a surprise that this happened. There has been some bad news in the media a couple of days ago about Bithumb, a South Korean exchange platform. The police raided the headquarters apparently for an accusation of fraud. This might have caused a drop in prices. Furthermore there were some other news articles about Russia having drawn up a law that would ban cryptocurrencies completely (no more miner rewards). All these things come out at the same time as we see prices drop everywhere. It is most likely a shake-out and do not fall for media news articles ! Russia has been in and out of crypto every month and China is often the same.
Here is a weekly chart of Bitcoin :
I have put the indicator OBV (On Balance Volume) and the 13-week Moving Average. When we broke out of the 13-week MA around the 13th of July we did not retest it. Right now we are doing this and so far it is holding it. It would be good news if we can hold this in the next couple of weeks.
OBV is still looking pretty good and convinces me that this is more a shake-out, rather than a bear market and moving towards 2K as some people would say. It is always better to check from level to level, rather than to go dramatic. Price went to levels around the area of the 20th of June 2020, but OBV has been staying higher right now and this is a good sign.
By the way the yellow line seems to have quite some importance on the chart and I would not be surprised if we hit it again. This would be around the 9600/9700$ level and it would mean we could fill the CME gap !
Here is a daily chart of BTC :
I have put the indicator Bitmex Funding Rate and the indicator CCI (Commodity Channel Index). You can see that we are finally moving down in the funding rate towards more shorts than longs. This is actually good news, because people are starting to become bearish and this can cause a short squeeze (price moving upwards, liquidating the shorts).
The CCI is also looking good and completely oversold. This would normally mean we are going to see at least a decent bounce back up.
The Bitcoin fear and greed index is right now around 40, which has dropped 50% ! This is good as well, because the overall sentiment was way too greedy.
Levels to watch
Watch the following levels for BTC :
- 10.5K area. This is an important one. Often we saw it as resistance and we went above it and tested it as support. Right now we are once again under it, so we need BTC closing above this area (preferably as fast as possible). We are battling it today and hopefully we can close above it again on the daily chart. If we fail the test, I can imagine more downfall towards at least the 9600$ area for a fill of the CME gap.
- 9600$ area. This would fill the famous CME gap and it would be very nice to see a drop towards this, but creating a wick and closing above 10K on the daily chart.
- 7700$ area. This area is rather important and hopefully we will not even get here close ! This has been an area for many weeks and it would be great news for the long-term price of Bitcoin to hold this area as support in case we get there. I do not see this level happening for now. I am more looking towards the 9600$ area for now.
When looking upwards there are a couple of levels :
- 10.5K area. As discussed this is a resistance we need to win back again soon in my opinion. If we fail to do so at the end of this week, I can imagine more downfall to at least the 9600$ area.
- 11.1K area towards the 11.5K. 11.1K got quite some test while we were above it so I assume we will see resistance now in this area. The 11.5K is an important one as well and has shown a lot of weeks as resistance. We wicked above it several times but the weekly close was always under it. The last couple of weeks we actually did close above it on the weekly, but we dumped hard right now and this has to do with the following level :
- 12K/12.1K area. This is one of the most important levels to watch. It is one of the last hurdles to overcome, before Bitcoin can really move upwards and move towards the all-time high.
I hope that this article was of some help to you ! Do not panic and see it as an opportunity that prices are moving down nicely ! The media always likes to create some bad news while we are dumping. Altcoins have been hit even harder and seem very juicy. In a bull market you will often encounter heavy drops (shake-outs). For the long-term price of BTC, nothing has changed as of yet and it is still healthy. Fundamentally nothing has changed either, so do not fall for these traps and Hodl on ! I have been buying several Altcoins and Bitcoin during this dump for long-term holding.
I am not a financial advisor and this is not financial advice. Please do your own research and make your own decisions.