July 4, 2024 Crypto Market Update
Bitcoin Daily Chart
Bitcoin has made a strong bearish movement below it's previously established low of $59,500 - igniting a wave of fear and panic selling in the market as we begin to break down across all major technical levels. Throughout our Daily Reports over the last week, we have warned about the importance of that price level, as violating it would violate the Consolidation Pattern and Range we have been trading in.
That break has now occurred, and the strength of our current Bearish Trend and negative implications for a quick continuation of the Bull Market Cycle are now in effect. The Directional Movement Indicator has confirmed this bearish trend since June 12th, with a rising Average Directional Index that rose above 20 back in late April - confirming the presence of bearish dominant movement.
We are also now trading below the Daily 200 Exponential Moving Average, a critical level of support.
Bitcoin Daily Technical Chart
Bitcoin has been trading below the Daily Base Line for several weeks now, following the Double Top pattern at approximately $70,000 in late June.
Sellers have also stepped in with strong force today, as seen by the overwhelming Volume Delta candle.
Time Transformation confirmed Hidden Bearish Divergence on our failed breakout of the low range on July 1st.
We are now no longer oversold on the Daily Timeframe, and $64,000 remains the level that needs to be reclaimed for any bullish momentum.
On-Chain Data
https://cdn.prod.website-files.com/66672172c7278fe11e60f137/6686a71aaf570fc300997450_July%204,%202024%20Bitcoin%20Realized%20Price%20by%20Short-Term%20Holders.png
Bitcoin is now trading below the Cost Basis of the Short-Term Holder Cohort with holding times of 3-6 months. Historically, every time this has happened it led to a deeper and longer correction before any period of price discovery, and when it happens following an All-Time High, on only one occurrence (2021-2022 cycle) did price make any significant recovery.
However, with only one exception, when price initially falls below this level, it does relatively quickly make a sharp move back up to re-test that level. This would be associated with what a "short squeeze" as the market steps in to punish late shorters before continuing the decisive movement back down.
This would hint strongly at a squeeze to $60,000 - $61,000. While most will be lured into longing this level, evidence suggests the appropriate move is to patiently wait to use that opportunity to exit any long exposure, and potentially enter short positions.
Bitcoin Liquidation Heatmap
https://cdn.prod.website-files.com/66672172c7278fe11e60f137/6686a83dd3c53498801d811d_July%204,%202024%20Bitcoin%20Liquidation%20Heatmap.png
The Liquidation Heatmap shows the destruction of Long Positions, however, as I've pointed out the low volume of recent movements, we can see that while many long positions were liquidated, the dollar amounts are not what we've seen in previous weeks or months.
This confirms our assertion that Buying Interest has been steadily drying up, as the Demand Side of the equation has continued to weaken as prices have driven lower. Investor confidence has been heavily shaken by the failure to break above All-Time Highs and sustain a more pronounced rally.
We can see the liquidations drying up, and we now see the heavy cluster of Short Liquidations clustered at approximately $60,000.
This lends more strength to the argument that a short squeeze to that level would generate a high-value entry level for short positions.
Conclusion
Confirmation of a dominant Bearish Trend are coming in on all fronts. Sadly, we might have just witnessed the death toll for this current Market Cycle. That means, capital preservation and risk management are more important now then they have ever been.
Bitcoin has made a strong bearish movement below it's previously established low of $59,500 - igniting a wave of fear and panic selling in the market as we begin to break down across all major technical levels. Throughout our Daily Reports over the last week, we have warned about the importance of that price level, as violating it would violate the Consolidation Pattern and Range we have been trading in.
That break has now occurred, and the strength of our current Bearish Trend and negative implications for a quick continuation of the Bull Market Cycle are now in effect. The Directional Movement Indicator has confirmed this bearish trend since June 12th, with a rising Average Directional Index that rose above 20 back in late April - confirming the presence of bearish dominant movement.
We are also now trading below the Daily 200 Exponential Moving Average, a critical level of support.
Bitcoin Daily Technical Chart
Bitcoin has been trading below the Daily Base Line for several weeks now, following the Double Top pattern at approximately $70,000 in late June.
Sellers have also stepped in with strong force today, as seen by the overwhelming Volume Delta candle.
Time Transformation confirmed Hidden Bearish Divergence on our failed breakout of the low range on July 1st.
We are now no longer oversold on the Daily Timeframe, and $64,000 remains the level that needs to be reclaimed for any bullish momentum.
On-Chain Data
https://cdn.prod.website-files.com/66672172c7278fe11e60f137/6686a71aaf570fc300997450_July%204,%202024%20Bitcoin%20Realized%20Price%20by%20Short-Term%20Holders.png
Bitcoin is now trading below the Cost Basis of the Short-Term Holder Cohort with holding times of 3-6 months. Historically, every time this has happened it led to a deeper and longer correction before any period of price discovery, and when it happens following an All-Time High, on only one occurrence (2021-2022 cycle) did price make any significant recovery.
However, with only one exception, when price initially falls below this level, it does relatively quickly make a sharp move back up to re-test that level. This would be associated with what a "short squeeze" as the market steps in to punish late shorters before continuing the decisive movement back down.
This would hint strongly at a squeeze to $60,000 - $61,000. While most will be lured into longing this level, evidence suggests the appropriate move is to patiently wait to use that opportunity to exit any long exposure, and potentially enter short positions.
Bitcoin Liquidation Heatmap
https://cdn.prod.website-files.com/66672172c7278fe11e60f137/6686a83dd3c53498801d811d_July%204,%202024%20Bitcoin%20Liquidation%20Heatmap.png
The Liquidation Heatmap shows the destruction of Long Positions, however, as I've pointed out the low volume of recent movements, we can see that while many long positions were liquidated, the dollar amounts are not what we've seen in previous weeks or months.
This confirms our assertion that Buying Interest has been steadily drying up, as the Demand Side of the equation has continued to weaken as prices have driven lower. Investor confidence has been heavily shaken by the failure to break above All-Time Highs and sustain a more pronounced rally.
We can see the liquidations drying up, and we now see the heavy cluster of Short Liquidations clustered at approximately $60,000.
This lends more strength to the argument that a short squeeze to that level would generate a high-value entry level for short positions.
Conclusion
Confirmation of a dominant Bearish Trend are coming in on all fronts. Sadly, we might have just witnessed the death toll for this current Market Cycle. That means, capital preservation and risk management are more important now then they have ever been.
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