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2nd November 2020: Bitcoin Analysis

by | Nov 2, 2020

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Bitcoin had a strong rise in October, printing a 28% growth. Doing so, it made the highest monthly close since ATH but was kept below December 17’s close by ~$60. There is no doubt the current trend is strong. Weekly candle confirmed the strong-ness but its close has been kept below key monthly level and supposedly the last line of defense for bears at $13860. Doing so it prints a possible bearish SFP on the HTF.

The decreasing volume on this 7 months trend shows us 2 things: There is not enough supply to keep bitcoin from rising. It also shows that interest from demand is diminishing. As shown by bitcointreasuries.org, we know big money is still interested in bitcoin above 10k and that’s a big paradigm shift. As I suggested in last month’s analysis, the MicroStrategy move started a strong decorrelation of bitcoin from stocks.

The decreasing volume on this 7 months trend shows us 2 things: There is not enough supply to keep bitcoin from rising. It also shows that interest from demand is diminishing. As shown by bitcointreasuries.org, we know big money is still interested in bitcoin above 10k and that’s a big paradigm shift. As I suggested in last month’s analysis, the MicroStrategy move started a strong decorrelation of bitcoin from stocks.

This does signal a strong bullish sentiment for BTC. Sky seems to be the limit. On the other hand, without a proper pull-back, we can expect smart money to get very cautious at the current level. All this bullishness could very well be a FOMO trap. 

Whalemape.io [Hodler Volumes] chart is supporting the idea that some whales are unloading large sums of Bitcoin in this area. 

According to CryptoQuant, [Miner reserve] is diminishing, suggesting they are net sellers.

Also, most of the altcoins have deeply retracted or stopped. Tradingview index [Crypto Market Cap 2] shows Alts are not making new highs anymore. This could be another sign of exhaustion (money flying to the most secure and liquid asset causing a final push up of Bitcoin).

The traditional economy is entering an iffy situation with two major events. 

  • Lots of countries are going back into lockdown. 
  • The US election. 

Volatility is highly anticipated, especially with some claiming that the results of this election could be contested, and riots could occur. We know markets don’t like uncertainty. So with all of this, we are potentially setting up the stage for a strong collapse of traditional markets. Even if it doesn’t seem correlated at the moment, if this scenario happens, there is no doubt BTC will be affected to some degree. 

Right now Bitcoin is kept between 2 monthly levels $13865 and $12915. 

Acceptance above monthly resistance could accelerate upside move and send us toward $14850 – $15000, the weekly level at $15290, and potentially to the high of the uptrend channel around $15800 to challenge the 16k level. 

But at the moment Bitcoin fell from its local high, finding support at the golden retrace from last swing low ~ $13330 with a wick down to $13200 (the larger 0.618 retraces). 

If we were to break our nearest support at $13350, $13250, and $13170 we can expect the price to test monthly support ~$12915.

Failing the monthly level would probably take us down toward August High ~12450$.

If price accelerates to the downside, we can keep an eye on the $12100-11800 area. Losing $10500 would get bulls in serious trouble and should send us to test lower liquidity in the 9000-$9500 area.

So, in my opinion, it’s the moment to get very cautious. There is no strong technical bearish signal on BTC, so it is hard to get in a short here. I would not be surprised to see a final big surge of Bitcoin to trigger the most FOMO possible, as well as short-stops and liquidation. In my opinion, we should eventually get a deep retrace before really entering price discovery and target the moon. I strongly think we need to retest liquidity below 10k at some point. A retrace and strong buy-back between $9250 and $7300 would make me more confident.

Founder & CEO at HyperLinq Inc.

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