Bitcoin at crossroads again

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Following the news about the SEC and Binance.US striking an agreement on Friday (resulting in temporary restraining order on Binance.US assets being dismissed), Bitcoin rose above $26,000. Then, over the weekend, trading activity was relatively muted, with Bitcoin trading in the vicinity of $26,500. Interestingly, this level coincides with the value of the 20-day SMA, and the price seems to take a halt here. On the daily time frame, RSI and MACD started to turn neutral, and Stochastic began pointing to the upside. Despite that, we think it is premature to call the short-term/medium-trend reversal from bearish to bullish. Accordingly, we will observe if MACD succeeds in breaking above the midpoint (which would be bullish) and Bitcoin’s ability to break above the 50-day SMA. As for the weekly time frame, we would like to see a bearish crossover between DM+ and DM- to support a thesis about more downside.

Illustration 1.01

Illustration 1.01 displays the daily chart of BTCUSD. The yellow arrow indicates Bitcoin’s retracement toward the 20-day SMA, which often coincides with the correction of a trend. As 20-day SMA and 50-day SMA are in a bearish constellation, we will pay close attention to these levels that act as resistance. It will be a bullish sign if the price breaks above the 50-day SMA. However, if the price fails to hold above the 20-day SMA (or above the 50-day SMA after a breakout), it will increase the odds that the retracement is simply only a correction (of now bearish short-term/medium-term trend, which is reflected in Bitcoin making lower troughs and lower peaks since mid-April 2023).

Technical analysis gauge
Daily time frame = Neutral
Weekly time frame = Bearish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

注释

Illustration 1.02

Bitcoin fully retraced toward the 50-day SMA and temporarily broke above it. If Bitcoin breaks out again and holds above this level, it will be bullish for the short term. However, a failure to break above the 50-day SMA will be bearish (the same applies if the price drops below the 20-day SMA).

Illustration 1.03

To illustrate alternative (yet very simple) support and resistance levels, we extended rays from the high on 14th April 2023 through peaks on 26th April 2023, 30th April 2023, and 6th May 2023. The first and second ray act as support levels while the third ray acts as a resistance.

注释

Bitcoin broke above the 50-day SMA. Now, we will pay close attention to the resistance at $27,666; if Bitcoin takes it out, it will further increase bullish odds in the very short-term. Under such circumstances, we will expect a retest of $28,000 and potentially resistance at $28,452.

注释

Yesterday, we updated our most recent article and noted that if Bitcoin took out the resistance at $27,666, then we would expect it to retest $28,000 and potentially $28,452. It did not take long, and Bitcoin broke above both of these resistance levels (now supports). Furthermore, overnight, it continued higher, breaking slightly above $29,000. This development is very significant and quite bullish as it cuts a series of lower troughs and lower peaks (on the daily time frame) that followed Bitcoin’s highs set in April 2023. As a result, we consider Bitcoin approaching another “break or make” moment that will either invalidate the thesis about the return to 2022 lows or keep it up in the air (the previous such instance was when we said that in order for us to start believing in the genuine recovery, we wanted Bitcoin to start consolidating above $30,000 but that did not happen).

Today, we would like to point out that the recent surge shows a lot of similar patterns that we presented during the previous legs up, notably spikes on the 1-minute charts (with the price jumping hundreds of U.S. dollars within a matter of few minutes). There were two main instances like that yesterday and early today, shown in Illustration 1.04 and Illustration 1.05.

Illustration 1.04

Illustration 1.04 displays the 1-minute chart of BTCUSD. The yellow arrow indicates the first instance in which Bitcoin suddenly jumped higher by $500 within a timespan of 4 minutes. In the previous legs up, such occurrences often happened when trading volume was low (for example, shortly after the close of the futures market or during the weekend) and preceded more upside. Therefore, in our opinion, it is something to watch out for.

Illustration 1.05

Illustration 1.05 shows the 1-minute graph of BTCUSD. The yellow arrow hints at the second instance in which Bitcoin suddenly spiked higher by several hundred U.S. dollars within a span of a few minutes.

注释

Regarding technical indicators on the daily time frame, MACD broke above the midpoint, which we previously described as bullish. In addition to that, RSI and Stochastic started to point to the upside. We will pay close attention to the RSI and its ability to break above 70 points; if RSI succeeds and breaks above the level, it will be very bullish for Bitcoin and likely accompanied by a breakout above $30,000.

Though, despite these bullish developments, we would like to note that the price of Bitcoin has been growing increasingly sensitive to news in the past week or two. We saw the initial fall with the announcement of the SEC case against Binance and Coinbase. After that, we saw an uptick in the price of Bitcoin following the order to unfreeze Binance’s assets and the announcement of Blackrock’s Bitcoin ETF and a new cryptocurrency exchange backed by Citadel and other big names. So, in our opinion, quick changes in sentiment play a part in the recent volatility in Bitcoin. As a result, we stay on high alert (meaning that the sentiment and price direction can change quickly again).

注释

bIllustration 1.06

Bitcoin made a new high exactly at $30,000. This beautifully coincided with the RSI crossing above 70 points. Now, we will watch whether Bitcoin will manage to close the day above $30,000; if yes, it will be positive for the asset. Contrarily, if Bitcoin fails to close above this level and RSI retraces, it will be worrisome.

注释

With Bitcoin rising above $30,800, we think watching the number of Bitcoin addresses with holdings above 100 and 1000 units will be important in the following days to help determine whether whales that were buying in the early stage of a rebound from $25,000 are not once again selling to euphoric retail above the $30,000 price tag.

注释

Bitcoin is back at $30,000. Again, we are paying close attention to whether it will manage to hold above this level; if not, a breakdown below $30,000 will be negative and raise our concerns about the continuation higher.