What Happens Next?
Morale is low and many were caught swimming naked when the tide went out. Where do we go from here?
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Cheat Sheet -
Support and resistance levels and our daily, weekly and monthly bias on BTC, GOLD, 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
Three Arrows Capital positions liquidated by FTX, Deribit and BitMEX (The Block)
Solana NFT marketplace Magic Eden reaches $1.6 billion valuation (The Block)
FTX Buys Embed to Expand Equity Trading Infrastructure (CoinDesk)
BIS: CBDCs Will Be Cornerstone of Future Monetary System (CoinDesk)
Cardano Developers Delay 'Vasil' Upgrade Citing Bugs (CoinDesk)
Deloitte and NYDIG partner up to help businesses adopt Bitcoin (CoinTelegraph)
Crypto exchange BlockFi secures $250M credit from FTX (CoinTelegraph)
ProShares To Launch First US ETF That’s Bearish on Bitcoin (Blockworks)
Terraform Labs Employees Barred From Leaving South Korea (Blockworks)
How DeviantArt Aims to Clean Up the World of NFTs (Decrypt)
The Bear Market is Sinking GPU Prices as Mining Profitability Drops (Decrypt)
PlayStation, Google Vets to Create New Franchises Via Solana DAOs (Decrypt)
On this chart you can see a down ward channel that does a fair job of capturing the price move over the last six months. The top of the channel is the ATH at $69k an the bottom of the channel starts with the October 2021 low which was also the Feb 2021 high. As you can see once the all time high was reached Bitcoin began selling off rapidly but sell offs that were too rapid pulled back to the bottom of the channel. The only exception was from Feb 2022 to April 2022 when Bitcoin rallied back to the top side of this channel and even broke out for a minute. We now know that this rally was spurred by the Terra Foundation buying 80,000 Bitcoins to defend UST’s 1:1 peg with the US dollar. However, these effects were met with the implosion of the Terrra ecosystem and the 80,000 Bitcoin were sold faster than they were accumulated. This left a gap in the CME chart near $38k and Bitcoin proceeded to return to the bottom of this downward channel. There was some hopes of a bottom in May when Bitcoin’s price began traveling sideways through this channel attempting to form support near $30k. Again large crypto players were put under pressure and Celcius and Three Arrow Capital were caught swimming naked when the tide went out. Forced liquidations across the ecosystem sent prices plummeting below the previous bull market highs.
So, now here we are and the bottom of this downward channel points to $0 Bitcoin by October 2022. This probably won’t happen as much as many crypto haters out there would be joyful in saying “I told you so”. Then this gives us a clue that some local bottom will probably be made between now and October. You could have confidence that a bottom is in when the price exits the top side of this channel and finds support above it. If history repeats itself the price will most likely stay within this channel until mid August. Using this channels width to measure that would mean by mid-august the price of Bitcoin would be between $8500 - $21,000 per token. Unless there is a significant breakout from this channel you would expect Bitcoin to trade under $30k for most of July.
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Possible Course of Action
Long spot here
Do nothing and wait for breakout of downward channel
Short here looking for retest of the bottom of the channel
The Bulls’ Defense:
Bounce back above 2017 high
The Bears’ Prosecution:
Global macro uncertainty
Tech stock correlation