Disclaimer: The writer is not a Financial Advisor, and this article is not investment advice. The information is written for educational and entertainment purposes only. The writer owns only a fraction of a Bitcoin for experimental purposes. BTC markets are highly volatile and risky in nature. DYOR before making any investment decision, rather than listening to a stranger over the Internet.
The global macro-environment, Russia-Ukraine conflict, and regulatory pressure have put Bitcoin on shaky grounds again. The financial markets were already inflated due to fed injecting cash during the Covid crisis and when it was decided in late 2021 to turn the tap off, markets responded with sell-offs, this sell-side pressure was further fuelled when Russia decided to invade Ukraine.
The political and macro landscape aside, a technical analyst can ignore the news and focus on the chart because the chart is where all the action is priced in. The purpose of this analysis is to describe the current state of Bitcoin, potential future prices, and when and where to expect the bottom. This report will briefly discuss the altcoin market too and when the next altcoin season can be expected, a question raised in crypto language as When Moon? When Lambo?
Bitcoin Monthly Chart
BTC monthly chart paints clean levels and provides vital clues for investors patiently awaiting confirmations to add to their portfolio. The trend is down as the price is currently below 6, 8, and 13 MAs. BTC is hovering slightly above 21MA at $37K and order-block at $35K. It is safe to say that if March closes below $35K, then lower prices can be expected. The next major level of support on the monthly chart is around $20K which is the previous ATH of Dec 2017 and 50MA. This is the level where a long-term bottom can be expected to form. BTC has never closed below 50 MA on the monthly time frame since its creation and has formed a bottom in the downtrends twice. It is expected for history to repeat itself unless a monthly candle decisively closes below $20K.
The above scenario only comes into play if BTCcloses below $35K on a monthly candle. An alternative scenario is if Bitcoin reverses from this level and resumes an uptrend. A reversal of the downtrend can be considered if Bitcoin closes above the 6, 8, and 13 MAs and stays above these critical MAs. All of the mentioned MAs are coiled together around $46.5K and $47.5K, making it a difficult level to breach above and has significance for trend reversal if the price closes a monthly candle above $48K. The current probability of a trend reversal is low given the current state of the markets.
Bitcoin Weekly Chart
The weekly chart is also indicating supply pressure and dried-up demand due to uncertainty of the markets. The volume is low and order books are thin which can lead to scam wicks and fakeouts to liquidate one side since a small amount of capital is required to move the market in any direction. BTC is hovering just above the 55MA on the weekly and 200MA on 3D (around $37K) providing somewhat strong support. It can bounce from here but all the bounces are capped by 200MA of 12H timeframe **.
So what path can Bitcorn take from here?
Bitcoin is below 21 and 55MA on the weekly timeframe indicating a downtrend. These MA’s are huddled together around $47K where 21MA is crossing 55MA from the upside, aka a death cross which is a bearish signal (yet to be confirmed owing to this week’s close). So let’s discuss the potential of a down move first. If BTC is to go down, then it needs to close below $37K on a weekly candle and stay below. If this happens then it can slowly bleed to $30K level where some stacked bids can support the price. A bounce can be expected from $30K due to bids at a support level and shorts taking profits. This bounce can be considered as a dead cat bounce until proven otherwise. A weekly close below $30K can accelerate selling even more and a capitulation can be expected further sinking BTC into lower $20K. Just like the monthly critical level, bitcoin can expect $20K as strong support due to previous ATH and presence of 200MA. BTC has never closed below 200MA on a weekly and has formed a bottom thrice since its creation and this is where a long-term bottom can be formed. But remember, bitcoin has to close below $37K and $30K on a weekly timeframe to open the door for $20K.
Alternatively, when a downtrend bias can be switched to an uptrend for Bitcoin? If BTC has to lure investors back into buy mode, it needs to close back above 21 and 55MAs around $47K. If $BTC closes above $47K and stays above for another week, it can indicate buy-side strength and bids can start to come in. This scenario has a low probability to play out at this stage.
The Alt Season
Given the previous crypto cycles, altcoins run in cycles too. However, there are some signs which can indicate if the money is flowing into altcoins. If BTC drops to $20K, it will come with a general market reset in which altcoins will suffer. Low-quality projects may collapse in valuation and never recover while many projects which are just money grabs may disappear altogether. This is good and bad for the market participants. For someone who is holding altcoins, this can be a disaster while others who are mainly in stable coins or have fiat to deploy which the market offers great value projects at a discount, flushing can present lucrative deals.
While this downtrend persists, BTC and alts will keep bouncing at key support levels until BTC finds a bottom. If the market has to fully reset, then BTC will recover first and keep on a rampage while alts either stay still or lose value. This behavior can be predicted with an increase or decrease in the Bitcoin Dominance Chart. When BTCDOM hits a low, it could give an early signal that money could escape alts and flow into BTC, this does not necessarily mean that BTC may go higher. However, if this is a start of a new cycle, then BTC would go up while alts remain in a downtrend. When BTCDOM hits a resistance level, it may be an early sign that money may rotate to altcoins and they are ready to go higher.
Concluding Remarks
Given the uncertain nature of the macro-environment, it is best to move from level to level when observing BTC prices. All the key levels have been described above. Only a loss of current support could indicate lower prices and only a reclaim of key resistances can indicate a trend reversal and higher prices. Crypto moves fast which means it can reverse a trend fast too. Current uncertain times and low liquidity create a PA environment where traders on both sides get chopped up and lose money. It is best to wait for a clear path and markets before entering into positions.
Happy Trading!
** The 200MA on the 12H timeframe has been a reliable measure of interim support and resistance levels and can provide an early signal of a trend reversal if the price closes above or below it.
Disclaimer: The writer is not a Financial Advisor, and this article is not investment advice. The information is written for educational and entertainment purposes only. The writer owns only a fraction of a Bitcoin for experimental purposes. BTC markets are highly volatile and risky in nature. DYOR before making any investment decision, rather than listening to a stranger over the Internet.
