Bitcoin Report - Complete market analysis
- Is Bitcoin in an uptrend or downtrend? (Short & Long term)
Bitcoin is currently chopping in a range, but is slowly forming higher highs and higher lows in the short term. The medium-term trend is down since we broke the bullish structure when it broke 47-48k and we are currently below the 50 & 200 DMAs which have also formed a death cross. However, the long-term trend is still up as the price is above the 28-29k support and above 300-350 DMAs.
Most of you have probably already seen the Wyckoff schematics and that the price action really looks like Wyckoff accumulation. I am a pretty big fan of Wyckoff and his methods, but they aren’t perfect and there are no guarantees so trade based on them with caution. In my opinion until we get a close above 48k the market is neutral-bearish so it is better to play it level by level, potentially taking both sides (buying dips at support, selling rallies at resistance).
- Is Bitcoin’s momentum up or down? (Daily-Weekly)
The current momentum for Bitcoin isn’t very clear and but it is coming at critical juncture. The RSI on the Daily is close to 50 where a very important diagonal lies. Above 50 it essentially turns properly bullish (the mid-point) and it won’t happen abruptly. There has been a very nice and slow build up with the RSI forming a nice trend. On the Weekly momentum is bearish, but not very bearish.
- Is Bitcoin overvalued or undervalued based on indicators & models?
Bitcoin is significantly undervalued based on S2F multiple, the NVT, Puell Multiple and the Stablecoin Ratio. Based on stuff like Bollinger Bands, RSI, Mayer multiple, VWAP, MRVR, SOPR etc it seems fairly value to slightly cheap, but most of these indicate a bear market. The truth is that the market got very fearful based on the Fear and Greed index and some of these metrics are similar to what they were back in Sep-Oct 2020 before the big run up.
- What are long/short ratios, funding, premiums etc showing?
Long/Short ratios are about 1-1.4 across most platforms. We haven’t seen Long/Short ratios really go below 1 and stay there, which might be a sign that the market isn’t ready for a huge long-term rally until longs get wiped out. However, because open interest got crushed this might not be necessary.
Funding remains very low or negative most of the time. Every time it goes substantially negative, we have a decent move up and every time it stays near 0.01% for some time, we get a correction. We are in a period of very low funding for more than a month, after 5 months of very high funding which could mean that now we can start going higher even if it is just short term only until funding turns positive and remains positive.
https://coinalyze.net/snapshot/IoBYyDzJ
Premiums show a healthy picture as they remain low after the expiration. They also came down from very high levels and they crashed below 0 only for a day. Currently they hover around 1% and that to me tells that we haven’t had proper capitulation yet, but it might not be necessary. The Korean premium has also collapsed from 24% down to 2% after hitting 0% twice, also an indication of less froth in the market, but also that the bull might be over. Binance, Bitfinex and Coinbase don’t have any significant premiums/discounts between them. GBTC premium also slowly going higher indicating potential institutional demand.
- What are the current statistics key on-chain data & statistics of Bitcoin?
Currently on-chain data are showing very low levels of activity on chain, that long term holders aren’t selling and that they are back to accumulating after a period where long term holders were net sellers (now net buyers).
On the 25th of June we got a pretty significant capitulation with some holders selling at a big loss. Overall, we aren’t seeing big deposits or withdrawals from exchanges, but the supply on exchanges is still much lower than where it was a year ago.
The 1+ year inactive supply so far has bottomed at the same place it bottomed in Nov 2019 so we haven’t really seen so many people move their coins in this bull market. The big difference with the previous bull is that back then we had all the forks and many people moved their BTC to be safe when claiming forks like BCH. Long term holders not selling doesn’t guarantee upside as long-term holders tend to sell during bull markets, not bear markets.
Currently BTC is going for its third gap up in a row after it was only having gaps down for almost 2 months. This might be an indication that something has really changed and the market is more bullish. This gap is going to be even bigger than the one during the ‘El Salvador / Microstrategy’ pump.
Some really important historical data is that every time BTC has touched the 350 DMA it has bounced and it has bounced by about 65%. However, every time it has touched the 350 DMA and bounced, that was a dead cat bounce and the bear market had already begun.
- What are the key levels for Bitcoin right now?
The most important level is 34.8-35.3 as it is the monthly Pivot which on July 1st rejected the price but has now been reclaimed. Not only is it the monthly P, but is a level that has acted as support or resistance multiple times. The fact that BTC managed to reclaim this level so quickly at the beginning of the quarter is significant.
33.8-34k and 32k are the most important support levels. If the price goes down to 30k I don’t think that level will hold. Below 29k the abyss and the next real support levels are 27k for a bounce, 24-25k for multiple bounces, 18-20k best buying zone and finally 12-14k the ultimate buying zone in case we get some sort of crazy bear market crash.
To the upside the whole 35.5-37.1k area is tricky because there are several important factors like the 50 DMA, the Volume Profile PoC and some horizontal resistance levels. Above that in my opinion the bull case becomes much stronger and the next key resistance is in the 43-44k area and then at 47-48k.
43-44k is the perfect place for a potential trap the same way people got trapped going short below 29k. The only high that hasn’t been swept is the one at 42.5k but right above it there is the 200 DMA + the horizontal resistance block. Then the next best one is at 47-48k which is also a major CME gap. Maybe these two levels might simply reject the price short term, but be aware that either one could be the top. 53k is also resistance but probably only short term as above 48k I think the bull will resume.
- What are alts doing vs BTC? What are doing vs USD? What is the BM% telling us?
So far Altcoins have been looking fairly strong and especially Ethereum. Ethereum has a lot of things going for it, probably a lot more than BTC. EIP-1559, ETH 2.0, DeFi, Layer 2 scaling and so on… After 4 months of alt season alts rarely recover very quickly and they probably need another1-4 months from now.
Alts vs BTC haven’t dropped enough so if the bull resumes it will probably be Bitcoin rallying alone for a bit and then we will get the next alt season. If BTC goes down I expect ALTBTC pairs to crash again and slowly I’d expect the Bitcoin dominance to slowly go up to 60% before alts pump again. Ideally ETHBTC would pull down to 0.035-0.04 and find support there before going higher, but currently it looks very strong. If ETHBTC close above 0.08 I think ETH could overtake (flip) Bitcoin within the next 12 months.
The key here is the strength and evolution of Ethereum as it could be the one actually dominating the market and forcing Bitcoin to take a back seat. This transition period could benefit alts again although we probably won’t have a period that was like the first 4.5 months of 2021. Essentially money could be flowing out of certain coins and tokens, into Ethereum and some DeFi projects. It is important to notice that this is a very speculative scenario as up until now Bitcoin has been the leader and the market is moving around it and we have never seen two consecutive alt seasons without that involving alts getting squeezed in BTC terms (Ethereum included).
The Bull market percentage both for USDT and BTC pairs hit extremely low levels which whenever we have seen them (around 2%) after an alt season we usually get a bounce for alts. The last time we got these two at these levels was in Sep-Oct 2020 so it is normal to see altcoins do well and this could lead into Bitcoin having a strong bounce.
https://www.turtlebc.com/tools/bull_percentage/usdt?from_date=2018-07-04&to_date=2021-07-04&exchange=binance
https://www.turtlebc.com/tools/bull_percentage/btc?from_date=2017-08-04&to_date=2021-07-04&exchange=binance
- What are traditional markets telling us?
Traditional markets have shown quite a lot of strength despite the USD and Bonds going higher. The current environment is a bit tricky because I can't see what will stop stocks from going parabolic, but I also think we will get a strong correction at some point. Currently it is mainly US large caps that are performing the best as deflationary forces are kicking in again. There is inflation both due to government spending and due to supply issues (either supply chain issues or underinvestment -i.e Oil) but this doesn't mean things are going well. There is good inflation and there is bad inflation, and based on the current way the system is structured and people are behaving stocks are the most attractive place to be. The trend is extremely strong and I think it will continue. No idea when will the next 15-25% drop will come and the current risk on environment on stocks will benefit crypto.
Oil is looking extremely bullish, while metals no so much. Other than stocks being on this mega trend which I've been talking about for about a year, I don't see other things as clearly. Big tech stocks do benefit from deflation, so even if the reflation trade is over this doesn't mean stocks will collapse. The US is the strongest one in the world and the system benefits US assets the most. I am bullish on - Stocks and Oil and I am neutral on - Metals, Bonds, USD.
So how does this affect crypto? Well if stocks keep going, if QE and low rates continue, if governments keep spending, if we don't have a crash in the next few months as people have to start paying back debts... I think crypto will eventually resume its uptrend. There are many risks in the system at the moment and any shock could lead to big downside in crypto.
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