Bitcoin’s Pivotal Moment: Key Technical and Fundamental Insights
Technical Analysis
Neutral:
1 - Price action has been fluctuating in a falling channel from around the 1 March 2024 and appears to be respecting support and resistance lines since.
2 - Price has fallen 28% since ATH compared to the 56% crash in the previous cycle during the same period.
Bearish:
1 - Price fell below the 125 day SMA level around the 20th of June and has been trading below since.
2 - The 60,000 BTC/USD psychological level has also been broken and not regained for approx 2 weeks.
3 - Volume since ATH has been approximately 7% over the same period in previous cycle.
4 - Price has clear short term bearish momentum
Bullish:
1 - Subtle Bullish Divergence on the RSI chart
2 - Price is trading above the shaded support area [1] supported by volume session profile and clear historical trends.
3 - Extreme Fear displayed on the Fear and greed index.
Fundamental Analysis:
1 - Real GDP has grown consistently over the past 10 quarters.
2 - Inflation appears to be easing with new US CPI appear beating analysts estimates but concerns about being behind the curve estimating a inflation to rise again in the winter.
3 - Short term unemployment data seems improving but as interest rates are still high a record number of credit defaults occurring which could potentially lead to worsened employment data by end of year.
4 - Gold price hitting ATH reflecting uncertainty due to heightened geopolitical tension.
Pattern
A cup and handle formation can be observed since Nov 2021 but handle seems elongated which might invalidate such pattern.
Summary:
With the current Bitcoin price at $58,637 and a 50% increase YTD, we can assert that the market is still in a bullish cycle. However, some critical points need to be analysed. Technical indicators suggest that Bitcoin is trading at a crucial level. A breakdown below the $53,000 level would not inspire confidence and is likely to lead to a continuation down to the $49,500 level. This is a significant threshold, as a break below it could trigger substantial selling pressure.
For Bitcoin to reverse this trend, it is crucial to reclaim the $60,000 psychological level, with trading above $61,000 providing confirmation. Subsequently, reclaiming the critical SMA level around $65,000 could likely lead to a new all-time high. Macro indicators suggest that most positive news has already been priced in. However, the overall geopolitical climate is radiating uncertainty, which is negative for the market. This is exacerbated by factors such as the upcoming US elections, the Ukraine-Russia conflict, and the Israel-Gaza conflict.Additionally, the Bitcoin hash rate is falling for the first time in two years, though a short-term drop does not confirm a long-term trend.
Given these factors, I believe that BTC/USD will continue to trend downward in the short term until approximately late August/early September. The extent of this downward trend will depend on the behaviour at the key levels mentioned and the global climate. A reclaim of $65,000 would invalidate this bearish outlook.
Neutral:
1 - Price action has been fluctuating in a falling channel from around the 1 March 2024 and appears to be respecting support and resistance lines since.
2 - Price has fallen 28% since ATH compared to the 56% crash in the previous cycle during the same period.
Bearish:
1 - Price fell below the 125 day SMA level around the 20th of June and has been trading below since.
2 - The 60,000 BTC/USD psychological level has also been broken and not regained for approx 2 weeks.
3 - Volume since ATH has been approximately 7% over the same period in previous cycle.
4 - Price has clear short term bearish momentum
Bullish:
1 - Subtle Bullish Divergence on the RSI chart
2 - Price is trading above the shaded support area [1] supported by volume session profile and clear historical trends.
3 - Extreme Fear displayed on the Fear and greed index.
Fundamental Analysis:
1 - Real GDP has grown consistently over the past 10 quarters.
2 - Inflation appears to be easing with new US CPI appear beating analysts estimates but concerns about being behind the curve estimating a inflation to rise again in the winter.
3 - Short term unemployment data seems improving but as interest rates are still high a record number of credit defaults occurring which could potentially lead to worsened employment data by end of year.
4 - Gold price hitting ATH reflecting uncertainty due to heightened geopolitical tension.
Pattern
A cup and handle formation can be observed since Nov 2021 but handle seems elongated which might invalidate such pattern.
Summary:
With the current Bitcoin price at $58,637 and a 50% increase YTD, we can assert that the market is still in a bullish cycle. However, some critical points need to be analysed. Technical indicators suggest that Bitcoin is trading at a crucial level. A breakdown below the $53,000 level would not inspire confidence and is likely to lead to a continuation down to the $49,500 level. This is a significant threshold, as a break below it could trigger substantial selling pressure.
For Bitcoin to reverse this trend, it is crucial to reclaim the $60,000 psychological level, with trading above $61,000 providing confirmation. Subsequently, reclaiming the critical SMA level around $65,000 could likely lead to a new all-time high. Macro indicators suggest that most positive news has already been priced in. However, the overall geopolitical climate is radiating uncertainty, which is negative for the market. This is exacerbated by factors such as the upcoming US elections, the Ukraine-Russia conflict, and the Israel-Gaza conflict.Additionally, the Bitcoin hash rate is falling for the first time in two years, though a short-term drop does not confirm a long-term trend.
Given these factors, I believe that BTC/USD will continue to trend downward in the short term until approximately late August/early September. The extent of this downward trend will depend on the behaviour at the key levels mentioned and the global climate. A reclaim of $65,000 would invalidate this bearish outlook.
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