BTC has taken a beating over the past week after rejecting off of the 200W sma last week. This came after a worse-than-expected CPI reading last week set markets tumbling, and expectations of a higher rate hike in this week’s FOMC meeting. Poor macro economics continue to lead all markets lower. At time of writing, BTC is bouncing of lows in the low $18k range, reclaiming $19k and printing the largest green candle of the week. Is this a dead cat bounce, or has BTC regained some footing?
Let’s take a look at the charts and find out.
Bitcoin Price Analysis
BTC has fallen beneath all moving averages on the 4H chart, and the 50SMA rejected cleanly off the 200. Currently a death cross is forming on the 4H. The closest resistance is the 50SMA, priced at $20.1k.
This week’s bounce came as BTC hits oversold on both the RSI and Stochastic indicators. However, after hitting the $19.5k zone, the Stochastic is now overbought and RSI is trending down. Rejecting under $20k is bearish as BTC will now face local resistance at $19.5k.
BTC rejected off both the 50 and 100SMA’s last week, retracing to range lows. The $18.5k zone has been a support area for BTC over the past several months, with the $17.6k wick bottom acting as the bottom of this zone. If BTC fails to regain any footing here, it is likely to revisit the $17.6k zone. If $17.6k fails, it’s lower lows between $14-16k.
Resistance is at the 50SMA, priced at $21.4k.
The daily momentum indicators contain some bearish divergence. The last time BTC was at this price point, RSI was lower. This means that we are actually more overbought now than last time we were here, signaling a lower price floor before a bounce. RSI and Stochastic have not yet reached oversold, so we are likely to continue grinding lower.
Weekly RSI is close to oversold, but Stochastic is overbought. At a minimum, this means BTC needs several weeks to reset the Stochastic before any kind of upward move can be seen. Alternatively, BTC can dump hard from here.
It seems that BTC rejected off the 200w SMA last week, confirming this key level as resistance, priced at $23.4k. This is the first time in BTC’s history that it is consolidating under the 200W SMA.
Bitcoin Investor Sentiment
The crypto markets are back to “extreme fear” but there is a hidden bearish divergence here. When BTC was trading in this price zone back in June, sentiment was registering much lower – in the 10s or high single digits. Registering in the 20s now means that investors are less fearful at this price level than they were just a few months ago. BTC would have to make a lower low (below $17.6k) to get back to the most extreme of fearful sentiment.
Bitcoin Fundamental Analysis
Key to all markets is the FOMC decision on the 21st. If they announce another 75bp hike, it will be neutral or slightly bullish for BTC, as this is already priced in. If a 100bp hike is announced, it will be more red candles. Markets are currently predicting an 86% chance of 75bp, and 14% chance of 100bp.
Bitcon’s network hash rate has reached a new all time high. Despite miner revenues declining, the network continues to gain strength. At one point, hash rate was correlated strongly with the price. That correlation has seemingly broken throughout this downtrend.
BTC is oversold on the 4H chart, but the daily and weekly charts are looking grim. With the FOMC meeting looming and persistent inflation, macroeconomic headwinds continue to buffet BTC and other risk markets. BTC seems to have found local support around the $18.5k zone, but further consolidation and/or grinding lower is the most likely scenario for the medium term.
Not investment advice. Do your own research.