Good day Midas community,
Today will be our latest installment on a series of Analysis articles on Bitcoin and the crypto market in general. As our recap article last week noted, these articles have been accurate since we started earlier this summer. Our goal in these articles is not to predict exact price movements, but rather to determine the overall market direction. To do this, we will look at the charts, investor sentiment, and blockchain fundamentals.
Price Analysis
Today Bitcoin is breaking yearly highs, moving well above the $12k mark and touching $12.4k. At time of writing, the price is slightly retracing, perhaps to retest the $12k resistance before continuing its upward trend. Let’s take a look at the 4H chart:
Last week, we saw short term bearish but long term bullish. When we wrote that, Bitcoin was at $12k and the market was extremely greedy. Our prediction was exactly correct – the price quickly retraced to $11.2k before moving back up slowly and then spiking to new highs (what we see today).
When we add in the moving averages, we can see that the movement is extremely bullish. When last week’s retrace occurred, the price held above the 100 MA (yellow line). Multiple wicks formed with this line as support, and not one candle closed below this mark. As long as the 100MA and 20MA are above the 200 MA and inclined upward, the indication is quite bullish.
The 1W candle chart shows a very similar story. The moving averages still read as quite bullish, and all are inclined upward. If we base current resistance levels around previous highs, the current resistance zones will be around $13.2k, $14k, $17.2k, and $20k (previous ATH).
Investor Sentiment
The FGI is showing as “Extreme Greed” which is generally a bearish sign. However, the indicator has read as “Greed” or “Extreme Greed” for two weeks now, so it’s possible that this trend could continue. Traders in long positions should set stop losses, because the longer that this reads “Extreme Greed” the likelihood of a strong correction increases. If the index returns to “Neutral” – Bitcoin is likely refueling before continuing the bullish trend.
Fundamentals
The Hash Rate of the Bitcoin network is at an all time high, clocking in at 129 million Terra Hash per second. This is generally a good sign, because it indicates that the inherent value (mining cost) of Bitcoin is increasing along with the market value.
Despite the all time high hash rate and increasing value of BTC, the Miners revenue remains low (relatively speaking). This is due to the Bitcoin block halving. I read this also as a bullish indication, because there is more room for revenue to grow. Miners are not going to operate at a loss. If mining ceases to be profitable, the miners will turn off, hash rate will decline, and the inherent value of BTC will go down. The fact that the hash rate is increasing with the price and revenue has room to grow is quite bullish.
Conclusion
The market looks extremely bullish, but it still can not move too fast. I expect Bitcoin to slow down or even retrace for a few days before moving up toward the close of the weekly candle. This is very similar to what we saw last week. The market is greedy, which means that these corrections are likely to be sudden and sharp.
Always do your own research. The information in this article is the opinion of the author and should not be considered investment advice.
TLDR
- Price Analysis: Bullish
- Investor Sentiment: Short Term: Bearish/Neutral
- Fundamentals: Very Bullish
- Consensus: Bullish mid-long term
