Last week we said:
This is a brutal time for the crypto market. Contagion is spreading from the FTX failure and sentiment is extremely fearful. However, from a technical perspective it seems that the market is close to a bottom, so averaging into new positions here seems to be a good risk:reward. Still, do so with extreme caution and not with more money than you can afford to lose.
It’s actually been a green week in the crypto markets despite the low morale of investors. At the time of publishing, BTC is trading around $16.4k and is up 3.7% from 7 days ago, ETH is sitting just over $1200 and is up 9% on the week, and BNB crossed $300 and is up a whopping 18% since last week. Could such a strong bounce after capitulation signal that the bottom is in?
Let’s take a look at the charts.
Bitcoin Price Analysis
BTC is showing some bullish divergence on the 4H chart, as the price has crossed above the 50SMA and held it as support upon multiple retests. This support level is currently being tested at $16.35k. We can also see that BTC has been moving in a tightening range, trading between the 50SMA support and 100SMA resistance. This resistance is currently priced at $16.5k. Above this, the 200SMA is much higher at $18.1k.
On the daily chart, BTC is still sitting well below all moving averages. From a momentum perspective, the RSI is now in neutral territory – but the Stochastic is now overbought. This could signal that bullish momentum may stall in the medium-term and BTC may continue to consolidate in this lower range.
BTC’s long term chart is showing signs of being oversold – signaling that downward momentum is likely over. The RSI is oversold and Stochastic has reached the bottom of its range. This is similar to its chart from June – which led to months of sideways consolidation. The nearest moving average is the weekly 300 SMA, which will act as resistance, priced at $18.1k.
Ethereum Price Analysis
ETH is showing similar bullish divergences to BTC, but slightly stronger. Here on ETH’s 4H chart, ETH has broken above both 50 and 100SMA’s, and is now retesting the 100SMA as support. The 100SMA is priced just under $1200. Above this is the 200SMA at $1350.
On ETH’s long term chart, the asset is looking very strong. Holding higher lows from the summer, trading just below the 200SMA, and an oversold Stochastic bode well for ETH in the coming weeks. There is support at $1200, $1k, and $880, and resistance at $1350 (200SMA).
BNB Price Analysis
BNB is looking like the strongest crypto asset recently. Its price has rocketed through all local resistances (50, 100, and 200 SMA’s), and is now testing the 200SMA as support at $300. Holding this support would be a classic resistance turned support bullish flip, and sets up a golden cross opportunity in the coming days/weeks. Below the $300 support is the 50SMA at $292.
BNB has held well above its weekly 200SMA throughout the bear market, showing incredible relative strength when compared to other crypto assets. Its RSI remains neutral despite the uptrend, and we can see that the 50SMA is acting as resistance – currently priced at $335.
Market Sentiment
The FGI is still very fearful, but is sitting one point out of the “extreme fear” range. This comes despite analysts calling for $12k or lower, and major uncertainty surrounding continued FTX fallout, GBTC and WBTC worries, and regulation risk.
Fundamental Analysis
Glassnode reported this week that small-to-medium BTC investors (up to 10BTC) have increased their on-chain holdings by nearly 300k BTC over the past month since the FTX fallout. This shows that investor confidence in the sector remains very strong, people are buying the dip, and decentralization is increasing – all positive signals.
The chart above shows that BTC’s hash rate has declined by about 15% following the recent sell off. This comes as Bitcoin mining companies are forced to turn off their mining machines. It also comes as Glassnode reports miners selling BTC from their treasuries to cover costs. While a lower hash rate is not good for BTC in the long term, it means that the miner capitulation risk has already occurred and is priced in.
Conclusion
Crypto markets are showing signs of resilience despite incredibly difficult conditions. With bullish divergences for all three major crypto assets, it seems the worst is over – at least for now. Many analysts are calling for $12k (or lower) BTC, but it would take some serious catalysts to push the price lower. Especially with so many investors buying and accumulating coins. HODL and BTFD conviction remains strong. Fearful conditions persist, presenting a fantastic buying opportunity.
NFA. DYOR.
