No market phase in the Bitcoin world lasts forever. As I explained to you in mid-November 2021, you'll have to learn how to react to these different phases in the right way, as they follow each other at their own pace.
Excitement, Boredom, and Fear are the three phases that recur all the time.
Until the ATH of the Bitcoin price at $69K on November 10, 2021, it was excitement that predominated. This translated into an increasingly heightened sense of FOMO. And then that feeling gave way to fear as the Bitcoin price then began to correct before crashing by more than 30% following the leverage shakeout on the night of December 3 to 4, 2021.
For those of you who want to understand what produces this type of hyper-volatile movement, I invite you to read the article “Bitcoin Leverage Trading 101” that I just published.
Fear is finally giving way to boredom. Slowly of course, but that's where we're headed in the days to come:
This feeling of boredom is of course related to the sideways movement of the Bitcoin price that we have been witnessing for the past week. The price of Bitcoin has been moving between $47k and $52K since the leveraged shakeout in early December 2021:
An attempt to break through the $52K resistance was made two days ago, but it ended in a rejection that brought the Bitcoin price back down to around $48K. This sideways movement may well be the one we have to get used to during December 2021.
While some will find it boring, others will take the opportunity to accumulate more BTC. Make no mistake, the current phase is one of accumulation rather than a Bear Market panic for the price of Bitcoin.
We are never safe from a Black Swan event, but apart from that, this Bull Market will continue and spread over a longer time than the predictive models had let us imagine. This still brings us back to the vision of a supercycle for the Bitcoin price with a top that could be reached in Q1 2022 or Q2 2022.
Bitcoin reserves on exchange platforms hit 3-year low
Seeing Bitcoin reserves on exchange platforms reach a 3-year low is likely to confirm this sentiment:
When the Whales prepare for a Bear Market, Bitcoin floods onto the exchange platforms. This is not the case now. This is extremely reassuring.
It is also interesting to compare the current market situation with that observed in May 2021. In that month, 5,149 BTC were deposited on average per day during the peak of the sell-off. Currently, 1,178 BTC are withdrawn from trading platforms per day on average:
These indicators refute the idea of a Bear Market at the moment.
On a larger timeframe for the Bitcoin price, there is an interesting trend on the RSI:
A sort of Falling Wedge that heralds a probable jump in the RSI while Bitcoin is practically at an oversold level. A jump in the RSI would be accompanied by a rise in the price of Bitcoin.
That's what I think is in store for us. The only unknown, but a big one I grant you, is that we don't know how long this accumulation phase with a sideways movement in the price of Bitcoin will last. Patience, as always, is required in such a situation.
Inflation rose to 6.8% in November 2021 in America, which could have consequences on the Fed's monetary policy, and therefore on the markets
Among the factors that most impact the price of Bitcoin are the macroeconomic conditions. And as far as America is concerned, they are getting worse and worse. Thus, the inflation for November 2021 was just announced and it increased by +6.8%. The largest annual increase since 1982:
This indicator will be taken into account by the Fed, as well as the job creation figures for November 2021 which are below forecasts, at its next monetary policy committee next week. Faced with this inflation which is now a real political problem in America, Jerome Powell could be forced to announce an acceleration of the tapering announced in early November 2021.
Instead of waiting until mid-2022 to stop its monthly asset purchase program, the Fed could do so as early as the end of Q1 2022. An increase in key rates could then be considered. We are not there yet, and this is just a guessing game, but it is hard to imagine the Fed not acting while inflation continues to rise.
Even so, the effects of a more rapid shift in Fed monetary policy should not be felt immediately, but over the next few months. There is so much liquidity in the markets right now that I can't imagine all that money sitting in savings accounts.
The inevitable bankruptcy of Evergrande is probably already priced in, but you must continue to observe the evolution of the situation
Finally, a word about Evergrande, whose bankruptcy now seems inevitable. Fitch has placed the Chinese property developer in “restricted default”. This means that Evergrande has not been able to meet a debt payment of just over $80 million. It's annoying when your debt amounts to 300 billion dollars ...
Behind Evergrande, 4 other Chinese property developers are near default. The Chinese government has already taken the matter in hand by creating a risk committee within Evergrande to facilitate a dismantling that will do the least possible damage to the Chinese economy. At the same time, Beijing is sending a signal that no Chinese company is now “too big to fail”.
Nevertheless, we must remain calm, because Evergrande's offshore debt is around 18 billion dollars. This is a risk that is already well integrated into the world's financial markets, and the fall of Evergrande should not cause the global tsunami that was feared at one point in September 2021 when the price of Bitcoin had corrected sharply.
Nevertheless, it is part of the information to be taken into account, as it could potentially have a downward impact on the price of Bitcoin in the days to come.
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