Bitcoin futures: mind the gap!As we are currently experiencing the expected return to the mean where most of the crypto market recovered back towards the 1hr 50 EMA. Lots of traders and investors are bottom fishing, which is good, but I do not think this is the bear market bottom. I have a few reasons for that:
- Stock markets are not done correcting
- Monetary policy (from the fed) only gets tighter in the coming year, this is just the beginning
- Lots of leverage in both the stock and crypto market still has to be flushed out
- There are still big players to hold big Bitcoin bags which I expect them to de-risk and lower their position size
- One bigger reason which Im currently researching (update soon)
Above you see the Bitcoin futures chart and the downtrend we are in since November, the white trendline currently acts as resistance is defined as the true trend. It could become support over time but that doesn't necessarily mean a breakout; it could still follow the true trend - whether price is above it or below it. We can also see the gaps below us at around:
- 33K (big gap)
- 25K (huge gap)
- 19K (previous ATH)
- 9.8K (small gap)
Normally I do not care too much about gaps, especially when they are small or they are at places that go against the price momentum. However currently these gaps represent targets in line with price momentum and thus we have seriously take into account these gaps could (!) get filled. Obviously the closer a gap is to the current price, the more likely it gets filled, this means we could cross off 33K as a likely target for Bitcoin in the coming weeks or months. Obviously at this point we could expect a short dead cat retrace to the mean around the 4hr 50 EMA or possibly 1 day 50 EMA before we continue the trend down. Now, if we extrapolate on that scenario, 30K would act as a strong support area. However, it would only mean another 5K drop to the biggest gap on this chart at 25K. Thus, we can not exclude this scenario either.
The lowest two gaps are miles away and thus unlikely targets, correct but(!) we can not exclude the scenario, not even dipping below 10K. Simply because 2017 ATH as well as 10K would represent a load of liquidity and a strategic point in the chart. These targets are only likely if we see a continued downtrend of the stock markets across the globe, a scenario that I do not exclude, given the research and analysis I did on the biggest indexes worldwide. Most seem to have formed peak formations in line with a wyckoff distribution and are only in phase D and they could possibly enter phase E this year.
Ofcourse, this is speculation and we have to consider bullish scenarios as well. We need to keep monitoring the situation and consider the interest of all parties - market makers, whales and retail - involved. Now if you have bought the lows of the current range, I congratulate you but with this analysis I line out possible (!) price action for Bitcoin during 2022. This means that if such a scenario unfolds, a lot(!) more pain for the crypto market is about to come - making current valuations look high and the recent crash look like a dip.
So when can we expect the good news? The good news will come when the stock markets bottom out and Bitcoin can reclaim the weekly 50 EMA. In my opinion we have not seen the end of it and patience is key to catch the bottom and catch the absolute discount.
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
