Bitcoin is Walking on Thin Ice
Bitcoin Data Newsletter
Hello Everyone!
Bitcoin continues to hover just below $26,000 after a retest of the 20 Week Exponential Moving Average as resistance at $28,000.
Feelings are dreary in the crypto X space with a severe lack of activity or enthusiasm. But data and indicators across the board seem to be pointing that Bitcoin is only merely entering a mid-cycle lull.
Confidence from many commenters has amplified that a return to the Bitcoin lows of 15.5k, or even lower, is inevitable. I just don’t think that’s the case.
Reality does say however, that being below healthy bull market supports prefers bearish price action, so this is something to be prepared for in the shorter term.
Today as always, we’ll be breaking down some thoughts on the short-term, as well as some comments on the market, and a unique long-term piece.
Be sure to stick around to the end to investor psychology to learn how to shift your mindset to be greedy when others are fearful, just as I have.
This Newsletter Will Cover…
Short-Term Thoughts - Volume Support and Resistance
Market Comments - The Bull Market Fake Out is Normal
Long-Term Analysis - Bitcoin vs Stablecoins
Investor Psychology - Reverse Your Thinking
Short-Term Thoughts
Volume Support and Resistance
The Volume Profile highlights specific support and resistance zones depending on the amount of Bitcoin that has been transacted in a particular range. If price has bounced in a range more, the block will be larger, and vice versa.
For this volume profile, it can be measured from different places, this is measured from the cycle lows to include the most relevant price action.
Bitcoin is walking on thin ice at the last heavy support here outlined by the green box. This range is between 25.8k and 26.4k. Price for now remains just below the zone.
The green zone has already been tested once before as support in June 2023. Price saw a nice rally, and made new yearly highs, but not significant ones.
Recently, we saw a spike into the firmest resistance zone of them all, outlined in red. Bitcoin almost immediately retraced all of the gains seen from the “Grayscale vs SEC” win.
I can’t help but notice the paper-thin support outlined in blue. Were price to slip through current support, yellow looks to be next. The prices are between 22.3k and 23.5k. This price range lines up well with many other data points in that area.
This isn’t to say price will follow the orange path directly, we could see another rise before that happens or not if all if our current supports hold, but something to prepare for.
Market Comments
The Bull Market Fake Out is Normal
As I mentioned earlier, sentiment along with price action is pretty dead in crypto X. I have seen many comments of frustration with price action. This is understandable especially for those that are invested from higher prices.
Those who are almost always bullish on X have become aware that the analyst space has shifted bearish. Of course, they are maintaining their ground that Bitcoin is still bullish, which is their right to do so. An overly optimistic position will typically result in a better outcome than pessimistic.
Bullish analysts make sure to mention that Bitcoin is at very strong support at current levels. This is absolutely true. But how bullish is it considering this is for the second time? I would argue not so much, but up for debate.
Bearish analysts on the other hand are much more skeptical, but in general at least amongst the more conservative ones, seem to think that a local bottom may not be far.
I am of course hoping that it is not the case that Bitcoin needs to visit lower prices, but I try to be realistic based on what I see on the charts.
What we’re experiencing now is a bull market fake out, something that takes place every cycle. This makes it appear as if the bull market has begun with the trigger of many signals, but then at some point, price fails to continue. This is the most convincing example we’ve seen of this yet.
Personally, I think there is still some time to go for that and I am patiently awaiting its completion.
Before we continue, I want to give a quick shout out to my premium newsletter.
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Let’s dive into our long-term analysis!
Long-Term Analysis
Stable Coins vs Bitcoin
This metric measures the relationship of Bitcoin supply (market cap) to the total stablecoin supply (market cap). This particular one is a measurement of the ratio in relation to Bollinger bands. The higher the ratio is in the bands the higher the metric, and the lower it is the lower the metric.
The green zone outlines a very frequently traded zone for the SSRO. Just before the highs of 32k, the oscillator made a peak, similar to the mid-top in 2019 and the cycle top in 2021.
It is clear that the top we saw was significant. Demand was high then. But from the metric history we have, it doesn’t tend to stay in that area for long.
Most of the time is spent in the green box. From every major high made, the metric has gone on to form a low point in a lower portion of the zone. Currently though, we are not wildly far from that point, and it is possible this metric could achieve that in one singular drop in price.
This data does seem to allude though, that lower prices are most likely as we make a return to homeostasis inside of the green area.
Investor Psychology
Reverse Your Thinking
Of course, most people will know that in order to be successful it is crucial that you do not think like the majority. This is something that I talked about in my investor psychology piece “One Step Ahead.”
The “how” is the challenging part. How do you know if you are thinking like the majority? This is something I have almost completely reversed in my own my mind which has been a key part in my success.
Part of it goes back to stories vs facts. Let’s think about it simply. My success started at this point: when I turned off my ears and started using my eyes. When I bought Bitcoin below 10k last cycle, metrics were in the green zones! It was that simple to me. I said, this is in the green, I will buy here.
But what if I would have listened to all the things people were telling me? After the black swan in 2020, predictions surfaced that Bitcoin would need to go to $1,000. This was right after the crash to $4,000. Times were overwhelmingly uncertain then and it would have been so easy to cave to fear. I saw an opportunity. I knew that the “crisis” would come to an end and these were the same prices as the Bitcoin bottom in 2018 that I didn’t purchase at before.
My friends and family rolled their eyes. No one believed. The feeling of aloneness was the first clue that I might be right.
Like clockwork, at the top in April 2021 at 64k, almost every single person I worked with decided to get into crypto, and I’m not exaggerating. This includes everyone that wanted nothing to do with it at prices below 10k.
Again, I was alone. I had only one friend that did as I did. I knew it once again, this is what the top feels like. I sold everything at 54k while others continued to gamble away.
When I came back to the space in 2022, everyone couldn’t stop talking about a recession. 12k was the target for many. Seeing a pattern? Data said it was time to buy while resting at the bottom of the buy zone, and that’s exactly what I did. All in.
To reverse your psychology, you need to realize what everyone else is saying. Who knows if price will go lower from here, what we do know, is that it’s a great time to accumulate! You can spend it wasted worrying about the 1 million reasons price could make new lows or treat this as an opportunity to buy and wait.
Once you make the right decision and stick to it, you will finally be on the path to making even more right decisions in the future. Patience will make you look like a genius.
I hope you enjoyed today’s Bitcoin Data Newsletter! If you did be sure to leave a like and any comments or questions you may have.
I hope you all have an amazing week, and I will see you next time!
Best wishes,
CryptoCon
Thank you for sharing your valuable experiences. I can't buy your paid subscription right now, but I hope to be able to later.