Bitcoin (BTCUSD) (3-day)
It’s been another turbulent week in the crypto markets with Bitcoin struggling to find any footing at key supports. This morning’s low showed support stepping in at a daily orderblock dating back to January 4th, 2021, and provided just enough buyer’s to show a reaction. With price showing this rejection at the low, we’ve seen a push up and back into the low timeframe range of $34,300 and $36,400. While this kind of low timeframe behavior is seen as bullish, there’s danger lurking ahead for the king crypto.
As we’ve seen the vital support of $40k get eaten through by bears, traders have had to zoom out and re-assess higher timeframe structures. On the chart above, you can see we’ve fallen back into a range first established in January ‘21 and this historical data will play a big part in Bitcoin’s next moves. This range of $29,700 and $40,600 provides a lot of room for upward and downward movement so traders need to take caution on taking positions mid range. In addition, traders should be prepared for liquidity sourcing below the range which is typical behavior on these assets. Flipping $40k will be vital for bulls to set their sights on $50k, and bears will want us to exit the range to the downside, if even only temporarily.
Ethereum (ETHUSD) (1-day)
Ethereum, like the rest of the crypto market, has also been beat up by recent action. Currently at $2,400, it’s failed to hold the key level of $2,900. While not as clean of a range as Bitcoin, it’s still in serious danger as it’s now facing a herculean task of reclaiming $2,900. While bulls could see some short term relief, likelihood is high that sub $2k prices will be seen in the short term. Similar to Bitcoin’s key level of $40k, Ethereum could turn macro bullish if it can reclaim $2,900 with higher candle closes (daily, 3-day, weekly, etc.) It would make sense for this type of reclaim to align with a reclaim of Bitcoin’s $40k level.
Fundamentals & Correlations (1-week BTC.d/1-month DXY)
While the US Dollar Currency Index remains stagnant around its recent levels, we can see Bitcoin take back some dominance as the broader crypto markets extends its losses well past Bitcoin’s own USD drop. This is likely to continue as long as the market remains bearish and people exit alts quicker than BTC. Lack of sound risk management will cause increasingly more pain as the market grows increasingly more bearish.
Also of importance remains the risk in equities markets. As the Fed has voiced recently, rate hikes appear to be on the horizon which has caused panic in recent days. As market participants continue to pursue a risk-off management style, this could only exacerbate the pain felt in the crypto markets.