Bitcoin making a Bear flag or preparing for a Bart move up
Updated
Just many things that don't add up the past week since the Bitfinex dump. There was panic when the news came out, which looked very bad at first sight. But 4 days have passed with sideways price action, which is not really confirming that we have panic in the market. OI' back to it's level from before the dump as well now. Now assuming that many people have an account at Bitmex and have funds spread around many exhanges as well. Since Tether' was dropping again and prob most did not forget the Tether' dump half year ago, only option would have been to move to crypto (or Bitcoin). But since it's less easy to move to fiat, think we can assume that many people have hedged through Bitmex, since it's easy to do there. This would explain the big increase of OI there. When looking at ETH's OI', that one barely moved since the dump. That would confirm this theory.
Normally hedging means locking up your $ value, so it should not matter which way it goes you can't loose or win in $ if BTC' dumps or rallies. Let's say, someone has 100K capital spread around several exhanges. If he would want to hedge it like it should be, he should have 100K to hedge as well. So in other words, he should not leverage hedge 10K to 100K. Because this way he would risk getting liquidated if the price would move up a lot. Since OI increased so much (have not seen it increase this much after a dump like this, i am thinking maybe a lot of people simply hedged their assets. But OI can't increase if there also are not a lot of new longs as well. So who are these people who have bought 130 mil new longs since the low, with all the uncertainty of Bitfinex hanging above the market?
If you remember from my previous analysis, i saw a few big buys at the low (first half hour of the dump), like it were people who tried to stop the panic dump. I missed the first 20 min or so of the dump, but i saw one 5 mil market buy, which is 95% sure a buy and not a short closing, because i saw the OI increase that moment. Of course anyone could have done this, doesn't need to be a pro whale. But usually retail money, would short during the panic than go long. So for now my assumption is that it's smart money.
Why would they be doing this? There can be several reasons. My first though was, supporting the price to stop a big dump. Because they were still looking at another wave up to like 6K before wanting to unload the bags. So a dump to 4800/4500 would cost them much more than supporting the price at these levels. In the hope to be able to unload at higher prices and decrease their risk.
To make things less complicated, short term think we can say that:
If we move stable sideways/down for another 2 days or so, that a bullish outcome becomes more likely. Until then, bears are in favor!
Now i will explain the chart on the right. We can see a very similar shape as we have seen during other big drops. They are similar, but nr 2 shows this movement could take another week and than instead of a lower low we could see a double bottomish level instead. They do all tell us, that if we see a second drop, it has to be smaller (and therefore also less volume) than the previous one. So nr2 says we should hang like this for like another week or so then test 4900/4950 again. Nr1 says, we drop withing 2 days or so and test 4750/4900 again. 2 weeks ago i gave 4700 as a good support level, week later i adjusted it to 4800. So for not having too many variables, i would say 4800ish should be the max and not 4700.
If we see another big drop happen, like again 500 points or so, than we can most likely say goodbye already to the rally from the past 3 months.
So bears are in favor now, that is clear. But the longer this takes and if the drops start to stay small and seem a bit controlled like they have been past days, than i would start to worry a bit. For the bulls, i would sit it out and wait for my description for the coming 2 days or so to play out. Even if we do see the blue line play out on the left, there are still a few factors that we can not see upfront, to judge if it's just a correctional (shake out) move before a dump again or that we will continue the rally again. And as if we don't have enough factors playing a role already, we still have Bitfinex and Tether hanging above the market as well.
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Previous analysis:
Normally hedging means locking up your $ value, so it should not matter which way it goes you can't loose or win in $ if BTC' dumps or rallies. Let's say, someone has 100K capital spread around several exhanges. If he would want to hedge it like it should be, he should have 100K to hedge as well. So in other words, he should not leverage hedge 10K to 100K. Because this way he would risk getting liquidated if the price would move up a lot. Since OI increased so much (have not seen it increase this much after a dump like this, i am thinking maybe a lot of people simply hedged their assets. But OI can't increase if there also are not a lot of new longs as well. So who are these people who have bought 130 mil new longs since the low, with all the uncertainty of Bitfinex hanging above the market?
If you remember from my previous analysis, i saw a few big buys at the low (first half hour of the dump), like it were people who tried to stop the panic dump. I missed the first 20 min or so of the dump, but i saw one 5 mil market buy, which is 95% sure a buy and not a short closing, because i saw the OI increase that moment. Of course anyone could have done this, doesn't need to be a pro whale. But usually retail money, would short during the panic than go long. So for now my assumption is that it's smart money.
Why would they be doing this? There can be several reasons. My first though was, supporting the price to stop a big dump. Because they were still looking at another wave up to like 6K before wanting to unload the bags. So a dump to 4800/4500 would cost them much more than supporting the price at these levels. In the hope to be able to unload at higher prices and decrease their risk.
To make things less complicated, short term think we can say that:
If we move stable sideways/down for another 2 days or so, that a bullish outcome becomes more likely. Until then, bears are in favor!
Now i will explain the chart on the right. We can see a very similar shape as we have seen during other big drops. They are similar, but nr 2 shows this movement could take another week and than instead of a lower low we could see a double bottomish level instead. They do all tell us, that if we see a second drop, it has to be smaller (and therefore also less volume) than the previous one. So nr2 says we should hang like this for like another week or so then test 4900/4950 again. Nr1 says, we drop withing 2 days or so and test 4750/4900 again. 2 weeks ago i gave 4700 as a good support level, week later i adjusted it to 4800. So for not having too many variables, i would say 4800ish should be the max and not 4700.
If we see another big drop happen, like again 500 points or so, than we can most likely say goodbye already to the rally from the past 3 months.
So bears are in favor now, that is clear. But the longer this takes and if the drops start to stay small and seem a bit controlled like they have been past days, than i would start to worry a bit. For the bulls, i would sit it out and wait for my description for the coming 2 days or so to play out. Even if we do see the blue line play out on the left, there are still a few factors that we can not see upfront, to judge if it's just a correctional (shake out) move before a dump again or that we will continue the rally again. And as if we don't have enough factors playing a role already, we still have Bitfinex and Tether hanging above the market as well.
Please don't forget to like if you appreciate this :)
Previous analysis:
Note
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Bitcoin fractal:The one i talked about the past weeks but unfortunately not in play anymore
Note
If it can hold the 5170ish coming hour or so, make a bull flag, could be the start of a Bart move up. So safe play would be waiting, seeing volume be a bit higher than past days as well, seeing nice bull flag form. As I described in my Bart move educational post
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Nice :)Okay, in theory the bear flag is still in play, but it has become a much different one. So i prefer to see it has failed already. If the bulls are able to keep it around these levels for the coming half day or (or less), than it will become much more likely that bearish movement is over for at least the short term. So seeing price hang around the upside of a bear flag, indicates it will prob fail. If we see some rejection, push to maybe 5150 withing an hour or 2, would but the flag in play again. So we need one more push above the 5300ish for the bulls to feel safer.
Note
That flag/wedge played out perfectly creating another push up. The target of that flag has been reached already as well. So at this point, anything can happen. Going to try and write a new analysis later on. Would be careful at this point, btc is moving up but alts don't feel like it. So even if we continue up, a wick (a shake out) is very likely to happen as well
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