Bitcoin Analysis 09/23/2022
6. March 2023
FinMag.fr – Quantum Data Analytics in Fokus
24. June 2024
An overview of the market!
Once again, I would like to start with good news. Ethereum has now completed its long-awaited hardfork and the consensus was successfully switched from POW to POS. And the price did exactly what we already described in the last analysis, which was nothing. In the meantime it is falling. Exactly what was to be expected. Even though the joy is huge and was probably the most important event of the year, which really did the whole market good, the bear market rally is over for the time being. We are in the midst of a strong bear market and it is not going to end any time soon. This is due to the disastrous macroeconomic factors that not even a hardfork as important as the one on Ethereum can change. Inflation is still too high and slowly eating its way through all sectors. In Europe, it is even worse than in the US. The central banks are forced to counteract it and they are doing so. We will always see smaller rallies but, as it looks now, the possibilities of a new all-time high have been postponed well into 2023.
From an economic point of view, the entire market for digital assets is a continuous disaster, but it is slowly but surely coming to an end. The reason for this is the technical developments and the global accumulation of digital assets. They are not in retreat as we saw in the 2018 crash and that is the good news in it. Digital assets are increasingly becoming alternative and interesting financial instruments. CME Group has opened futures trading in Ethereum as of today. And China is also coming back to the market, albeit indirectly, repeating the game of reliable confusion. Although digital assets are banned in China, a few months ago a court in Shanghai issued a landmark ruling that digital assets are definitely part of private property. Since then, people have been looking for ways to invest in digital assets. New loopholes are opening up, so to speak, which could well provide bullish signals for the market.
Individual assets could well see decent breakouts to the upside despite a fierce bear market. Cardano is entering the home stretch for the Vasil hardfork, which has already been postponed several times. Even if critics still complain about the broken testnets, Cardano is known for its extremely reliable technology. No half measures are taken and test nets are developed to put them through their paces. And if one breaks, then that's a good thing!
Ripple's XRP is still engaged in a fierce mudslinging battle with the US Securities and Exchange Commission, which is currently clearly being led by Ripple. Ripple Labs has been able to score significant successes against the SEC in recent weeks. There are good hopes that the lawsuit will be off the table by the end of the year, and the signs are good that it will be. Therefore, it would not be unwise to have a few XRP's in the portfolio for the current occasion. Many market participants are assuming a 300% rally when the lawsuit ends, which is also quite realistic. Once the lawsuit is off the table, XRP will once again be listed on all major platforms in the US. In addition, the IPO of Ripple Labs can be accelerated. The state of the market then seems to be completely irrelevant. When the news comes that the lawsuit is over, regardless of its outcome, a great many market participants want to profit from it. If Ripple wins the lawsuit, everything remains the same, but if XRP is classified as a security, that is also very bullish. This would make XRP the first digital security that institutional investors can put in their portfolios.
But what will happen next on the market? The next few weeks will undoubtedly still be very turbulent. Experience shows that the second half of September is likely to see falling prices with midterm elections in the US. This could change slightly at the beginning of October, when we see a technical short-term recovery phase. After that, it could go down again until mid-October. If a bottom is then found by the end of October, the chances for longer-term rising prices are very good. However, this logic only works if there is no extremely negative news. The regulatory efforts in the USA are currently not aimed at putting a leash on the market, but rather at supporting technological development. They are trying to strike a balance between investor protection and market growth. And it seems that this could also work. Overall, the market still looks very bearish, but the first bullish signals in the medium-term time frame are already faintly discernible.
The chart development of the entire market!
Now it's getting really exciting on the weekly chart! After the current sell-off, the digital asset market has returned to its strong support. For weeks, the market kept getting the support it needed for bear market rallies at the key MA 200 moving average. Even though we kept falling below this important level on the weekly chart in the short term, it was always able to close above it in the end. That in itself is a really good and strong sign. The question now is, can it work this time too and do the bulls have the strength to do so? We will soon see if we lose the last support. If this is the case, a setback to 691.-BUSDT is very likely. Here we find the mark of the last all-time high of 2018. And the market tends to take the last all-time high as support in a bear market.
On the daily chart, things currently look anything but great. The market has fallen out of the important support zone and is thus also below the important upward support line. In addition, the market now has the important MA 100 moving average as strong resistance, which was previously still partly support. It would have been important for the market to at least stay in zone 1 of the price cluster and work off the upward support line. If we continue to retreat, there will also be a bearish crossover of the MA 50 and MA 100 moving averages in the next few days. This could provide additional selling pressure. The market finds next support at 852.-BUSDT and then we would be back at the June low. Maybe we will be lucky and it will hold here as it gets the support of the seasonality of the market. Maybe it will turn out quite differently, but that is more wishful thinking.
Things don't look much better on the h4 chart. Here, the MA 100 moving average has meanwhile established itself as a firm resistance and it cannot find a way through. The fact that it has closed below zone 1 of the price cluster does not improve the situation. A free fall to the support at 852.-BUSDT would be possible. Here we could then start a small recovery that could lead to 908.-BUSDT. After that, it will be exciting. If it can hold at this level, a further technical recovery would only be logical. However, if it bounces off this slight resistance, it will go to the next further lows, ultimately to the 2018 TOP. According to our data, a setback to the 2018 TOP is more likely. Volumes are thin, large investors are holding back and it is also getting too hot for small investors.
The good thing, however, is that investors are not fundamentally leaving the market, but are making themselves comfortable on the sidelines. The market capitalisation of the largest Stabelcoins is still unbroken. This means that investors want to get back into the market, but they first want to wait out the general uncertainty. Moreover, we have not yet seen the final capitulation, which is common for the market in a bear market per se. If this capitulation comes, the market will only repeat its familiar patterns!
Overview of market depth!
Fear & Greed Index! You can clearly see the individual phases of the respective cycle. The first phase is always extreme, the second phase normal and the third phase cools down and indicates a trend reversal. The Fear & Greed Index is now in the cooling pattern of the bear market fear. We have reached the first phase and Greed is falling into the mid-range. In the bear market, this indicates that the rally is over and fear will rise again. Experience shows that the second phase is not as strong as the first.
The volume price trend in the relative strength index has received the first yellow dot, which could indicate a trend reversal. With this, the market signals the eventual end of the bear market rally and the dots turn red again.
The volume remains at a low level.
The money flow shows that large investors are currently very cautious. The market is dominated by small investors. According to the ON-Chain data, institutional investors are currently on the sidelines.
The dots are approaching the AI trend and testing it as support. In this situation, it would now be important for the market to stop closing below the AI trend. This is expected to flatten the curve, indicating the confirmation of a bottom. Meanwhile, the AI Trend is turning slightly upwards again, which could be a bullish signal!
The Google Trend for Crypto is slightly increasing again. This is indicated by the black dashed line in the chart. The current value is 27 points.
Author
Erik Wimmer
Passionate programmer and machine learning developer. Trader in Forex since 2016, in digital currencies since 2018. Erik Wimmer, a programmer from Tyrol, is the deputy managing director and technical developer of Quantum Data Analytics GmbH.
The author, Erik Wimmer, confirms that he may be invested in this digital asset mentioned at any time. A conflict of interest could arise as a result. Erik Wimmer affirms that he has prepared each analysis in compliance with journalistic duties of care, in particular the duty to report truthfully and with the requisite expertise, care and diligence.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Quantum Data Analytics GmbH. Any investment or trading move involves risk and we advise you to seek other opinions as well. We do not recommend buying or selling decisions! You trade at your own risk! Quantum Data Analytics and Erik Wimmer are not liable for any losses incurred directly or indirectly as a result of any action taken in relation to the contents of the publications.
