Volatility Squeeze
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Volatility Squeeze
Bitcoin is trading in a tight range. Which way will it break out?
We just released Boomer’s Guide to the Bear Market. This Private Podcast focuses on the depegging of Tether, the blow up of Terra USD, how it relates to traditional markets, and possible contagion. Available to Premium Subscribers only.
Cheat Sheet -
Support and resistance levels and our daily, weekly and monthly bias on BTC, ETH, OIL, ES, and NQ as well as our favorite altcoins.
What We Are Watching
We further breakdown our case for these cryptos here : What We Are Watching
Crypto News
Coinbase Enters Fortune 500 List of Biggest US Companies (Coindesk)
At Davos, Crypto Is No Longer on the Outside (Coindesk)
Russia's updated crypto mining bill cuts tax amnesty for Bitcoin miners (Cointelegraph)
Central African Republic to launch official crypto hub ‘Sango’ (Cointelegraph)
Milady Maker Twitter Storm and GameStop’s Ethereum Wallet (Blockworks)
Over 280 million LUNA have been sent to an address which permanently removes it from circulation, a process also known as burning (Blockworks)
FTX Reportedly Seeks Acquisitions in Brokerage Space (Blockworks)
South Korean Crypto Exchanges to Face Closer Supervision Following Terra Collapse (Decrypt)
Crypto Could Use More Centralization: DraftKings CEO (Decrypt)
BTC Outlook
This current price action on Bitcoin looks similar to an inverse Bart Simpson. We’ve talked about these a lot, though mostly they were Barts and not inverse Barts. Basically, just an upside-down Bart. Just as a Bart forms when a Bull flag extends, and inverse Bart occurs when a Bear flag extends and never plays out. The pattern starts with a huge sell off followed by an elongated period of reduced volatility. Eventually after some unknown period of time the price retraces quickly back to the start of the selling. In this case this also corresponds to a Fibonacci retracement of 0.5-0.618.
Notice that it is still possible for this to be a bear flag and retest $26k levels. We will continue to monitor this particular pattern until it breaks out either direction.
Possible Course of Action
Long under $30k expecting to fill the CME gap at $36k
Do nothing and wait for further consolidation
Short any weakness looking for short term trades
The Bulls’ Defense:
Inverse Bart
The Bears’ Prosecution:
Global macro uncertainty
Still trading under $30k
Potential Bear Flag
ETH Outlook
The shape of the ETH/BTC pair actually matches the BTC/USD rather closely. A rapid sell off resulted in low volatility consolidation. This is now forming a bear flag or as we pointed out with BTC an extension of this flag is likely to result in an inverse Bart. This would be consistent with our prediction that ETH is overacting to whichever direction BTC decides to go. The ETH merged planned for this summer has mixed opinions on how the price will be impacted.
We will continue to monitor the ETH/BTC pair for clues.
Possible Course of Action
Caution here as ETH is highly correlated with the tech stock sell off
Wait for further consolidation and confirmation of a higher low
If you want to be long BTC, you can be long ETH for more beta
The Bulls’ Defense:
EIP-1559 has burned $4,662,467,042 (2,347,856 ETH) so far. Supply constraints should continue to have a positive impact on price.
Inverse Bart
The Bears’ Prosecution:
Global macro uncertainty
Nasdaq correlation and sell off
Potential Bullflag
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