People of Midas!
I hope that you’ve been enjoying the Bitcoin Price Analysis articles as much as I’ve enjoyed writing them. Especially in these times with large price movements, the price action is quite exciting. For experienced traders, these large swings present opportunity. For those who FOMO and trade with their emotions, it can be disastrous. Be sure that you use extra caution, and stick to your trading strategy no matter what happens.
Disclaimer: All information in this article is the opinion of the author, and should not be considered investment advice. Always do your own research.
Price Analysis
Bitcoin is on the move again!
At the time of writing of our last article, Bitcoin was trading at ~$11.2k, and had just undergone a price correction after testing $12k levels. Over the past week, Bitcoin has been on a steady rise, and just retested the $12k resistance zone. Failing to break the $12k resistance, the price dipped to test local supports (around $11.4-11.6k) which held nicely. Now, the price is rebounding and hovering around $11.9k, possibly going to retest $12k resistance.
Let’s take a look at a very large, macro point of view. Using the weekly chart (shown above), we can see that Bitcoin was forming a neutral wedge between the 200MA (shown in blue) and the BIG RED LINE. That big red line is THE massive resistance line that was holding Bitcoin down since December of 2017. Bitcoin breaking this resistance line could confirm that we are in the midst of a new bull season.
To try and understand the shorter-term price action, let’s look at the 1H candle chart. After failing to break the 12k resistance zone, Bitcoin’s price retraced. This retrace sent a wick down to the 200MA line (bright blue) which held, causing the price to bounce sharply. Since this dip was so rapid, and only encompassed one candle, the moving averages still look bullish. If the price breaks above $12k and holds, I expect the moving averages to incline upward, giving the price more room to grow upward. Higher resistance levels are around $12.6k.
Investor Sentiment
The Fear/Greed index is a good indicator for medium term price movements. The index is updated once daily. Generally speaking, when the indicator reads “fear” or “extreme fear” – it’s a good time to buy. Likewise, when it reads “Greed” or “Extreme Greed” – it’s a good time to sell. Given that Bitcoin has increased so quickly in value, the sentiment indicates that a correction is likely incoming.
Fundamentals
Instead of our usual look at the Bitcoin hash rate, we’re going to take a look at the number of Unique addresses on the Bitcoin blockchain.
This is an important metric because it indicates what level of adoption Bitcoin has reached. Though the chart data is noisy, we can see that the total number of Bitcoin addresses is trending in the upward direction. I’m sure that this is due in part to increased trading volumes and people creating second addresses and exchange accounts, but it’s also in part to new money flowing into the crypto markets. This is a very bullish sign, and could mean the best is yet to come.
Analysis
While the fundamentals and price analysis look Bullish, the investor sentiment is clearly bearish for the short-to medium term. That being said, the market could stay greedy for a few more days and push Bitcoin higher before the “greed bubble” bursts and the price corrects. Personally, I would be very hesitant to enter a long position until the index turns back to neutral. However in the long term, I see the markets as very bullish for Bitcoin and believe we are in the beginnings of a new bull cycle that could take us to all time highs. The future is bright for crypto. Happy trading.
TLDR
- Price Analysis: Bullish
- Investor Sentiment: Bearish
- Fundamentals: Bullish
- Overall: Short-term: Neutral/Bearish
- Long Term: Bullish
