Bitcoin And The 3-day 50 MA - A Chance For $30k

4 nov 2022

Back in April, when Bitcoin was still well above 30k, I wrote about why I thought it could fall straight to 20k. The analysis ended up proving correct. I was looking at the 3-day 200 MA and the 3-day 50 MA.

This is my first "long" idea for Bitcoin in a little while. Although my feelings about Bitcoin and crypto have soured since roughly one year ago, I don't want to let my bias get in the way of simple chart analysis. As you can see, Bitcoin is again butting up against the 3 day 50 MA (red). I suggested a couple weeks ago that Bitcoin could potentially begin an uptrend:

Part of my reasoning has been that at least until U.S. midterm elections, we could see some recovery in markets to create some momentary optimism. This idea was presented here back in July 2022:

This is partially why I'm still being careful here.

Anyway, to the current analysis:



If you look on the left side of the above chart, you can see its importance as resistance during the last bear market. You can also see that we are now a long ways away from the 100 and 200 moving averages (yellow and teal). This means there is plenty of room for Bitcoin to correct to the upside. Should we see a bigger rally for Bitcoin, unless Bitcoin dominance drops, I do not think there is enough evidence for me to say it's likely to sustain. I still think it's fairly likely to print a lower high and head to some unbelievable lows in the future. But for now, there could be some upside to be had.

On the bearish side, I wouldn't want to see Bitcoin heavily rejected above 21k and unable to reclaim the uptrend I drew some time ago. You can see that structure here:

I also think a break back below 19.8k is likely to send Bitcoin towards the 18k support level again. But for now, it seems buyers are in control. Another thing that continues to concern me is the outperformance of altcoins, coupled with skyrocketing open interest each time Bitcoin moves up slightly. Bitcoin is up just over 3% so far today, yet open interest has climbed a staggering 8% to $32.5 Billion. That's a lot of potential leverage on the table, and I don't put it past big crypto actors like SBF and CZ to use everything in their toolbox to prop the market up. As I've mentioned, I do not really advocate for continued price appreciation in this space because I believe it to be mostly smoke and mirrors and a zero-sum game.

Although people lose just as much in the stock market, stocks are not zero-sum since companies have output. Bitcoin and other cryptocurrencies do not have any output, so continued price appreciation is just "money better spent elsewhere" in my opinion. Pardon my bitterness, but this is why I feel frustrated these days when I see crypto prices go up.

As always, this is not meant as financial advice. This is meant for speculation and entertainment only. We will see what happens!

-Victor Cobra

4 nov 2022

Nota

Another thing that concerns me and may limit upside is how poorly big tech is doing. Since many of those continue to make new lows, I wouldn’t be surprised to see crypto do the same soon.

4 nov 2022

Nota

Already failing at the trendline. perhaps still "safer" to buy if it gets above.

4 nov 2022

Nota

Continued rejection at this MA could be quite bad. 30k is only possible if can begin to establish support above.

8 nov 2022

Nota

Well, looks like my bias is more in line with reality about this space. Even if the FTX rumors are unfounded, this is the kind of man-child drama that really turns me off. If the market is at the whim of a couple of babies then it really isn’t very decentralized, is it? What a joke.

8 nov 2022

Nota

Looks like the rumors were not unfounded.

7 apr 2023

Nota

It seems that many months later, this relief rally has finally taken place, though prices are currently finding resistance just below 29k. The next obvious resistance is at the 100 week MA (yellow), should the current resistance at $28.8 fall.

7 apr 2023

Nota

Otherwise, support is back at the 9 week EMA, at 25.5k.