Written by Logan

On January 31, 2022

Market Report – January 31, 2022

Bitcoin (BTCUSD) (3-day/8-hour comparison)

Bitcoin has a tough road ahead.  After finding support at $33k, we have remained range-bound, with several high timeframe resistances overhead. 

You can see in our 3-day chart that a previous “buy zone” from $37k-$43k is now acting as resistance.  We nearly dipped into the larger range’s green “buy zone”, but it was front-runned by buyers before we could reach it.  This may seem like a good thing, but it is typically seen before a support zone gets broken through.  The reason for this could be that it’s a common consensus among market participants that this area is a good place to buy, so it gets front-run on the first “test”; very seldom are the majority of market participants correct in their assumptions.  On our 8-hour chart we see the same type of scenario, with a previous “buy zone” now acting as resistance. 

Bulls will need to reclaim $41k as a support level by breaking through, and then retesting it for support.  Without that reclaim, price looks destined for $28k, if not lower.

Ethereum (ETHUSD) (3-day/8-hour comparison) 

Ethereum  looks more or less the same as BTC here, the difference being that our macro green “buy zone” on the 3-day chart did in fact get hit with a nice reaction from support. On our 8-hour  chart we can see that we’ve bounced through the orange “neutral” zone and the next challenge for bulls is to pass the $2,848-$3,037 red “sell” zone. 

Bulls need to reclaim $3200 as a support level, and without that, $1600-$1800 seem like the next support down.

Fundamentals & Correlations (Weekly)

BTC dominance (BTC.D) has bounced slightly off the 40% support, not a major development really. Altcoins still have some breathing room, though confidence in the market overall seems shaky. Alts seem to be experience amplified swings relative to BTC’s movements, particularly to the downside.  At each drop of 4-5% on BTC, we are seeing altcoins dropping 30-40% or more.  The overall feeling of the market is very reminiscent of January 2018: complacency, ranging, and overall trending down.

The US Dollar Index (DXY) Has rallied in the past few weeks, and opened this week with a slight retrace, giving both stocks & crypto a bit of a boost.  The market structure is bullish however, which could spell more trouble in equities and crypto prices.

Looking at the S&P 500(SPX500USD), we can see some striking similarities between the current state of things and how they looked a few weeks leading up to the “Covid Crash” of March 2020. Two years of inflation boosted “up-only” conditions could mean that the sea of red is only getting started.  Another 1000 point drop in SPX looks about right on the macro view, and this would very likely carry over to crypto.

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