Another 15% Pullback for Bitcoin? Several Factors Indicate a Bearish Move
Markets remain the same.
Both Bitcoin and gold are acting alike, taking a hit. While bitcoin went down under $11,150, the bullion has fallen to $1,913 level.
Meanwhile, the S&P 500 surged to hit yet a new all-time high at 3,443, which is 1.68% higher than the February ATH. Tech stocks have already been pushing Nasdaq higher, which roared to an even higher level, which is 16.79% above the pre-March crash peak.
Amidst this, the US dollar index is also enjoying trend reversal, rebounding from the fresh 2-year lows hit earlier last week to aim for 93.50.
Buy the Frickin Dips
The digital assets dipped yesterday, but as we saw, it has been “largely in line with” the precious metals. And according to the Bollinger bands’ Inventor John Bollinger, the dips are to go long on the largest digital asset.
BTFD call from the legend… https://t.co/ZEp13Kkwy5
— Mati Greenspan (tweets ≠ trading advice) (@MatiGreenspan) August 26, 2020
Moreover, as analyst Mati Greenspan says, “a retracement at this point would be extremely healthy for bitcoin's price discovery. Of course, a quick trip to the moon could be exciting, but a slow crawl is certainly more sustainable.”
Currently, bitcoin is testing the support, which, if it doesn't hold, the next support would be found around the “important critical level of $10,000.”
The market is currently playing the “distribution game,” which means, if we make a new local low around $11,000, $14,000 won’t be coming in the near term. As analyst DonAlt also sees, the market is looking heavy and expects the market to go lower.
May find temporary relief here but still looks pretty heavy.
Bears have an even easier invalidation now than they had before, if price takes out $11760 on a closing basis, BTC is probably going higher.
Until it does I'll assume it's going lower. pic.twitter.com/5PKy2bFf6V
— DonAlt (@CryptoDonAlt) August 25, 2020
Bearish Inside the Bullish Structure
The longer time frame on-chain structure is bullish, but because a large number of coins have started to move on-chain again, we are seeing a reversal in direction, meaning “the next move is bearish,” shares on-chain analyst Willy Woo in the macro update of bitcoin.
The on-exchange movement paints a similar picture as on-balance volume (OBV) that tracks hidden accumulation or distribution via volume; movement is also showing a “hidden sell-off.”
The channel the digital asset is currently in is being tested right now, but Woo doesn't think it will hold. As such, the critical support level is $10,900, which if fails, then the lower $9,700 is the next support level, which would also fill the CME gap.
Woo has been expecting a reverse in bitcoin dominance for a few weeks, gain over altcoins, which may start to take place now as well.
“In other words. BTC pulls back. Alts pull back more. BTC dominance increases.”
Overall, the analyst expects two to three weeks of pullback, a bearish structure inside the larger bullish structure, which could take us to $9,600 to aim for $13,500.
At this point, even the bitcoin network seems to be looking for trouble as after the heavy floods in China affected the bitcoin miners located in the region, now China’s Inner Mongolia will no longer provide subsidized electricity to miners.
Bigwigs like Antpool, which takes advantage of China’s naturally cool climate, cheap workforce, and government policies like subsidized electricity to make hundreds of million in revenue each year are situated in the region. They are also part of a mining cohort that contributes to China’s massive 60% share of Bitcoin’s total hash rate, which “might be about to change.”
Waiting for the Rocket Fuel
“Monetary stimulus is rocket fuel for bitcoin,” and the markets are all waiting for the Federal Reserve Chairman Jerome Powell’s speech this Thursday, where the central bank is “quite likely to embark on a groundbreaking campaign to increase inflation.”
“This is baffling to me, especially now with all the monetary and fiscal stimulus going around. At a time when the people are just starting to ask questions about the intrinsic value of money, the Fed is announcing that they're about to intentionally decrease that value,” wrote Greenspan in his daily newsletter Quantum Economics.
“The Fed is basically playing with fire!!” he said.