Bitcoin bottom, people leveraging up, and systemic failures

Once again, we notice calls for the market bottom all over the place. As if it was not enough, we also see a barrage of statuses on social networks with claims from people about mortgaging their houses, selling cars, and getting loans… only to get on this “lifetime” opportunity in Bitcoin.

However, we would like to stop for a second and take time to realize how irrationally bullish the sentiment has become. The FED is set to slow the pace of rate hikes; however, it will not reverse the course in monetary policy. The interest rates will continue to climb, and payments on the debt will climb with it. Over the coming months, people trying to leverage the current situation might end up in a precarious place, being forced to sell their holdings because of improper money management.

With that said, we doubt the market bottom is in. Despite that, risks associated with shorting are immensely bigger than a year ago. The potential for the downside in percentage terms might still be relatively high, but this also applies to the potential of missing out on a bottom, which is exactly what causes many people to slide into “FOMO” mode (subsequently sparking big swings up and down in BTCUSD).

Problems in the system continue to persist, with many troubled financial institutions amid the downfall in the cryptocurrency market. We do not expect these issues to be resolved in a blink of an eye. Contrarily, we believe more companies might still end up declaring bankruptcy, further risking more systemic failures (and a drop in the price). Accordingly, we remain bearish on Bitcoin, and our price targets stay at 15 000$ and 13 000$.

Illustration 1.01
Illustration 1.01 displays the daily chart of BTCUSD and two simple moving averages. The yellow arrow points to the 20-day SMA, which we pointed out numerous times in our article and outlined as a natural occurrence. The 20-day SMA acts as a resistance, and if it is broken to the upside, it will be bullish (the same applies to the 50-day SMA).

Technical analysis - daily time frame
Stochastic points to the upside. MACD is neutral. RSI is neutral. DM+ and DM- stay bearish. Overall, the daily time frame is turning neutral, potentially foreshadowing a further uptick in Bitcoin (in the short-term).

Illustration 1.02
The image above portrays the weekly chart of BTCUSD. The red arrow shows the decline in volume for the past three weeks, hinting at a decrease in selling pressure.

Technical analysis - weekly time frame
MACD is turning neutral. RSI and Stochastic stay bearish. DM+ and DM- are bearish. Overall, the weekly time frame is bearish.

Illustration 1.03
The picture above shows the monthly chart of BTCUSD. The yellow arrow indicates low monthly volume.

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 be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.