Will Bitcoin Continue Upwards?

12 февр. 2023 г.

A continuation of upwards momentum for Bitcoin is more likely than any capitulation to the downside. BTC is drawing support on the one hour timeframe from the 21500 resistance line, which developed in the aftermath of the FTX debacle and was confirmed upon this month's upwards price action. We saw the same resistance line rejecting Bitcoin's price on January 18th until Bitcoin finally broke past the line on the 20th.

Moreover, February's slight depression in price has not been reflected in either cumulative volatility (which I measure as the reversion between the median and the mean) or the Accumulation/Distribution indicator. This tells that the price is consolidating significantly, despite the macroeconomic conditions or the recent resistance in other risk markets, such as equities. I hesitantly point to a combination of technical reversion to the mean and policy (such as Kraken's staking program in conflict with the U.S. government) for the fall.



If the 21500 resistance does not hold, we can expect the next resistance at 20400, at the geometric median. After December began and Bitcoin began to consolidate from its plummet, we saw this median (denoted in yellow on-chart) reject the price twice (on Dec 14th and between the 20th-26th, respectfully), before Bitcoin finally broke through on Jan 10th, starting its current uptrend.

Finally, I noticed a few ideas mentioning the RSI and Bitcoin as well as macroeconomic factors for reasons why this current rally could be a bull trap. I included the RSI on this chart because I am aware that, since Jan 23rd, the RSI has turned significantly bearish, producing lower highs and lower lows. I interpret this as the RSI is adjusting to the more muted volatility of the price action following the elevated volatility of the 35% rise over a month, which is just a factor of these indicators not calculating from dynamic lookback periods. As for macroeconomic conditions, we must remember that risk assets trade on forward-looking expectations. As the full effects of federal policy will take months to take effect, and as Bitcoin continues to decouple from a high correlation with the stock market, I expect further consolidation, instead of a lower low, especially given the strength of the rally produced this past month.

Support below 20400: 18500, 17500, 16500. Resistance above current price: 22500, 23500, 24600. Strangely uniform levels.

Regards, wbburgin