Sell the fact? $39,000 in play?

15 янв.

The last week brought much-awaited Bitcoin Spot ETF approval in the United States. However, despite the highly bullish expectations of the majority of market participants, no significant rally took place. Instead, Bitcoin has lost about 15% since its high on Thursday, which marked the day when multiple new Bitcoin ETF products started to float on the market. At the moment, Bitcoin trades near the $42,600 price tag. If it drops below the channel’s upper bound, it will bolster the bearish thesis about continuation to $39,000 and potentially even $36,000. Nevertheless, the setup we showed previously (with the short trigger coming upon a breakout below the upper bound) is significantly riskier, given the losses already made by Bitcoin (and the extent of corrections in 2023). With that said, we would like to point out that in spite of the approval of new Bitcoin ETF products (and Bitcoin Spot ETF), there is no rise in any group of Bitcoin addresses; Bitcoin addresses exceeding 100 BTC and 1,000 BTC in the balance show little to no accumulating activity. In fact, it can be argued that some of the big speculators were selling their holdings into the market’s strength. Besides that, the addresses with balances exceeding 10 BTC have continuously declined since the big rally started in mid-October 2023 (somewhat of an odd development).

Now, to address the recently asked question about whether Bitcoin can drop back to $30,000. In our opinion, it would require a strong weakness in the stock market, likely amounting to a decline of 20% or more in major indices. With a global slowdown progressing further and equities being on an incredibly powerful run in a long time, a case for strong correction remains strong. In addition to that, one could argue that the recession in Europe and deflation in China could eventually spell trouble for the United States as well. All in all, the question of such a big drop is tied to market conditions.

Illustration 1.01

Illustration 1.01 shows the daily chart of BTCUSD. In 2023, there were three major corrections in the price of Bitcoin. The one in February/March reached 22.56%, and the other two in April and July reached 20.33% and 21.68% respectively.

Illustration 1.02

The first two trading sessions were negative for iShares Bitcoin Trust and Ark 21Shares Bitcoin ETF.

Illustration 1.03

Illustration 1.03 portrays an alternative upward–sloping channel. The channel’s lower bound acts as an important support. If Bitcoin breaks through it to the downside, it will slightly add to the bearish odds. Utilizing the same strategy as described in the previous setup, this channel could play a role in an alternative setup (still considered highly risky, though); a bearish trigger would get activated with the breakout below the lower bound, targeting $39,000.

Technical analysis gauge
Daily time frame = Neutral (turning increasingly bearish)
Weekly time frame = Neutral
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of multiple indicators.

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 serve as a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.