Hello Midas Community!
Once again we are going to conduct our weekly analysis of Bitcoin and the larger crypto markets. We see this as a valuable insight, especially since Bitcoin tends to determine the direction of the entire industry. Bitcoin is the “rising tide that lifts all boats” so to speak. We will begin with a price analysis, followed by sentiment and fundamental indicators. Let’s get started!
Price Analysis
Here we can see the price movements of Bitcoin vs. USD with 4 hour candles. Over the long term, we can see that Bitcoin has been consolidating between 9 and 10k for a while now, occasionally breaking out of this zone before retracing. As we stated in our last article, the consensus is that the longer Bitcoin stays in this zone, the larger its next move will be (in either direction).
Looking at the more recent end of this range, we can see that a wedge has been forming on the 4H chart, with the price forming higher lows and lower highs. Given the symmetrical geometry of this wedge, it is neither bearish nor bullish.
Moving to the very large-timeframe 1D candle chart, the moving averages indicate a bullish sentiment. On June 25 (indicated by the green bar) the 100 MA crossed the 200 MA line, indicating more potential upside. However, increasing volumes are needed to confirm the cross.
The RSI on both of these time frames is neutral.
On the weekly chart, we see that last week Bitcoin minted its first green candle in over a month. This could be a bullish sign of things to come.
Investor Sentiment
Another key piece of our analysis has to do with investor sentiment. If it reads “fear” it’s a good time to buy. If it reads “greed” – it’s a good time to sell. Unfortunately, if you’ve been following along over the past several weeks, there is nothing new to show here. The Fear/Greed index has been trending in the 40s for a while, and does not help us determine the market direction.
Fundamental Analysis
Last week Bitcoin’s Hash Rate reached a new high of 126 exahash per second. It is currently retracing slightly, but is still near ATH levels.
Last week, we shared the following image from Charles Edwards – a well known Bitcoin enthusiast.
This chart is the value of Bitcoin compared to its “Energy Value” – a number determined by the hash rate and electricity costs. According to his analysis, Bitcoin was (and is still currently) undervalued by about 27% when calculating its “true value” based on the costs of mining.
This week, Charles posted on his Twitter about the Bitcoin “Hash Ribbon” signal posting its first “Buy” signal in months.
In his own words, this signal indicates the beginning of the next bull run, which many believe will see Bitcoin post a new all time high. As an indicator that uses hash rate and block difficulty as its main inputs, it’s no wonder it signaled “Buy” for the first time since the block halving. In the past, each block halving has led to a massive, parabolic bull run. We know that past performance does not guarantee future results, but it looks quite promising.
Conclusion/TLDR
- Price Analysis: Neutral / Slightly Bullish
- Sentiment Analysis: Neutral
- Fundamental Analysis: Bullish
- Consensus: Slightly Bullish
Bitcoin’s strong fundamentals tell me that once we break out of this consolidation zone, chances are it will be upward. This is not guaranteed, but a convincing break above the $9500 zone and then $10k with strong volumes will confirm the move. Otherwise, a break below $8600 and then $8k will confirm the opposite. Given Bitcoin’s low volatility, a break out of the consolidation zone could happen at any time. It’s important to exercise extra caution while trading until a direction is confirmed.
As always, do your own research before making an investment decision. All of the information presented in this article is the opinion of the author, and should not be considered financial advice. Never invest more than you are willing to lose.
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