Last week in Bitcoin Price Analysis we said:
Price analysis looks bearish on all timeframes, with some potential bullish divergence on the daily. Overall though, expect more pain before the tide turns. Sentiment looks bearish, and bearish fundamentals show the market cracking. On a positive note, very long term macro-indicators for BTC are still bullish, and a capitulation event could provide an excellent buying opportunity.
Over the past week, BTC has systematically fallen through support levels. It has been max pain in the markets, as BTC has printed weekly red candles for 6 weeks in a row – a phenomenon that has not happened since 2014. Where does the pain stop?
Let’s take a look at the charts.
Bitcoin Price Analysis
BTC has been falling like a rock. On the 4H time frame, moving averages are firmly bearish, and resistance levels are far overhead. The 4H 50 SMA is sitting up at $37k, and will be the first line to test if and when BTC begins to bounce.
On the 4H timeframe, the RSI looks heavily oversold and stochastic looks ready to bounce. This makes it likely that we see at least a short-term bounce from the key $32.5-33k support level. If this fails, we will retest $28-30k support, where we expect a bounce.
On the daily chart, moving averages are also bearish, and the 50 SMA is about to cross beneath the 100 SMA. Resistance is at the 50/100 SMA, trading just around $41k.
On the daily chart, the RSI is also nearing heavily oversold levels – but there does seem to be room within the RSI for one last capitulation wick. The stochastic has finally bottomed out, signaling a reversal / bounce soon. This aligns with what we see on the 4H chart.
On the Weekly chart, the RSI is nearing the same historically oversold zone that we reached in January. However, the RSI was a bit lower in late 2018 when BTC bottomed at 3k. This pairs with the Stochastic just reaching the bottom of its range. Most likely, BTC will have a short term bounce and continue its downtrend to lower support levels.
Bitcoin Investor Sentiment
Fear has gone nearly off the charts this week as BTC has printed losses almost every day. Sentiment finding a bottom here will likely coincide with the short-term bounces we see forming on the 4H and Daily charts.
Bitcoin Fundamental Analysis
Global markets as a whole have been in turmoil over the past several weeks. This past Wednesday, the Federal Reserve raised interest rates by 50 basis points, sending markets surging (temporarily). After a short relief rally, markets have dumped mercilessly. Even historically save haven markets like bonds have taken a beating. Crypto is no exception.
As for BTC, its hash rate has risen to all time highs. This metric is traditionally associated with rising prices, but global economic headwinds have broken this correlation.
It has been a very painful week. We are likely to see a relief rally sometime this week, as the 4H and Daily charts look ready for a bounce. On the weekly, it looks like there is some room to continue dipping before a true bottom is found.
Not investment advice. Do your own research.