Last week in Bitcoin Price Analysis we said:
BTC has reclaimed its previous ATH of $20k, and has bounced from $18k levels to form new local support. While we may see a slowdown in the short term (as indicated on the 4H chart), the daily and weekly charts look absolutely primed for a relief rally. In all likelihood, this relief rally will take BTC past the weekly 200SMA – a bullish signal for traders and algos alike. Barring additional black swan events, I expect BTC to bounce and consolidate, rather than continue to dump in the mid-term. With euphoric bearish sentiment, it seems to be a good time to begin DCA’ing into new long positions.
Our prediction for a slowdown in the short-term has proven accurate, as BTC consolidated all of this past week below the $22k mark. However, we are still waiting on the relief rally that charts indicated is overdue. Today BTC is retracing slightly, trading at $20.7k and continuing the consolidation. Let’s take a look at the charts and see if we can predict BTC’s next move.
Bitcoin Price Analysis
On the 4H chart, we can see BTC is testing support at the 4H 50SMA. This price level is at $20.7k. If this line holds, it will be bullish for BTC in the short term. Local resistance is at the 4H 100SMA – priced at $21.8k. The support and resistance are converging in a tightening range, signaling a breakout in either direction in the coming days.
The RSI has dipped below neutral but is still not oversold, however, the Stochastic has reached the bottom of its range. While not a strong signal, it does show that it is likely that support at $20k holds.
The daily moving averages do not show anything new – BTC is still well below the nearest 50SMA, priced at $27.1k. This line will act as resistance once BTC finally tests it. The RSI on the daily time frame is oversold, but stochastic is overextended. These signals cancel out. On the daily, BTC looks neutral or slightly bearish.
On the weekly, BTC appears to be at very strong support. Last week’s candle closed just underneath the 200SMA, which will be a key test. The RSI is heavily oversold and Stochastic has been at rock bottom for weeks. Any bullish catalyst at all should send BTC rocketing upward in a longer time frame. Bearish macro fundamentals are holding BTC in place – for now.
Bitcoin Investor Sentiment
Extreme fear persists in all markets, but crypto especially. This negative sentiment shows that BTC is at least in the range of a bottom.
Bitcoin Fundamental Analysis
Glassnode published an analysis this past week showing that this BTC bear is one of the most significant in history. With the price falling below BTC’s realized value, the Mayer multiple trading at historic lows, and the price dipping to the weekly 200SMA, the bottom could be in. However, a pessimistic outlook could see BTC dip as low as $13k.
Some global macro analysts have been calling a commodity bear market, saying that energy prices are overdue for a price correction. Oil, copper and natural gas prices have all begun to correct – with oil falling from $120+ per barrel to $106, Natural gas falling from $9 to $6/MMTbu, and copper falling into a bear market. Lower energy prices will help ease inflationary pressures, which should improve the overall global macro. This will in turn lead risk-on assets to rally. Keep an eye on energy prices.
Conclusion
BTC looks neutral on the 4H and Daily, but heavily oversold on the weekly. Any bullish catalyst should send BTC on a massive relief rally. According to Glassnode data, BTC is currently trading at a major recovery zone and should have significant support in the newly established $17-20k range. Resistance is nearby at $22k. Improving global macro thanks to sliding energy prices could be the catalyst BTC needs to finally rally. TBD.
Support Zones:
- $17.5k (range)
- $20k
- $20.7k (4H 50SMA)
Resistance Zones
- $21.8k
- $27.1k
Not investment advice. Do your own research.
