Bitcoin Bearish Structure Intact Breakdown to $14,600 Likely
Sometimes it seems one week in the world of crypto moves at the speed of three months in the traditional markets.
If you recall, last week Cameron Winkelvoss called out Barry Silbert of Digital Currency Group (DCG) for potential solvency issues and potential co-mingling of assets between Digital Currency Group (DCG) and Grayscale Bitcoin Trust (GBTC). It would appear things are escalating quite rapidly on that front.
It would appear Digital currency Group is currently being investigated by the US SEC and the US DOJ over suspicious funds transfers according to Yahoo Finance
[url=finance.yahoo.com/news/digital-currency-group-spotlight-over-110300788.html ]Digital Currency Group in Spotlight Over Suspicious Fund Transfers
“Crypto-focused conglomerate Digital Currency Group (DCG) is under investigation by the U.S. Department of Justice as well as the Securities and Exchange Commission (SEC) over questionable transfers between DCG and a subsidiary, according to a Bloomberg report that cited unnamed sources.”
Additionally, Bloomberg is reporting Dutch Crypto Exchange Bitvato rejected an offer by Digital Currency Group (DCG) to pay 70 percent of its outstanding debt to Bitvato.
[url=bloomberg.com/news/articles/2023-01-11/dutch-exchange-bitvavo-says-digital-currency-group-in-talks-with-creditors?leadSource=uverify wall ]Dutch Crypto Exchange Says Digital Currency Group in Talks With Creditors
…and of course this led to a call for removal of Barry Silbert from Digital Currency Group (DCG) by Cameron Winkelvoss (Yahoo Finance analysis link below).
[url=finance.yahoo.com/video/dcg-gemini-tensions-escalate-winklevoss-151055393.html ]DCG, Gemini Tensions Escalate as Winklevoss Calls for Removal of Barry Silbert
The ramifications of a potential Digital Currency Group insolvency – and by extension a potential insolvency of Greyscale Bitcoin Trust – would have a material impact on the entire crypto ecosystem. It would appear that the Cryptocurrency Ecosystem may need to brace for a hard landing.
With that, Let’s get to the TA. (My methodology is Point & Figure/Wyckoff.)
Looking at the 1D chart ($200 USD box size with a 3-box reversal), the bearish structure of the formation has remained intact, with a series of Upward Thrust (UT) shakeouts honoring the broken trendline of support throughout Phase C of this Wyckoff Redistribution. Upward Thrusts (UT) and Upward Thrusts After Distribution (UTAD) are quite common in Phase C of Wyckoff Redistributions to trap, shakeout, and chop up traders.
“A UT or UTAD allows large interests to mislead the public about the future trend direction and, subsequently, sell additional shares at elevated prices to such break-out traders and investors before the markdown begins. In addition, a UTAD may induce smaller traders in short positions to cover and surrender their shares to the larger interests who have engineered this move. Aggressive traders may wish to initiate short positions after a UT or UTAD. The risk/reward ratio is often quite favorable. However, the “smart money” repeatedly stops out traders who initiate such short positions with one UT after another, so it is often safer to wait until Phase D and an LPSY.”
- The Wyckoff Method: A Tutorial
The recent PA move took Bitcoin to a confluence of resistance at $17,400 USD where the broken support trendline (started from the Secondary Test at $15,600 USD) and the resistance trendline (started from the UTAD local top at $18,200) meet. The PA should experience rejection here, with price falling into the $15,800 USD region on a Sign of Weakness (SOW) as the formation moves into Phase D of the Redistribution. The projected price for this Wyckoff Redistribution phase would be ((9 columns x 200 box size x 3 box reversal) * 2/3) - $18,200 = $14,600 region based upon the existing cause in the formation. A breakout above $17,800.00 would invalidate this bearish scenario.
Something worth reminding about: One thing to be acutely aware of in a Wyckoff Redistribution cycle is these cycles generally have three waves – each with diminished intensity as a rule of thumb. It is entirely possible after BTC settles into a new Trade Range in the $14,600 region, the formation will move through a normal Phase A Wyckoff Accumulation right before experiencing a Change of Character and transforming into a third Wyckoff Redistribution only to take the PA to a lower Trade Range.
Always remember this is not trading advice.
Outside of that, Happy Trading.
If you recall, last week Cameron Winkelvoss called out Barry Silbert of Digital Currency Group (DCG) for potential solvency issues and potential co-mingling of assets between Digital Currency Group (DCG) and Grayscale Bitcoin Trust (GBTC). It would appear things are escalating quite rapidly on that front.
It would appear Digital currency Group is currently being investigated by the US SEC and the US DOJ over suspicious funds transfers according to Yahoo Finance
[url=finance.yahoo.com/news/digital-currency-group-spotlight-over-110300788.html ]Digital Currency Group in Spotlight Over Suspicious Fund Transfers
“Crypto-focused conglomerate Digital Currency Group (DCG) is under investigation by the U.S. Department of Justice as well as the Securities and Exchange Commission (SEC) over questionable transfers between DCG and a subsidiary, according to a Bloomberg report that cited unnamed sources.”
Additionally, Bloomberg is reporting Dutch Crypto Exchange Bitvato rejected an offer by Digital Currency Group (DCG) to pay 70 percent of its outstanding debt to Bitvato.
[url=bloomberg.com/news/articles/2023-01-11/dutch-exchange-bitvavo-says-digital-currency-group-in-talks-with-creditors?leadSource=uverify wall ]Dutch Crypto Exchange Says Digital Currency Group in Talks With Creditors
…and of course this led to a call for removal of Barry Silbert from Digital Currency Group (DCG) by Cameron Winkelvoss (Yahoo Finance analysis link below).
[url=finance.yahoo.com/video/dcg-gemini-tensions-escalate-winklevoss-151055393.html ]DCG, Gemini Tensions Escalate as Winklevoss Calls for Removal of Barry Silbert
The ramifications of a potential Digital Currency Group insolvency – and by extension a potential insolvency of Greyscale Bitcoin Trust – would have a material impact on the entire crypto ecosystem. It would appear that the Cryptocurrency Ecosystem may need to brace for a hard landing.
With that, Let’s get to the TA. (My methodology is Point & Figure/Wyckoff.)
Looking at the 1D chart ($200 USD box size with a 3-box reversal), the bearish structure of the formation has remained intact, with a series of Upward Thrust (UT) shakeouts honoring the broken trendline of support throughout Phase C of this Wyckoff Redistribution. Upward Thrusts (UT) and Upward Thrusts After Distribution (UTAD) are quite common in Phase C of Wyckoff Redistributions to trap, shakeout, and chop up traders.
“A UT or UTAD allows large interests to mislead the public about the future trend direction and, subsequently, sell additional shares at elevated prices to such break-out traders and investors before the markdown begins. In addition, a UTAD may induce smaller traders in short positions to cover and surrender their shares to the larger interests who have engineered this move. Aggressive traders may wish to initiate short positions after a UT or UTAD. The risk/reward ratio is often quite favorable. However, the “smart money” repeatedly stops out traders who initiate such short positions with one UT after another, so it is often safer to wait until Phase D and an LPSY.”
- The Wyckoff Method: A Tutorial
The recent PA move took Bitcoin to a confluence of resistance at $17,400 USD where the broken support trendline (started from the Secondary Test at $15,600 USD) and the resistance trendline (started from the UTAD local top at $18,200) meet. The PA should experience rejection here, with price falling into the $15,800 USD region on a Sign of Weakness (SOW) as the formation moves into Phase D of the Redistribution. The projected price for this Wyckoff Redistribution phase would be ((9 columns x 200 box size x 3 box reversal) * 2/3) - $18,200 = $14,600 region based upon the existing cause in the formation. A breakout above $17,800.00 would invalidate this bearish scenario.
Something worth reminding about: One thing to be acutely aware of in a Wyckoff Redistribution cycle is these cycles generally have three waves – each with diminished intensity as a rule of thumb. It is entirely possible after BTC settles into a new Trade Range in the $14,600 region, the formation will move through a normal Phase A Wyckoff Accumulation right before experiencing a Change of Character and transforming into a third Wyckoff Redistribution only to take the PA to a lower Trade Range.
Always remember this is not trading advice.
Outside of that, Happy Trading.
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