Hello again Midas Investors!
We will continue our series of weekly TA on Bitcoin and the crypto markets in general. If you’ve been involved in crypto for any amount of time, you are well aware that where Bitcoin goes – so does the entire market. Except for stablecoins, the movements of Bitcoin have a direct effect on nearly every other cryptocurrency. As such, prudent investors will keep their eyes on the market direction of BTC at all times.
Price Analysis
Bitcoin has been retracing over the past week, dropping about 4% today alone. Currently, the top cryptocurrency is trading around $11.3k, and has yet to find a price support. Two weeks ago, we saw a price retrace to around $11.2k, before the price retested the $12k levels. Perhaps we will find support around that level.
We get a slightly clearer picture of what is happening when we look at the 4H chart with moving averages. The 200MA (shown in blue) is a strong support level, and BTC is currently testing it. If BTC continues to close candles below this line, we might see further retracement. If a “wick” forms and the candle closes above the 200MA, a bounce is likely coming.
The daily chart gives us a more macro-view of the trend. Despite the pullbacks, the uptrend is still quite strong, and all of the moving averages show bullish. Support levels for the 100MA and 200MA are around $10k and $9.2k, respectively. However, the red trendline could also be used as support, around the $10.7k level.
Investor Sentiment
Since Bitcoin is primarily a P2P traded instrument, market sentiment is king. In general we want to “buy” when the market is fearful, and “sell” when the market is greedy. Alternative.me provides a great index which measures this sentiment. Let’s take a look at what it says.
Despite the week-long retracement, the market is still reading as “Greed”. However, last week it was at “Extreme Greed” – so there has been a slight pullback in sentiment. Keep in mind that this indicator is only updated once per day, and that today’s sharp price decline has not yet been “priced in” to the index value. I would expect that after today, the index would be much less greedy. Overall, the index suggests that we could see more short term pain.
Fundamentals
Bitcoin’s hash rate is a measure of the total number of miners contributing to the network. As you can see, the hash has declined from its all-time-high, but might be in the process of bouncing. The hash rate helps to determine the inherent value of Bitcoin, because in general the higher the hash is, the more electricity is required to generate one Bitcoin.
Despite the long term upward price trend and hash decline, the Miners Revenue is still relatively low due to the block halving. I view this actually as a bullish sign, since the miners have every reason not to sell their rewards at this point.
The last fundamental we will look at today is the number of unique addresses used on the Bitcoin blockchain. This is a raw indicator of how many people are actually using Bitcoin. With this number on an upward trend, we can be confident that Bitcoin is still growing, and will continue to gain value.
Analysis
With how quickly Bitcoin shot up over the past few weeks, we could see this price correction coming from a mile away. But, as long as we stay over the $10k mark, the upward trend will remain in tact. Since the block halving has historically been extremely bullish, I view this pullback as “refueling” for testing new resistance levels. The fundamentals are still incredibly bullish.
TLDR
- Short term: Pain
- Long term: Gain
The information in this article is the opinion of the author and is intended for educational purposes only. Not investment advice. Do your own research.
