The Fourth Leg Down
Today Hal discusses the odds of another leg down for Bitcoin. Do you think the bottom is in?
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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
Crypto News
Lawmakers race to release draft of stablecoin bill ahead of August recess (The Block)
Senators Toomey and Sinema introduce bill to exempt small crypto transactions from capital gains taxes (The Block)
The SEC is investigating Coinbase over its coin listings: Bloomberg (The Block)
Bitcoin Drops Even as Wall Street's 'Fear Gauge' Indicates Calm Ahead of Fed Decision (CoinDesk)
US Rep. Josh Gottheimer Proposes $3M Boost to Treasury’s Crypto Crime-Fighting Unit(CoinDesk)
SEC Philippines to investigate Binance over alleged illegal operations(CoinTelegraph)
74% of public agencies feel under-equipped for crypto investigations: Report (CoinTelegraph)
Japan Ministry of Economy launches Web3 policy office (CoinTelegraph)
Bitcoin Mining Stocks Face Market Reckoning Amid Widespread Selloff (Blockworks)
Crypto Investment Products Saw Mid-Month Inflow Spike (Blockworks)
DeFi Tokens Lido, Curve Follow Ethereum into Bear Territory (Decrypt)
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BTC Outlook
May 2021 - Jan 2022 Bitcoin went on another run up. Looking back, there were three back to back descending wedges with the first two leading the charge higher and the last one failing. Everyone that was bidding $50k were being greedy looking for $100k as war in the ukraine broke out, inflation skyrocketed and the fed started tightening. Most importantly, equities started selling off which Bitcoin and ETH were highly correlated to. So, the 3rd descending wedge had a flash crash which was our first warning sign and then the price could never break out to the upside like the previous two wedges did.
From Jan 2022 - present the opposite has happened. Bitcoin’s price formed a huge bear flag- broke down, formed a smaller bear flag- broke down, and now we are in what appears to be a 3rd bear flag. So, the big question is, does this one break down? Is the 3rd time a charm or do we see a 4th and what many are calling for (a final) capitulation. We don’t need to guess… Just wait and see and trade it. If Bitcoin’s price breaks down (one or more daily candles close below $20k) then chances are high for a drop to $12-$10k. Alternatively, if this is really a local bottom, then expect daily candles to close above $25k at some point in the next week or two. The usual story. Pick your camp: trade the range, or trade breakouts.
If you are the HODLR type. Then yeah… DCAing (TWAP) is probably ideal here. You can still hold dollars back and watch for a break out and decide how frequently to add based on whether or not the price breaks down or up from this pattern.
The cheat sheet is an ideal way to add to your confidence if a breakout of breakdown will happen as it will carry a bearish or bullish bias around these potential moves.
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Possible Course of Action
Long spot here with multi-year timeline
Do nothing and wait for breakout or breakdown
Trade the range: short near $25k, long $20k
The Bulls’ Defense:
Down trend is over extended
The Bears’ Prosecution:
Bear flag
Global macro uncertainty
Tech stock correlation
A Closer Look
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