Bitcoin Weekly Analysis

Last week we said: 

The overall outlook is bullish from a technical indicator perspective. Resistance levels are lowering, but bullish divergences are present on long-time frame views. The $40-42k support level is critical. If BTC closes the week below $40k, it’s down to lower demand zones. Likewise, if BTC breaks back above $43k, it will likely test $45k, and if it breaks $45k, it will likely test $48k. 

Obviously, BTC broke through the $40-42k support level and the $37k demand zone and is now testing support in the low 30s. This morning a wick below $33k was printed, and BTC is currently bouncing slightly to the $36k range. Support at $33k seems to have materialized, for now, but retesting the summer lows of $29-31k seems possible. 

Let’s look at the charts and try to identify support and resistance zones for the week.

Bitcoin Price Analysis

There’s not a lot of value in looking at moving averages on lower timeframes. Right now – they are all bearish. The 50 SMA on the 4H chart is at $39k and will act as resistance for any relief rally. Instead, we will focus on longer time frames.

On the daily chart, we can see that BTC is near summer lows. We are actually currently seeing a bounce into the $35k zone after finding support at $33k. 

The daily RSI is bottoming out below the summer lows and is near March 2020 levels – when BTC flash crashed to $3k as markets were spooked by coronavirus fears. This is the most oversold BTC has been in nearly two years. 

It’s a similar story on the weekly chart. RSI on the weekly has bottomed out around 28-35 for all bear trends dating back to 2015. RSI is near these levels, but it seems that there may be room for one final plunge before finding the exact bottom. We can also see weekly 100 SMA support at $31k.

Bitcoin Investor Sentiment

The FGI is registered at 13 after clocking in at 11 just yesterday. Being this deep in “extreme fear” certainly poses a decent buying opportunity. Many view anything below 10 as peak fear. This again shows there may be room for one final plunge, but sentiment has almost bottomed out. 

Bitcoin Fundamental Analysis

Glassnode has reported that BTC supply has become increasingly illiquid, as long-term holders are relentlessly buying the dip.

At some point, sellers will run out of coins and a supply/demand dynamic will drive prices upward. Clearly, long-term holders have retained their conviction that BTC is undervalued. 

Plan C tweeted that Miners are not selling their data. Glassnode data backs up this claim. In fact, the BTC balance of miner wallets has steadily increased since the summer lows in July, spiking in January.

Lastly, Dylan LeClair tweeted on BTC’s MVRV ratio (Market Value to Realized Value). When this ratio is 1 or <1, it is a generational buying opportunity. Currently, the MVRV is about 1.5 and would reach 1 at a price of about $24k. 

Conclusion

It has been a terrible market for the past few months, but the bottom is close. While RSI indicators may signal room for one final plunge, there is significant support at the 29-31k area. Below this, potential bottoms could be $24k or at the weekly 200 SMA (currently at ~$20k). 

Bitcoin’s fundamentals remain strong. The network continues to grow, supply becomes less liquid, and miners are holding their earnings. With sentiment near all-time lows, it wouldn’t be a bad idea to start averaging into a new position. Remember, it’s not about catching the exact bottom (this is very hard to do) – but rather, buy when markets are down and fearful, and sell when they are greedy and inflated. NFA. 

Support Zones

  • $33k (local)
  • $29-31k (demand)
  • $24k (demand)
  • $20k (weekly 200 SMA)

Resistance Zones

  • $39k (local)
  • $45k

Not investment advice. Do your own research.

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