BitcoinShort
A Breakout or Another Bull Trap? Market Fundamentals Included*
Updated
Today is an interesting day, most people who are looking at hourly and daily charts (or shorter term charts) are thinking that Bitcoin is on a breakout.
Short term charts are signaling a breakout. But do not be fooled, market makers know how to play with people's psychology. If we look at weekly and monthly charts, the bull case is still not there. In fact these moments may be the worst moments to buy into FOMO.
Before taking a look at weekly and monthly charts, let's analyze the current market fundamentals.
There are 3 top issues that needs a resolution:
Probably over 90% of the market thinks that Tether manipulated the market many times, and they don't have the money they have been telling in their banks. Audit issue, subponea, and the days that tether printed heavily (i.e. market manipulation), all correspond to a negative scenario. There are almost no positives that may lead the market to think that Tether issue will be resolved without any problems. Tether is used in most exchanges, and if it collapses, the whole market will go into a crash, and media is going to make it even worse. Bitfinex, who is known to be closely connected with Tether, will probably take a big blow too, if Tether collapses or fails to show the money they printed in their banks.
G20 is another key issue that most people only heard about 3 days ago in this post by Coindesk: coindesk.com/french-german-finance-ministers-call-for-g20-crypto-discussion/. Since the overall panic atmosphere that we have seen last week is kind of gone after the CFTC hearing, market didn't seem to care so much about G20, yet. A month ago there were news about "Monsieur Bitcoin" (a well known critic who was former deputy governor of the Banque de France), being appointed to regulation task force in France. In the meanwhile, there are lots of hints that cryptocurrency is going to be a hot topic of G20, during March gatherings in Argentina. G20 is the biggest international gathering, and it is very likely that there will be news that will create panic in cryptocurrency markets. I believe this issue is even bigger than Tether issue, because if nations take offensive approaches to cryptocurrencies altogether, we might go through a very rough market. Tether collapse might be forgetten in a couple weeks, but if G20 decides to act harsh on cryptocurrencies, we might see months of trouble.
Commodity vs Security issue has been talked in CFTC meeting, but it was only the tip of the iceberg. While most ICOs and cryptocurrencies like to defend themselves as commodities, regulators will most likely see most cryptocurrencies and ICOs as securities in the future. J. Christoper Giancarlo became the hero of cryptocurrency fans and evangalists by defining cryptocurrencies as commodities. However, there was an opposing side during the hearing, which was suggesting cryptocurrencies as "undercover securities". While CFTC meeting brought a relief to a crashing market in general, there are a variety of nations' regulators and SEC, who might decide to see cryptocurrencies as securities. G20 meetings become even more important in that sense, because nations will gather there to decide whether to see cryptocurrencies as Commodities or Securities.
If cryptocurrencies become defined as securities, this will cause problems for both ICOs, exchanges, and cryptocurrency investors in general.
Even though bulls got encouraged by CFTC meeting, market makers probably do not feel as positive as bulls about these unresolved issues. Whether the market is bearish or bullish, they always find great opportunuties to make money. The CFTC meeting gave the market maker whales the opportunity to buy during 6000s and lower 7000s, however, they have a different greed than we do. They love to make profit during bull traps, and get even more greedy to push the prices even lower.
Short term charts are signaling a breakout. But do not be fooled, market makers know how to play with people's psychology. If we look at weekly and monthly charts, the bull case is still not there. In fact these moments may be the worst moments to buy into FOMO.
Before taking a look at weekly and monthly charts, let's analyze the current market fundamentals.
There are 3 top issues that needs a resolution:
- Tether & Bitfinex
- G20
- Commodity vs Security
Probably over 90% of the market thinks that Tether manipulated the market many times, and they don't have the money they have been telling in their banks. Audit issue, subponea, and the days that tether printed heavily (i.e. market manipulation), all correspond to a negative scenario. There are almost no positives that may lead the market to think that Tether issue will be resolved without any problems. Tether is used in most exchanges, and if it collapses, the whole market will go into a crash, and media is going to make it even worse. Bitfinex, who is known to be closely connected with Tether, will probably take a big blow too, if Tether collapses or fails to show the money they printed in their banks.
G20 is another key issue that most people only heard about 3 days ago in this post by Coindesk: coindesk.com/french-german-finance-ministers-call-for-g20-crypto-discussion/. Since the overall panic atmosphere that we have seen last week is kind of gone after the CFTC hearing, market didn't seem to care so much about G20, yet. A month ago there were news about "Monsieur Bitcoin" (a well known critic who was former deputy governor of the Banque de France), being appointed to regulation task force in France. In the meanwhile, there are lots of hints that cryptocurrency is going to be a hot topic of G20, during March gatherings in Argentina. G20 is the biggest international gathering, and it is very likely that there will be news that will create panic in cryptocurrency markets. I believe this issue is even bigger than Tether issue, because if nations take offensive approaches to cryptocurrencies altogether, we might go through a very rough market. Tether collapse might be forgetten in a couple weeks, but if G20 decides to act harsh on cryptocurrencies, we might see months of trouble.
Commodity vs Security issue has been talked in CFTC meeting, but it was only the tip of the iceberg. While most ICOs and cryptocurrencies like to defend themselves as commodities, regulators will most likely see most cryptocurrencies and ICOs as securities in the future. J. Christoper Giancarlo became the hero of cryptocurrency fans and evangalists by defining cryptocurrencies as commodities. However, there was an opposing side during the hearing, which was suggesting cryptocurrencies as "undercover securities". While CFTC meeting brought a relief to a crashing market in general, there are a variety of nations' regulators and SEC, who might decide to see cryptocurrencies as securities. G20 meetings become even more important in that sense, because nations will gather there to decide whether to see cryptocurrencies as Commodities or Securities.
If cryptocurrencies become defined as securities, this will cause problems for both ICOs, exchanges, and cryptocurrency investors in general.
Even though bulls got encouraged by CFTC meeting, market makers probably do not feel as positive as bulls about these unresolved issues. Whether the market is bearish or bullish, they always find great opportunuties to make money. The CFTC meeting gave the market maker whales the opportunity to buy during 6000s and lower 7000s, however, they have a different greed than we do. They love to make profit during bull traps, and get even more greedy to push the prices even lower.
Note
In the meanwhile, the weekly chart doesn't signal a breakout. RSI signals a decision phase, while MACD is signaling a bear market. Also the buy volume is significantly low for a breakout. *Its my first time using tradingview, so I mistakenly added a comment by "Post Comment". I hope I'm doing the right thing now :D
Note
As an additional note, I don't think the G20 events will cause months of trouble. Only if they agree on a "war against cryptocurrencies", that might be the scenario, which is highly unlikely.However, I feel like they will take the regulatory approach, and most nations will start to become stricter on regulations and taxation issues as well as doing everything they can to diminish money laundering. Which are all healthy for the long term, but in the short term market makers will move harsh on the market with these news.
I believe the bear market will be continuing for a little while, probably until end of March, since market makers would try to shake the market a little bit more with a strategy for: buying low + increasing their profits through bull traps + and selloffs with FUD news.
While the market is gaining confidence, the agenda of market makers will adopt. Even though they took somewhat of a hit by CFTC hearing, they will use today's confidence to profit more, and then with the next FUD news, they will try their best to push the market to a lower low.
Most people in the market believe BTC will reach at least 40.000$ by the end of the year, so the lower they can push the market, the more profit they will make, and the easier the next bull market will be.
So my short case is only for a little while, until we see a lower low of 4500-5000
ISH mark.------------------------------------------------------------------------------------------------------------------
* My opinions are not financial advice, nor buying or selling signals. These materials are for educational purposes only.
Note
Cointelegraph just published news that gives more hints on the next month's events. IMF Chief Christine Lagarde said: regulation of cryptocurrencies is “inevitable” and necessary on an international level.These international talks will be during these sets of dates;
March:
17-18 Meeting of Finance and Central Bank Deputies #2 Buenos Aires
19-20 Meeting of Finance Ministers and Central Bank Governors #1 Buenos Aires
April:
19 Meeting of Finance and Central Bank Deputies #3 Washington, D.C.
20 Meeting of Finance Ministers and Central Bank Governors #2 Washington, D.C.
Clearly, G20's hottest topic will be cryptocurrencies.
I believe regulation will make this market bigger and better in the long term, there will be less fraudalent events, as well as more money entering the market with more regulation.
However, as I stated before, I believe market makers will try to use each material on this topic for their own benefit, by trying their best to continue a bear market, until the price of Bitcoin reaches a level, where they can stack heavy, to have even more power, and to profit even more (when we enter one of the best bull markets ever).
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