Bitcoin Broke The $30K Crucial Support Level, What Now?

Bitcoin has followed our Excess Phase Peak breakdown pattern almost perfectly.  Each phase of any Excess Phase Peak is important to understand as it relates to other asset classes.  For example, as an asset, like Bitcoin, begins a Excess Phase breakdown in trend, other assets will likely follow along. The psychological impact of a major decline can often result in traders also expecting breakdown events in various other asset classes.

Before we begin to go into deeper detail regarding this Excess Phase Peak setup in Bitcoin, I suggest taking a minute or two to review our earlier research posts related to this pattern: How To Spot The End Of An Excess Phase – Part I November 25, 2020;  As this breakdown continues to unfold, we want to warn you that other asset classes (as mentioned above) may follow this trend as trader/investor psychology often impacts future expectations/trends across the globe.

If traders suddenly develop an expectation that the recent price rally in the global markets is at risk of failing, or that the downtrend in Bitcoin may have broader implications across other assets, we may see a bigger rotation in the global markets throughout the rest or 2021 (and beyond).

Phase #4 of the Excess Phase Peak Setup Is Pending

Now, as we begin to enter Phase #4 of the Excess Phase peak pattern, the final breakdown of intermediate support, our research suggests Bitcoin may fall to levels below $10k.

Traders need to be prepared for the next phase of this move. This may last many months as Bitcoin attempts to identify a key support level that will act as a new momentum base for any potential future upside price trending. Bitcoin has breached the $30,240 level earlier today.  A stronger downside price trend is likely to wipe out another 60% to 75% of the current price valuation – resulting in a bottom forming below $10k.

This potential bottom level may not be the ultimate low for Bitcoin.  Traders are advised to wait for a strong bottom/base to set up before attempting to jump into any new upward price trending expectations. As mentioned above, the process of setting up this ultimate bottom/base may take many months to complete.

Let’s go over the Excess Phase Peak Pattern Setup, illustrated in the chart below.

  • Phase #1:  The rally to the ultimate peak level
  • Phase #2:  The breakdown of that peak level, setting up the initial support level and prompting a sideways price Flag/Pennant price channel
  • Phase #3:  The breakdown of the #2 sideways price channel leading to a steep decline to intermediate support – which acts as a temporary sideways bottom.
  • Phase #4: The breakdown of the intermediate support level ultimately leads to the strongest price decline targeting the ultimate bottom in price.
  • Phase #5: Identifying the ultimate bottom/momentum based in price.  This trending phase can last many months (possibly more than 12 months at a time), or could be in the form of a deep “V” bottom.

After the completed five phases, a new momentum bottom will set up which will likely prompt early-stage accumulation again – eventually prompting another rally attempt.

Could Bitcoin Target A Bottom Below $7500?

My team and I believe the lower support level in September 2020, near $9850, is a likely target for the ultimate bottom.  Although, we want to warn you this level may act as a temporary support level if the unwinding of this Phase #5 downward trend persists beyond our expectations.

This Weekly Bitcoin chart highlights the current three completed phases and the pending #4 and #5 phases of the Excess Phase Peak pattern. We find it interesting that we highlighted this pattern setup more than 7 months ago and warned that an Excess Phase Rally was taking place back in November 2020.  Even though Bitcoin rallied far beyond our expectations for a peak (near $32k), we strongly believe the ultimate bottom setup from this extended Excess Phase collapse will prompt another incredible opportunity once the final phase of this pattern is complete.

To help answer your question, “where is the ultimate bottom in price?”, the simple answer is “we don’t know exactly where Bitcoin will find an ultimate bottom price level.”.  We believe the $9850 level is a likely target for a bottom.  But we also believe the unwinding of this broad market excess phase peak may prompt a bigger downtrend that may last many months as global assets break away from the recent rally phase.  This means we may see a broader unwinding of the global markets throughout the end of 2021 and into 2022.

Many major commodities have recently broken their rally phase trends and have started to move dramatically lower in recent weeks.  The US major indexes, particularly the Dow Jones and the Transportation Index, have begun to break upward sloping price channels. Gold and Silver have reacted, recently, to the FOMC statements by breaking strongly to the downside.  All of these setups are indicative of a change in trader/investor psychology – a breakdown of expectations.

I advise traders and investors to be cautious with regards to trying to pick a bottom as we watch the markets attempt to identify new support levels.

Want to know how our BAN strategy is identifying and ranking various sectors and ETFs for the best possible opportunities for future profits? Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

Have a great day!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

Bitcoin Climbs Above $31k Following Yesterday’s Losses

The cryptocurrency market has slightly recovered today following the massive losses recorded yesterday after China’s latest crackdown on cryptocurrencies.

Bitcoin Back Above $31k

The cryptocurrency market sustained massive losses yesterday following the latest crackdown measures from China. The People’s Bank of China had told banks and other payment companies in China to cut off payment channels for cryptocurrency traders and investors.

This led to some banks, such as the Agriculture Bank of China (AgBank), to tell its clients to desist from dealing with cryptocurrencies or face seeing their accounts shut down and all business relationships cut off.

BTC/USD chart. Source: FXEMPIRE

The ban sent shock waves through the market, with Bitcoin’s price unable to sustain its $35k price and slipped towards the $30k mark yesterday. However, the broader cryptocurrency market has slightly recovered, with Bitcoin approaching the $32k region at the time of this report. The leading cryptocurrency has substantially reduced its losses after rising by more than 4% over the past 24 hours.

Total Crypto Market Cap Now At $1.2 Trillion

The cryptocurrency market embarked on one of its biggest rallies at the start of the year. This saw Bitcoin and several other cryptocurrencies reach all-time highs. With the massive increase in the prices of the crypto assets, the total cryptocurrency market cap climbed to a historic $2 trillion.

Bitcoin accounted for half of the total market cap, with its market value standing at $1 trillion at the time. However, most cryptocurrencies have lost 50% or more of their value since then. Bitcoin’s market cap now stands at $588 billion.

ETH/USD chart. Source: FXEMPIRE

Ether, the second-largest digital currency by market cap, has also experienced massive losses. ETH is trading below the $2,000 level for the first time in weeks. All the cryptocurrencies in the top ten are trading in the red zone, with Dogecoin suffering the biggest loss over the past 24 hours. The leading meme coin’s price is down by 19% in the past 24 hours. It is currently trading at $0.19, down by over 70% from its all-time high price of $0.70.

China Is Clamping Down Hard On Crypto Trading And Mining Activities

The cryptocurrency market in China has come under heavy pressure in recent weeks, and the government is now working harder to crack down on crypto trading and mining activities in the country.

China’s PBOC Ask Banks Not To Involve In Crypto Operations

The People’s Bank of China (PBOC) has reportedly summoned banks and other payment institutions in the country. In the meeting, the PBOC asked the banks and other payment institutions such as AliPay not to be involved in cryptocurrency operations.

In a tweet by Walter Bloomberg, the central bank had told banks and payment companies to cut payment channels for cryptocurrency trading. This implies that individuals and institutions engaging in cryptocurrency operations would see their accounts disabled by the banks and other payment institutions.

Some banks have already begun taking the recommendation. In a Reuters report earlier today, Agriculture Bank of China (AgBank), China’s third-largest lender by assets, said it would follow the guidelines from the PBOC and clamp down on crypto trading and mining activities. This makes AgBank the first major bank to come out and make a public statement regarding cryptocurrencies.

AgBank said it would intensify efforts to eliminate illegal activities involving cryptocurrency mining and transactions. The bank warned that any client found to be involved in crypto mining or trading operations would have their accounts shut down immediately, and all relationships would be severed.

China’s Authorities Are Serious About Crypto Ban

China has been a tough ground for cryptocurrencies in recent years. The government began by banning crypto exchanges from operating in the country and initial coin offerings (ICOs). This forced exchanges like Binance, OKEx and Huobi to relocate to crypto-friendly countries.

In this latest banning season, the Chinese authorities are targeting cryptocurrency trading and mining activities. Several provinces, most recently, the Sichuan province, have banned mining activities.

The Sichuan province cut electricity supply to 26 Bitcoin mining farms and other smaller crypto miners last week. This has resulted in Bitcoin’s hashrate dropping by 17% over the past 48 hours. It has also affected Bitcoin’s price, with the leading cryptocurrency now trading just above the $32,000 mark on various crypto exchanges.

BTC/USD chart. Source: FXEMPIRE

With the latest wave of FUD from China, Bitcoin risks losing more value, and its price could drop to the $30k region in the coming days.

Is Bitcoin An Investable Asset Class? Goldman Sachs Analysts Are Divided Over This

Bitcoin has gained massive adoption over the past year, with traditional banks and institutional investors entering the market in droves. However, there is still an ongoing debate about Bitcoin’s position as an asset class. This has caused a difference in opinion amongst Goldman Sachs analysts.

Goldman Sachs analysts can’t decide on Bitcoin’s position

Goldman Sachs has been changing its views regarding Bitcoin for a while now. Some of the bank analysts don’t see it as an investable asset class, while the others do. This latest development comes despite the bank expanding its presence in the cryptocurrency market.

Wall Street investment bank Goldman Sachs published a report titled “Digital Assets: Beauty Is Not in the Eye of the Beholder.” In the report, the bank analysts said the leading cryptocurrency is not a long-term store of value or an investable asset class. The views from this report contradict Goldman Sachs’ May 21 report titled “Crypto: A New Asset Class?” In this report, Matthew McDermot, global head of digital assets at Goldman Sachs, classified Bitcoin as an investable asset class after its performance over the years.

The investment bank has changed its decisions on Bitcoin numerous times over the past few years. Last year, the Bitcoin published a presentation detailing reasons why it thinks Bitcoin is not an investable asset class.

In this latest report, the Goldman Sachs analysts said they wanted to play it safe regarding Bitcoin. They didn’t want to attach any positive or negative sentiment to the cryptocurrency. The report said, “We have refrained from repeating the positive and negative hype that surrounds this ecosystem because we do not want clients to be seesawed, even swayed by a cacophony of assertions, many of them unsubstantiated.”

Bitcoin’s price has historically gone up

Despite the argument regarding Bitcoin and its status as an asset class, its price has gone up since it was first launched in 2009. The surge in Bitcoin’s value comes despite intermittent bear markets such as the one experienced in 2018 and 2019.

BTC/USD chart. Source: FXEMPIRE

At the time of this report, Bitcoin’s (BTC) price is down by 3.6% over the past 24 hours, and it is trading below the $40k mark again. Bitcoin has struggled to surpass the $40k mark in recent weeks, and it is still nearly 40% down from its all-time high price of $65,000.

The World Bank Can’t. But the IMF Might Help El Salvador With Bitcoin Adoption

The World Bank has rejected El Salvador’s request for technical assistance on implementing Bitcoin as a legal tender. Now the Central American country will have to look at other financial bodies such as the International Monetary Fund (IMF) for support.

World Bank Says No to El Salvador

El Salvador made history last week when it became the first country to officially adopt Bitcoin as a legal tender. However, there is still work to do before the citizens start using the cryptocurrency to conduct daily transactions. There are technical aspects that need to be sought out before people can use BTC comfortably alongside the US Dollar in El Salvador.

The Central American turned to the World Bank to help with the technical aspects, but its request was denied. A World Bank spokesperson told Reuters that although it wishes to help El Salvador in numerous ways, including for currency transparency and regulatory processes, adopting Bitcoin is not one of them.

“While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings,” the spokesperson added. The situation is tough for financial bodies because El Salvador is using the US Dollar as its official legal tender, and adding Bitcoin could make things complicated.

IMF might be the solution

The World Bank has rejected El Salvador’s request, but the Finance Minister Alejandro Zelaya has revealed that they are now in talks with the IMF. The minister said talks are progressing positively, and the IMF doesn’t have an issue with El Salvador adopting Bitcoin as a legal tender.

Last week, the IMF said it envisions macroeconomic, financial and legal issues with El Salvador’s adoption of Bitcoin. If the IMF doesn’t help, El Salvador could turn to the Central American Bank for Economic Integration (CABEI). The financial agency has already offered to provide technical assistance to El Salvador regarding its implementation of Bitcoin as a legal tender.

BTC/USD chart. Source: FXEMPIRE

Bitcoin’s price has slipped below $40k again after rising above that resistance level earlier this week. The leading cryptocurrency is still unable to mount a rally that could propel it towards its all-time high price of $65k again.

CBDCs Will Attract Cybercriminals And Money Launders, Says BOE’s Bailey

Central bank digital currencies (CBDCs) are becoming increasingly popular globally, and the Bank of England Governor warned that they could attract money launders and cybercriminals.

CBDCs are great, but they will attract cybercriminals

The rise of cryptocurrencies and stablecoins in recent years has attracted the attention of central banks globally to the market. In addition to seeing the need to regulate the rising crypto market, central banks also believe developing CBDCs would help bring them to the digital age and bridge the gap between them and the private financial institutions.

However, despite the positives of having the digital versions of fiat currencies, the Bank of England (BOE) governor Andrew Bailey believes there are risks attached to developing and issuing the digital currencies.

Bailey, while speaking on financial innovation at the City UK annual conference yesterday, said CBDCs risk attracting cybercriminals and money launderers. He believes the digital currencies are excellent innovations and are the future of the global financial systems. However, they still come with certain risks that regulators need to find a way to tackle.

The BOE governor encouraged regulators to ensure they promote financial innovation as they would benefit the economy. However, that doesn’t mean the innovations shouldn’t be criticized or adequately regulated. He believes the new forms of digital money should be accepted as a means of payment and trusted as a store of wealth.

The BOE, like several other central banks, is considering launching the digital pound. Per the apex bank, the digital pound would be issued directly to consumers in a number of years and not via retail banks. The BOE also published a paper last week discussing the need for digital currencies. According to the paper, the BOE recommends at least 20% of all retail banking deposits should be in digital currencies once the CBDCs go live.

However, the paper said the transition to digital currencies would affect the financial markets. Hence, Bailey advised central banks to limit the speed and scale of any transition to digital currencies.

Bailey still not a fan of cryptocurrencies

Most central bank governors are not fans of Bitcoin and other cryptos. Bailey criticized cryptocurrencies, stating that “I have met crypto enthusiasts who take the libertarian view that something backed by nothing has more confidence in value than something backed by the state. Suffice to say that is not a view I agree with.”

BTC/USD chart. Source: FXEMPIRE

Bitcoin and other cryptocurrencies have rallied over the past year, with BTC reaching a new all-time high at $65,000 earlier this year. However, BTC’s price has dipped in recent weeks, and it is now trading above $40,000.

For a look at all of today’s economic events, check out our economic calendar.

Is Bitcoin A Great Portfolio Diversifier? Paul Tudor Jones Thinks So

Bitcoin (BTC) has become one of the most exciting financial assets in recent years. With several investors entering the market due to its massive growth, billionaire investor Paul Tudor Jones believes that the leading cryptocurrency is a great portfolio.

Paul Tudor Jones likes Bitcoin

Billionaire investor and the founder of the Tudor Investment Corporation has revealed that he likes Bitcoin as an asset class. Tudor Jones made this revelation during an interview with CNBC yesterday. Tudor Jones pointed out that Bitcoin is a great portfolio diversifier, and he looks to boost his investment in the leading cryptocurrency.

Jones pointed out that Bitcoin and other cryptocurrencies have grown to become a store of wealth. “For me, it’s just a way of kind of foundationally looking at how do I protect my wealth. Over time it’s a great diversifier. Again, I look at bitcoin as a store of wealth,” he added.

The billionaire investor added Bitcoin as one of the assets he would hold to preserve his wealth against inflation. “I like bitcoin as a portfolio diversifier. Everybody asks me what should I do with my bitcoin? The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities,” Jones added.

More institutional investors are trooping into the crypto market

The leading cryptocurrency has gained massive adoption over the past few years. In recent months, most of the adoption came from institutional investors. With a net worth of over $7 billion, the Bitcoin market would be gaining hundreds of millions of dollars if Tudor Jones invests 5% of his portfolio in BTC.

More asset management firms and hedge funds have been increasing their exposure in Bitcoin. Most of the institutional investors now view Bitcoin as a hedge against inflation, thanks to the US Federal Reserve (FED) and several other central banks globally printing money to combat the effects of the Coronavirus pandemic.

BTC/USD pair. Source: FXEMPIRE

Bitcoin climbed the $40k mark for the first time in weeks, as positive news lifted the spirit in the market. BTC is still trading around the $40k region at the time of this report, while Ether is up by 4% and trading above $2,500 per coin.

Bitcoin Breaks Above 21 Ema Resistance in 5 Waves

Bitcoin (BTC/USD) made a bullish bounce at the 78.6% Fibonacci retracement level. It was followed by a bullish breakout above the 21 ema resistance zone as expected in our analysis.

This article analyses the expected Elliott Wave and FIbonacci patterns on the Bitcoin 4 hour and 1 hour charts.

Price Charts and Technical Analysis

BTC/USD 14.06.2021 4 hour chart

The BTC/USD made a strong bullish reversal after testing the previous bottom and Fibonacci retracement levels:

  1. The bullish reversal is probably part of a ABC (green) wave or even a potential 123.
  2. Price action managed to break above the resistance trend line (dotted orange) during the weekend.
  3. But price action still faces hefty resistance (red box) from the previous top and long-term moving averages.
  4. A bearish bounce (orange arrows) could retest the support again where a bullish bounce is expected (green arrows).
  5. A bullish breakout (blue arrow) could indicate an immediate push up. A bull flag pattern (grey arrows) could indicate even more upside (purple arrow).
  6. A break below the support line (green) places it on hold (orange circle) and a break below the bottom invalidates it (red circle).

On the 1 hour chart, price action is showing strong bullish momentum:

  1. A 5 wave pattern (black 1-5) seems to be visible.
  2. The bullish 5 waves could complete a wave 1 (blue).
  3. A bearish ABC (black) could indicate a wave 2 (blue).
  4. The Fibonacci retracement levels of wave 2 could act as support (blue arrows).
  5. Especially the support zone (green box) could indicate a bounce due to the inverted head and shoulders pattern.
  6. All Fibonacci levels are potentially support levels.
  7. A break below the 88.6% Fib makes it less likely (orange circle) whereas a break below the bottom invalidates it (red circle).

Bitcoin 14.06.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

Tesla Will Accept Bitcoin Again. On One Condition

Tesla CEO Elon said the electric car manufacturer would resume accepting Bitcoin again. However, the company will only do so if the Bitcoin miners use renewable energy.

Tesla wants miners to use renewable energy

The leading cryptocurrency has come under fire in recent weeks for apparently contributing to the climate change concerns due to the miners using massive non-renewable energy to mine Bitcoin. As such, Tesla removed Bitcoin as a payment option for its electric vehicles.

However, the company could resume accepting BTC as a payment option once everything is in order. Tesla CEO Elon Musk revealed this yesterday while replying to a post by Cointelegraph that criticized him for causing pumps and dumps in the market with his tweets.

Musk denied the allegations and went on to reveal that Tesla will start accepting Bitcoin again once miners commit to using renewable energy to mine BTC and other cryptocurrencies. “When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing bitcoin transactions,” he tweeted,

 

Musk also clarified that Tesla still holds on to most of the bitcoins it bought earlier this year. The electric car manufacturer bought $1.5 billion worth of bitcoins in a few months. Following Tesla’s decision to stop accepting Bitcoin as a means of payment and Musk’s subsequent attack on the cryptocurrency, most people speculated that Tesla had sold its bitcoins.

However, Musk corrected that Tesla only sold 10% of its bitcoins holding, and the company did so to prove that BTC could be liquidated easily without moving the market.

Bitcoin’s energy concerns remain

There are numerous theories regarding Bitcoin’s massive energy usage. According to the Cambridge Bitcoin Electricity Consumption Index, the energy used in mining Bitcoin is the same as the annual carbon footprint of Argentina.

BTC/USD pair. Source: FXEMPIRE

The leading cryptocurrency has been in a bearish trend for the past few weeks. Its price has struggled to surpass the $40k mark despite recent positive news in the market. At the time of this report, Bitcoin’s price is up by 12% over the past 24 hours, and it is trading at $39,587 per coin on various crypto exchanges.

For a look at all of today’s economic events, check out our economic calendar.

Elon Musk’s Tweet Revives Bitcoin Bulls

At the time of filing this report, Bitcoin traded near the $40,000 mark, posting gains of about 12% for the day.

Present price actions reveal the most popular crypto asset had been hovering in a lower corridor between the $30,000 and $40,00 price levels since the second week of last month, suggest the asset was consolidating.

Though recent macros reveal that investors are increasing their buying capacity on the crypto asset partly attributed on Elon Musk’s recent comment suggesting Tesla would resume buying and accepting Bitcoin once miners go 50% with renewable energy.

These fundamentals boosted the faith among vintage bulls having a long-term mindset on the most popular Crypto amid recent calls for tough Crypto regulations.

The tech Billionaire’s tweet also suggested that the world’s most valuable carmaker will resume allowing Bitcoin transactions, once those terms were met.

Consequently, Elon Musk reiterated his earlier statements on Tesla having sold only 10% of its Bitcoin holdings, which seem to indicate Tesla’s hasn’t sold anymore, triggered more bullish sentiments around the Crypto asset, in the early hours of Monday.

Such a surge on the price of the flagship Crypto pushed the market value of Bitcoin to about $740 billion or 45% of the total crypto market valuation.

Though it’s important to note Bitcoin is still down by about 38% from its all-time high of $64,778 set on April 14.

Additionally, market sentiments around Bitcoin seem to be rallying stronger on reports that President Hassan of Tanzania instructed its central bank on reforming their banking processes, singling out crypto assets as the future of finance, further gave Bitcoin bulls the much-needed momentum in aiming for the resistance level of $40,000.

For a look at all of today’s economic events, check out our economic calendar.

Banks Can Now Hold Bitcoin And Other Cryptos. But There Is A Catch

Banks will be able to hold Bitcoin or other cryptocurrencies. However, the banks would be required to comply with tough capital requirements before they can do so.

Banks will face tough capital requirements to hold Bitcoin

The Basel Committee on Banking Supervision revealed yesterday that traditional banks would be allowed to hold Bitcoin or other cryptocurrencies. However, they will have to comply with stringent capital requirements due to the risk nature of cryptocurrencies.

In a statement yesterday, the committee stated that the banking sector is facing increasing risks from cryptocurrencies due to the potential of money laundering, reputational challenges and the massive price volatilities of the assets. The committee complained that these vices could lead to defaults, hence, the need to institute those regulations.

The committee recommended that a 1,250% risk weight be attached to a bank’s exposure to Bitcoin or other cryptocurrency assets. As such, banks would be required to hold a dollar in capital for each dollar worth of BTC they hold. The committee also suggested the same standard for other volatile digital assets. The capital is required to fully absorb a full write-off of their exposure to cryptocurrencies without exposing depositors and the bank investors to a loss.

Stablecoins are not covered in the capital requirement

The committee exempted stablecoins because the digital currencies are tied to real-world currencies like the US Dollar or Euros. Per the report, the proposal is now open to public comment before it is implemented. The committee comprised of the European Central Bank, the US Federal Reserve and other leading central banks added that the policies would undergo several changes as the cryptocurrency market continues to evolve.

The crypto market has gained adoption from various traditional banks and financial institutions over the past year. Currently, some leading banks such as Goldman Sachs and Morgan Stanley have all begun offering crypto-related services to their clients.

BTC/USD chart. Source: FXEMPIRE

Bitcoin’s price continues to underperform, and it is trading at $37k per coin at the time of this report. Despite the numerous adoption and regulatory news coming into the space, Bitcoin’s price has failed to embark on a rally to surpass the $40k mark.

Is The Bitcoin Bear Market Here? JPMorgan Analysts Seem To Think So

The prices of most cryptocurrencies have dropped by nearly 50% in recent weeks, sparking fears that the bull cycle is over and we are at the beginning of a bear market. Analysts at JPMorgan already think the bear market is close.

The Bear Market is Here

JPMorgan strategists have revealed that they think the Bitcoin bear market is getting closer. The leading cryptocurrency’s price has been stuck below the $40k region for the past few weeks and has struggled despite some positive news in the market.

JPMorgan strategists led by Nikolaos Panigirtzoglou said, “We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market.” The analysts added that Bitcoin’s relatively depressed share of the total cryptocurrency market cap is another trend that indicates that a bear market might be close.

The strategists based their analysis on the 21-day rolling average of the 2nd Bitcoin futures spread over spot prices. They stated that the backwardation displayed is an unusual development, and it reflects how week Bitcoin demand is from institutional investors at the moment. The analysts pointed out that in 2018 when Bitcoin’s price plunged by 74%, the Bitcoin futures curve was also in backwardation.

Bitcoin has lost a chunk of its market share to altcoins. The leading cryptocurrency currently accounts for roughly 40% of the total crypto market cap, down from 70% at the start of the year. According to some analysts, retail investors shifting to altcoins is another sign that the Bitcoin bear market is close.

BTC/USD pair
BTC/USD chart. source: FXEMPIRE

Bitcoin’s Price Still Trading Below $40k

Bitcoin’s price has been struggling for the past few weeks. The leading cryptocurrency’s price is trading below $40k despite the wave of positive news in the market recently. El Salvador became the first country to officially adopt Bitcoin as a legal tender ad more Latin American countries are looking to make similar moves. The crypto space is also gaining fast adoption, with numerous institutional entities like Interactive Brokers and Victory Capital coming into the market. With the prices still down, it would be interesting to see how the market performs in the coming days and weeks.

Bitcoin Retests Low and Bounces at Key 78.6% Fibonacci

Bitcoin (BTC/USD) has slowed down in the past 2 weeks. Price action is moving sideways and failing to break below the bottom or above the top.

Based on the Elliott Wave patterns and Fibonacci levels, we do expect a bullish reversal to occur in the near future. Price has in fact already made such a first bounce at the 78.6% Fibonacci level as mentioned in our previous analysis.

Price Charts and Technical Analysis

Bitcoin 09.06.2021 daily chart

BTC/USD is retesting the 61.8% Fibonacci retracement support level. Yesterday’s daily candle saw a bullish wick emerge after hitting that Fibonacci level again. Here is the context and what we expect next:

  1. A deep ABC (orange) correction is probably part of a larger ABC (grey) pattern in wave 4 (pink).
  2. The recent low and bounce at the 61.8% Fib probably indicates the end of the wave A (grey) and start of the wave B (grey).
  3. The bearish move to test the bottom does not change anything to this outlook. Only a break below the bottom places it on hold (orange circle) whereas a deep retracement invalidates it (red circle).
  4. A breakout (green arrows) above the resistance zone (red box) and 21 emas should confirm a push up to test the previous top.
  5. Eventually an uptrend (blue arrow) is expected to take price for a higher high and confirm the 345 waves (pink).

On the 4 hour chart, price action is probably building an ABC (green) or 123 pattern:

  1. The ABC or 123 remains valid as long as price stays above the 100% Fib and bottom.
  2. A break below the bottom invalidates it (red circle).
  3. A break above (green arrows) the resistance trend line (orange) and 21 ema zone could indicate a higher low and soon even a higher high.
  4. The 78.6% FIbonacci retracement level (blue box) is a key support zone.

Bitcoin 09.06.2021 4 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Should Bottom at Around $26K Before the Next Rally Starts

Using the Elliott Waves (EWP), see Figure 1 below, I view Bitcoin (BTC) as completing the green (minor) wave-5 of red (intermediate) wave-c of black (major) wave-4. Since Elliott waves are fractal, BTC is currently wrapping up even smaller waves (grey minute waves-iii, iv, and v), with the ideal Fibonacci-based target zone shown for each, respectively.

Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.

Bitcoin should bottom soon and then rally to at least $50K, ideally new all-time highs.

As you can see, BTC has been chopping around since its mid-May low, in what is called a triangle in EWP terms. Once the triangle completes, which from a technical analyses perspective is called a Bear flag, the price will break down and travel south about equal in length to the triangle’s width: small red dotted down arrow.

That then targets right into the ideal (grey) minute-v target zone, as well as the perfect (green) minor wave-5 target zone: the 176.4 to 200.0% Fibonacci-extension of minor wave-1, measured from the top of wave-2. Note that the mid-May low was minor-3 and bottomed almost precisely at the 161.8% Fib-extension of wave-1. Then green wave-4 initially reached the 100% extension. Picture perfect so far, and thus I must anticipate a picture perfect wave-5 bottom until proven otherwise.

The technical indicators (RSI5, MACD, MFI) set up potential positive divergence (dotted green arrows), which means the currency is moving lower but on less strength, momentum, and money is moving back into Bitcoin. The latter is very important because liquidity drives markets.

When the five waves down complete, a larger irregular flat wave-4 should end, and I anticipate the next multi-month Bull run to $100K +/- 10K to start. Since the financial markets are all about probabilities of possibilities, the alternative (labeled as “alt: III, alt: a, alt: b”) is BTC will “only” rally -in three overlapping waves- to around $50K+/-5K for a bounce and then head south again. Why? Because after five waves down, one must at a minimum expect at least three waves back up.

Bottom line: BTC is IMHO fast approaching a tradeable bottom from where one can expect at least an almost doubling in price, preferably a quadrupling. As usual, I will continue to monitor the price action as we move higher to see which two it will become. I prefer the latter but will gladly also take the former. A doubling is nothing to sniff at.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Stabilizes After 6 Daily Candles Fail to Break Low

Bitcoin (BTC/USD) has not made a lower low. Price action seems to be respecting the 61.8% Fibonacci retracement level as expected.

But the main question now is: will price action be able to show a bullish reversal? Let’s review the key decision zones and Elliott Wave patterns.

Price Charts and Technical Analysis

BTC/USD 28.5.2021 daily chart

The BTC/USD is testing the 21 ema zone of the weekly chart only for the 2nd time since the uptrend started. As mentioned in our article “Bitcoin 2021 vs Bitcoin 2017: How The Bull Trends Are Similar and Different”, the uptrend in 2017 on the other hand had 6x retests and bounces in this zone, which means that an uptrend is still very probable.

The BTC/USD is also testing the support of the long-term moving averages (144-233 emas). A second retest of the 61.8% Fibonacci level is possible:

  1. A bullish bounce above the previous low could confirm the current wave A (grey) within wave 4 (pink) pattern that is expected.
  2. A bearish breakout places the uptrend and this Elliott Wave analysis on hold (orange button).
  3. The bearish ABC (orange) pattern is probably not completing the wave 4 (pink) because usually waves 4 are lengthy and complex.
  4. Therefore, a larger bearish ABC (grey) pattern is expected before completing wave 4 (pink). A bullish ABC (orange) in wave B (grey) is possible.
  5. Six daily candlesticks were unable to break below the previous low which is making a bullish bounce more likely from a time pattern point of view.

On the 4 hour chart, price action was unable to break above the 21 ema resistance zone and resistance trend line (orange):

  1. Price action broke below the support trend lines (dotted green), which is indicating a bearish push.
  2. Bitcoin could be building a bearish BAC (blue) in wave B (orange).
  3. Price action could reach the 78.6% Fibonacci retracement support level.
  4. The 78.6% Fib is expected to act as support and potential bounce (green arrows).
  5. A bullish breakout above the 21 ema zone could confirm the bullish reversal.
  6. An immediate breakout above the 21 ema zone without hitting the 78.6% Fibonacci could do the same (blue arrow).

BTC/USD 28.5.2021 4 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Bullish Bounce at 61.8% Fib Indicates Complex Wave 4 Pattern

Bitcoin (BTC/USD) continued to drop after the break below the 38.2% Fibonacci level. But price action managed to reach the 61.8% Fib rather than just the 50% Fib.

This deep decline is unusual for a wave 4 but not illogical in this case. Let’s review the Elliott Wave patterns in more detail.

Price Charts and Technical Analysis

Bitcoin weekly chart 24.5.2021

The BTC/USD made a deep retracement in wave 4 (pink). Usually waves 4 retrace only to the 38.2% Fib.

  1. But in this case, wave 2 (pink) was very shallow so a deeper retrace now makes sense. Because waves 2 and 4 are usually the opposite in their character (shallow vs deep).
  2. Wave 2 was not only shallow but also simple. This means that wave 4 (pink) could also become complex besides being deep.
  3. BTCUSD respected and bounced at the 61.8% Fibonacci level. This could indicate the end of the wave A (grey).
  4. A bullish bounce (green arrow) could create a retest of the top in wave B (grey).
  5. Then another bearish price swing could complete wave C (grey) in wave 4 (pink).
  6. Once the ABC (grey) is completed, the wave 4 (pink) could be completed and another uptrend (blue arrows) could start wave 5 (pink).
  7. If Bitcoin, however, fails to break above the 21 ema zone on the weekly chart, then the uptrend is probably over (grey arrows).
  8. In that case, price action could drop further down after a sideways range.

On the 4 hour chart, Bitcoin (BTC/USD) seems to have completed an ABC (blue) in wave B (orange) followed by 5 bearish waves (blue) in wave C (orange):

  1. The current pullback respected the 61.8% Fibonacci support.
  2. This could indicate a bullish ABC (blue) pattern towards the previous bottoms (red box).
  3. The main targets are the -27.2% and -61.8% plus long-term moving averages.
  4. A bearish bounce at the target zone could complete wave A (orange) and start wave B (orange).
  5. A strong bullish bounce (green arrows) could indicate a wave C up (orange).
  6. A break below the bottom invalidates the current wave outlook (red circle).

Bitcoin 4 hour chart 24.5.2021

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Price Update – Prices Should Find Support Around $30,000

The recent plunge appears almost over, and we see firm support surrounding $30,000. Our 2021 outlook expects new highs and an advance to $90,000+ by year-end.

TECHNICAL OUTLOOK

Bitcoin collapsed below $40,000, triggering a waterfall of stop orders. The correction that began in April appears to be a standard ABC-style pullback. Prices should find support around $30,000 over the coming days. It would take a decisive break down below $24,000 to recommend a more ominous outcome. Overall, our work supports one more advance into late 2021 that could exceed $90,000.

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AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For regular updates, please visit here.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Decline Breaks 38.2% Fib and Aims at 50% & $37.5k

Bitcoin (BTC/USD) made a bearish breakout and one more lower low as expected. But the BTC/USD did not make a bullish bounce at the 38.2% Fibonacci level.

Instead, price action broke below the Fib and is now approaching the 50% Fib level. What can be expected next for Bitcoin?

Price Charts and Technical Analysis

Bitcoin weekly chart

The BTC/USD decline is stronger then previously expected due to the break below the 38.2% Fibonacci level. This could be a first warning signal that price action might be a deep correction:

  1. If the wave analysis is correct, price action is still in a wave 4 (pink) as previously mentioned.
  2. This is valid as long as price action remains above the 50% Fibonacci level near $37,500. Two other aspects help the support zone: the 21 emas and the sideways zone (green box).
  3. A break below 50% Fibonacci level and every Fib below it however is a warning signal (orange circles) that the wave 4 (pink) outlook might be incorrect.
  4. A break below the 88.6% Fib invalidates the wave 4 (red circle).
  5. If the wave 4 pattern (pink) is correct, then there are 2 main scenarios for a recovery. The first one is indicated by the green arrows: a strong bullish rebound.
  6. The second scenario is price action will slowly respond to the support zone. This is indicated by the orange arrows. This is a phase where price action carefully turns up with many dips to test the support zone before moving up later on (blue arrow). This is the most likely scenario at the moment due to the strong bearish price action.
  7. If our wave analysis is correct, then the wave 4 (pink) could be lengthy but eventually, a new uptrend could send it higher within a wave 3 (purple) of wave 3 (red).

On the 1 hour chart, price action is building lower lows as part of the wave C (grey). The bullish price action are wave 4 pullbacks:

  1. The current pullback could also be a wave 4 (green) of a lower degree,
  2. A bearish bounce at the Fibonacci levels could indicate at least one more lower low.
  3. The main target of the bearish price action is the 50% Fibonacci support zone around $37,500.
  4. A bullish bounce could occur at the target (blue arrows).
  5. A break (green arrows) above the 50-61.8% Fibonacci however could indicate the end of the 1 hour downtrend.
  6. The main target of a bullish break is the resistance zone (red box), which could create a bearish bounce (orange arrows).

Bitcoin weekly chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

The $217 Million Dollar Pizza: Don’t Let These 3 Stocks Get Away Like Bitcoin

Price is what you pay, value is what you get.

The infamous Warren Buffett quote sums up investing vs trading perfectly.

The short-term trade is all about instant gratification. Take a pizza for instance. We all know it’s bad for us, but it tastes so good. Maybe that’s why Americans eat 3 billion pizzas and spend $38 billion on them each year.

Short-term trades feel great when we win, just like pizza feels great going down. But later, that pizza might not feel so great. And long-term, we know it clogs arteries and does all sorts of other damage. So, when we tee-up a quick trade poised to clip a profit, the greed center of our brains is hoping to get to the pleasure center.

Short-term traders are often looking for free money.

Maybe this was what Laszlo Hanyecz was thinking on May 22nd, 2010. He was hungry and bought two pizzas in Jacksonville, Florida. Only he made the first real-world bitcoin transaction paying 10,000 BTC for them. Surely, at the time it felt like free money – or rather – free pizza. Who foresaw bitcoin’s future?

Maybe the pizza seller did. Because now those two pizzas are worth $217 million each.

If ever there was an example of someone who likely regretted the short-term trade and wish they’d held for the long-term, it might be poor Laszlo.

There are two sides to every coin (except perhaps bitcoin). What the short-term trade offers in terms of quick excitement, the long-term trade severely lacks. Buy-and-hold investing has a stuffy stigma. Let’s face it, being patient and waiting years for monster gains is boring. Not many want to do it.

That is until one looks up 5, 10, or 30 years from now at someone else’s successful long-term investments.

Imagine you had sold 2 pizzas for 10,000 bitcoins 11 years ago. And then never did anything with the cryptocurrency. Naturally, you’d have forgone a fast in-and-out trade trying to clip a few percent. You also would need the long-term view on bitcoin’s potential. But had you done nothing, you would have turned roughly $16 bucks into nearly half-a-billion dollars.

That, my friends, is the power of long-term investing.

At MAPsignals, we see the investing-world through the lens of stocks: specifically, outliers.

What’s an outlier?

An outlier stock is a stock that makes insane gains, more than most other stocks. Professor Hendrick Bessembinder proved that for the past nearly 100 years, only 4% of all stocks accounted for 100% the gains above treasuries. That 4% represents the outliers.

If you missed the bitcoin boat, don’t worry- I did too. But I did catch some monster outliers that helped me get closer to my long-term investing goals. And today, you’re in luck, because I’m about to share 3 outlier stocks with close ties to bitcoin and cryptocurrency. These stocks represent a great way to own awesome businesses, and simultaneously get exposure to cryptocurrency.

Nvidia Corporation (NVDA)

NVDA is a Technology stock focused on specialized semiconductors. It has great sales and earnings growth and a juicy 62% gross profit margin. It has reasonable debt levels and a reasonable P/E ratio. Their chips are popular with bitcoin miners.

Now, let’s take a look at the Big Money data. What’s that? We have a process that looks for high-quality stocks seeing buy activity in their shares. Only the best ones show up on our weekly Top 20 reports.

What we want to see is a repeat offender. Look how Nvidia has been a Big Money magnet over the years:

Times on the Top 20 since July 1st, 2014: 54

Outlier status: OUTLIER

First signal: 2000-06-05

Performance since first signal: +5433.85%

Here’s a chart of all of those rare signals:

 

Source: www.mapsignals, End of day data sourced from Tiingo.com

Next up is PayPal Holdings, Inc. (PYPL)

PYPL is a Financials stock focused on Consumer Finance Services. It has great sales and earnings growth and a juicy 55% gross profit margin. It has reasonable debt levels and a reasonable P/E ratio. They also own the popular digital payments app, Venmo.

Recently, PayPal has allowed their users (and Venmo users) to transact in bitcoin.

Now, let’s look at the Big Money profile for PYPL.

BIG MONEY DATA:

Times on the Top 20 since July 1st, 2014: 45

Outlier status: OUTLIER

First signal: 2016-09-20

Performance since first signal: +520.53%

 

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Lastly, there’s Square, Inc. (SQ)

SQ is a Discretionary stock focused on Retail Industry Software. It has great sales and earnings growth and a juicy 28% gross profit margin. It has high debt levels and a high P/E ratio.

They have point-of-sale technology for merchants and the popular Cash App. The latter allows users to transact in bitcoin.

Let’s look at the historical Big Money profile for Square.

BIG MONEY DATA:

Times on the Top 20 since July 1st, 2014: 12

Outlier status: MATURING

First signal: 2017-10-17

Performance since first signal: +535.82%

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Here’s the bottom line: If you missed out on bitcoin’s massive run, there are stocks that are correlated to the cryptocurrency’s success. If you’re looking for stock exposure that can benefit from the rise in bitcoin, consider Nvidia, PayPal, & Square.

Disclosure: the author holds long positions in PYPL & SQ in personal accounts and PYPL in managed accounts, but no position in NVDA at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

Disclaimer

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For a look at all of today’s economic events, check out our economic calendar.

Havoc in the Crypto Market as Bitcoin Drops to its Lowest Levels Since February

The flagship crypto on Sunday night broke its key support levels amid intense selling pressures in play as weighed heavily on the value of many Crypto assets including Ethereum, XRP, Internet computer.

Sell -offs got intensified with Elon Musk’s most recent tweet reaction pushing the price of the flagship crypto to their lowest prices since February after implying via a Twitter exchange that the world’s most valuable car company might diversify its Bitcoin holdings.

At the time of drafting this report, the world’s most valuable crypto asset by market value was down by 10% for the day as it traded around $43,200 on the FTX exchange with a daily trading volume of $64 Billion. Bitcoin currently has a market value hovering around $808 Billion.

The pioneer crypto asset, momentarily broke below their key support levels of $45,000 for the first time in almost 12 weeks after the powerful tech billionaire gave his bias to a social media post that suggest Tesla might sell off all its $1.5 billion stake in the largest cryptocurrency.

It’s important to note that Elon Musk has a strong affluence in the crypto-verse via having a strong following on social media with his market-moving tweets thereby triggering so much outrage among crypto fans after such statement was made, as present market sentiments reveal record cash outflows in play on the account that many retail investors are reducing their exposures.

That being said, market experts, however, remain bullish on the crypto market, particularly on Bitcoin and Ethereum as they continue to revolutionize many aspects of the global financial ecosystem, and in spite of its implied volatility, the long-term fundamentals for many of these digital assets remain rock solid.

Giving credence to such bullish is recent data from Bitcoin Treasuries, pointing to increased institutional exposure to BTC, as such investors accumulated about 215,000 Bitcoin worth close to $10.billion in the past 4 weeks.

Consequently, data retrieved from Glassnode affirmed the Bitcoin supply held by long term holders has returned to accumulation mode, even as price dips.

Though it looks similar to the 2017 peak, long term investors of today actually held +8% more of the circulating supply in dormant wallets.

For a look at all of today’s economic events, check out our economic calendar.