Bitcoin, is it Finally time to Turn Around?

Data Bites, Bitcoin Data Newsletter

Hello friends!

Welcome back to Data Bites, a smaller Bitcoin update to guide you through the week with some short-term observations, my thoughts on the market and a unique long-term chart and analysis.

In last week’s Data Bites, we talked about Bitcoin building support for its next upside move using the Pi-Cycle top indicator as a healthy support zone. We also looked at some shorter-term analysis to see that Bitcoin had hit the bottom of a bull flag pattern and was potentially building an oversold bullish divergence on the 4hr time frame.

You can read the previous Data Bites here.

This left some room for further downside to build the bullish divergence. With the latest small drop in price, we may have just what we were looking for which of course we will talk about soon!

Here we’ll answer the question of could Bitcoin see some larger downside before it returns on its bullish path? We’ll use short-term and long-term views to come to a good conclusion.

Let’s get started!

Data Bites Will Cover…

• Short-Term Analysis: Is this what we were waiting for?

• Market Comments: Bears are coming out to play

• Long-Term Analysis: A bullish signal fires

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Short-Term Analysis:

Is this what we were waiting for?

4HR

This time, I want to focus less on the bull flag of last newsletter and zoom out a bit for a better picture.

For now, Bitcoin is creating an oversold bullish divergence on the 4hr time frame (circled in blue), which is the first positive sign we want to see! This divergence will completely confirm after it has passed the $29,700 mark which of course hasn’t happened quite yet.

Oversold bullish divergences on the 4hr time frame have been pretty reliable typically, I have circled each one from the first rise out of the lows in December - January this year.

In the beginning of the bull markets, these have great success. During the slide down from the 31k highs however (circled in red)… not so much.

Then, we saw 3 failed divergences in a row. You may be thinking, “50/50? That’s not really a great track record…”

This is only a small portion of the 4hr oversold bullish divergences that have occurred. Especially in bull markets, these tend to be pretty reliable.

I have also lined another important event that has taken place, which is the retest of the bull market trend. I’d be lying if I didn’t say these make me a bit queasy… The good news here is that this trend can be drawn in a couple more ways and is not the absolute trend which can be found on higher time frames like the Daily. Making it absolute gives a bit more leeway, but not too much.

This trend I think is very important to the health of the bull market. We have already seen one bearish fake out during the last lows of 25k.

No short-term analysis is absolute, obviously, but I do think there is a better chance of Bitcoin rising from these prices than falling. Here is why I think that:

• Retesting the bullish trend as support

• 4HR oversold bullish divergence in the works

• Trading inside a bull flag (not pictured here)

• In a bull market (above bull market supports)

• Very low volatility (Bullish)

With that being said, here’s to hoping we see a good bullish reversal from here! I do think that is what’s most likely.

Market Comments

The bears have come out to play

Bearish tweets I’ve noticed are getting most of the love from crypto goers. This tells me that many are starting to agree with a more bearish outlook without voicing. The space is not as lively as it is typically either, which is usual when price is glum or just plain not exciting.

Positive comments on posts across Twitter have slowed down. Short-term Twitter analysts across the board and even some long-term are now bracing for impact with expectations of more downside.

Possible, sure anything’s possible. Just because everyone’s expecting it doesn’t mean it can’t come. Maybe it comes in a different way than most expect. The 4hr divergence plays out, Bitcoin sees a small bullish pump and then retraces.

I think there’s enough evidence to say though, a turnaround point could be immanent.

With volatility at historical lows which we discussed in today’s post, the big move that is on the horizon is bound to be bullish. And that’s the main thing I’m waiting for.

Long-Term Analysis

A bullish signal fires

Hash Ribbons

The hash ribbons use two moving averages of the Bitcoin Hash Rate (30- and 60-Day moving averages.

The premise is that when the 30-day moving average (green) crosses under the 60-day moving average (blue), it shows that miners are capitulating. This means that miners would be selling off their reserve Bitcoin and turning off their rigs to fill the gaps in profit.

These times can offer good buying opportunities or signal a rally to come. Light red signals a cross, and dark red an uncross.

The bullish shot has now been fired, the signal has both crossed and uncrossed. Miners underwent a brief capitulation period. This signal is overwhelmingly bullish, with very few false signals.

It has been very good at detecting Bitcoin cycle bottoms which I have marked with a red arrow, and subsequent bullish signals with purple arrows.

I have drawn the purple arrows to where I think this signal compares most based on our historical position.

There is one orange arrow, which at first would seem to be a false signal, but this was due to the COVID black swan of 2020.

As you can clearly see, we compare most with times of long sideways price action in early bull markets, just before huge run ups, which I think is on the horizon.

Things are looking good in the short and long-term! Let’s be patient and see what comes of it.

I hope you enjoyed this week’s Data Bites. If you did, be sure to drop a like on it, it means a lot to me!

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Have a fantastic week everyone and see you next time!

Best wishes,

CryptoCon