New crypto market trends are starting to emerge now that Bitcoin and equities markets move closer to make-or-break levels, which will determine the markets’ direction.
This week, Bitcoin (BTC) raised investors’ hopes and then left them high and dry again.
Traders placed a majority of their attention on BTC price pushing through a long-term descending trendline resistance, but according to Cointelegraph analyst Ray Salmond, “BTC price simply ‘consolidated’ its way through the trendline by trading in a sideways manner where price has been range bound between $18,500 and $24,500 for the past 114 days.”
At the time of writing, BTC’s price continues to battle at $20,000, and it’s uncertain whether or not the level will hold as support.
Data from on-chain analytics firm Whalemap shows the three price zones investors should focus on.
Key BTC price support zones. Source: Whalemap
Whalemap told Cointelegraph, “So far, the resistance at $20,380 — that is due to a whale accumulation of ~20,200 BTC — has been working quite well, with the latest rejection being almost to the dollar accurate.”
“Our support remains unchanged since the drop from $30,000. It lies at $19,174 and was formed all the way back on June 18, 2022, by a staggering accumulation of ~101,300 BTC by whale wallets. There is also one more resistance above $20,380, at $21,543. But first, we need to at least break above $20,380.”
From the perspective of technical analysis, on the daily timeframe, the Bollinger Bands are constricted, BTC futures open interest reached a near-record high above 604,000, and the price is trading outside of a long-term trendline resistance — all of which are signs that a directional move is in the making.
As shown by the chart below, investors’ appetite for risk continues to decline, and it should be no surprise that risk assets are the first to see outflow and be ignored by investors during a bear market.
Investor risk appetite. Source: Bank of America Global Research
While BTC’s and Ether’s (ETH) prices have ignored the recent volatility seen in equities markets, United States Federal Reserve policy and the potential for another wave of strong selling in stock markets could trigger the next leg down for the cryptocurrency market.
What’s next for Bitcoin?
At the moment, Bitcoin and the wider crypto market are essentially in a zone where a range of bullish and bearish factors could determine the next direction of the trend.
As mentioned by Delphi Digital, Bitcoin is currently following the trajectory of previous market cycles.
2018 Bitcoin market cycle vs. 2020 Bitcoin market cycle. Source: Delphi Digital
Zooming in closer, we can see what Delphi Digital characterizes to be “uncanny similarities to the 2018 cycle.”
2018 Bitcoin market cycle vs. 2022 Bitcoin market cycle. Source: Delphi Digital
There are a handful of Bitcoin, crypto market and equities metrics that are showing confluence and support the possibility of a relief rally in the short term, but generally, the overall trend favors the downside. If equities see some relief and rally higher, the tight correlation between BTC, Ether and equities markets would suggest a similar style of price action in crypto.
With that said, a Bitcoin relief rally is likely to be capped at $27,500, where the 200-day moving average resides. The most encouraging short-term actions from Bitcoin would be to either continue in the same range, holding $20,000 and $18,400 as support, or a high volume breakout clearing the current 116-day range with a series of daily closes above the range high at $25,200.
An eventual flip of the 200-MA to support and a series of weekly higher highs on the candlestick chart would be early signs of a possible longer-term bullish reversal, but this seems highly unlikely given the macro headwinds facing Bitcoin.
This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter author at Cointelegraph. Each Friday, Big Smokey will write market insights, trending how-tos, analyses and early-bird research on potential emerging trends within the crypto market.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.