Today is Friday, 1st October, and this is Cointribune’s Crypto analytics. You will learn about everything that’s been going in the market, and also what to expect next in our new article! If you’d like to read the previous instalment, please follow the link. Off we go!
Friday ended with a resolute move on the part of Bitcoin, whose price, after going a long way from $43,000, immediately reached $48,400. At the time of this writing, BTC is trading at about $47,800.
The largest cryptocurrency has finally done what we’ve all been waiting for. The hints at its imminent growth were many: the record low index of fear and greed, the slight drawdowns of altcoins, the reliable support around $40,000, the positive news stories, and the conjectures that weak hands have long lost all their positions and only the holders who are confident in the future remained in the market.
However, there were a lot of shorters at work, and it’s thanks to their efforts that we’ve eventually climbed so high so soon. Credit where it’s due: the guys never spared their deposits, allowing for the accumulation of enough “fuel” for such a BTC move. Liquidations in the last 24 hours amounted to about $447 million, of which 65% fell on short positions.
There was no room to fall any lower, just because there was almost no one who suffered losses due to the drawdown. That, in turn, means that the whales rocking the market simply wouldn’t be able to reap any benefit from a further price decrease. But instead of taking advantage of the situation and replenishing their portfolios, many retail players wrongly figured that they could make money on shorting. At a certain point, such positions turned out to be enough for the whales to push the pendulum again, and the strategy of traders focused on the decline crumbled like a house of cards. That is because you need to sell when everyone else is already buying at any price, guided by greed alone. It would only make sense to open a leveraged short at a moment when the market could not break above the last local highs and has begun to hint at the lack of strength in the bulls.
Many trading chats are now in ruins. Some rejoice at the growth. Others call such a rise nothing more than a trap, believing that it will be followed by a dump up to $35,000, at which point all long position holders will be obliterated by liquidations. And that’s not to say that the worst-case scenario is wrong. Right now, unlike yesterday, there are players who can be taken out with a new dump. So, slacking off at this point is simply not an option. Keep your stop-losses close to current prices, as in the event of a reversal that will help you get away losing the least you can.
Also, don’t forget that the weekend is here, a time that can both please with continued growth and cool down even the most heated ardour with just one solid drop.
Locally, we’ve finally left the orange downtrend trading channel. But consolidation at a new level is still in doubt. The growth was too sharp, so without a bit of trading within the same price range, it won’t be possible to say with certainty that the price has found support.
The day began with a slight pullback. However, there is no need to sound the alarm since yesterday began the same.
BTC had wicked up above $48,000 but couldn’t hold within the range. A natural pullback followed. All the above indicates the presence of resistance in the $48,000 – $50,000 zone, and all our further attempts will be aimed at overcoming that milestone. At this stage, the price of the chief cryptocurrency is moving within a local expanding trading channel (white), wherein we have access to peaks up to $60,000.
Within the range marked on the chart with a green rectangle, the formation of an “inverse head and shoulders” pattern is evident. This is a bullish sign, and if confirmed, the price of the first Bitcoin may get a long-awaited push for growth, potentially clocking up to $68,000.
Also, mind that within this pattern, the price will probably drop down to $43,000. But that’s only in case the formation of the pattern is confirmed and we don’t go any higher without it. In our case, the confirmation will be the return and retest of support, which is the upper border of the orange trading channel. If it holds, a new shoulder will begin to form.
Another important point is that during the assault of $50,000, we will inevitably face resistance, both psychological and global dynamic (the so-called “downtrend line”). It is shown on the chart by the upper pink line. And in order to overcome this milestone, the bulls will need a lot of strength and patience. In the case of fixing above the level, buyers will receive a boost to their motivation. Globally, the course will change from a downtrend to a flat. And in case it surpasses the last absolute price maximum, a new bull run will start.
Note that patterns are not just angles and lines. They are a system visualising decisions made by the majority of players in the market. A way to understand where an asset is moving is by evaluating the choices made by the majority of traders. Simply put, trading channels, patterns, intersections – everything that we designate on the chart is systems, the formation of which is dictated by the behaviour of traders. A trading range or channel, for example, marks the zones in which most players prefer to buy (support) and sell (resistance) their assets. The direction of this range (up, down or straight) signals the prevailing local/global trend in the market.
The market is cyclical. The pattern theory is based on this very fact. Traders look for certain patterns on the chart and, based on the information they find, plan to enter or exit. Thus, when the majority of players, guided by the same signs, use the amount of funds available to them and vote for certain movements (opening deals), they end up being the ones maintaining the very cycles that they expect to ensue.
Prices change not because traders draw lines but because they vote for an asset’s behaviour with their volumes. And as you know, any asset in any market always moves where the majority of trading volumes lead it. If the power is on the side of buyers, the asset grows. When sellers are leading – it falls.
Some of you may wonder: why, then, is trading on the crypto market so hard? After all, if everyone works within the same framework, shouldn’t everyone benefit?
To begin with, traders are not always unanimous in their decisions. And the whole point of any trade in any market is that by investing your funds, you multiply them at the expense of losses incurred by others. Money doesn’t appear out of thin air, and there will always be losers.
Moreover, one shouldn’t forget about those who can solely own such volumes of assets that will exceed the stocks of all other traders put together. These people are called whales. If ordinary players are forced to read trends and plan their trading strategies accordingly, then whales are the ones setting the direction of the trend. Their behaviour often leads to unexpected changes in asset prices as well as huge losses for retail players who entered earlier.
Right now, it’s important to enter the $48,000 range and gain a foothold within it. If that doesn’t come off, then the bulls will retreat into the lows in search of support, and the price will keep falling until the players reach a level at which buying BTC would seem acceptable.
Speaking of news, one thing that’s worth mentioning is the application from the US Securities and Exchange Commission (SEC). Gary Gensler announced that the department would begin to consider the possibility of approving a Bitcoin ETF based on CME (Chicago Mercantile Exchange) futures. At the same time, his subordinates have been putting off applications by the Global X Bitcoin Trust, Valkyrie XBTO Bitcoin Futures Fund, WisdomTree Bitcoin Trust and Kryptoin Bitcoin ETF for 45 days.
In the short term, this may lead to a decrease in positive sentiment among the bulls. Let’s hope that the SEC will soon consider and approve at least one of the remaining applications.
Analyst PlanB, known for his Stock-2-Flow model for predicting the price of Bitcoin, said that his theory works like a clock. However, if his model relies on calculating the BTC deficit, then that would mean that, like any other indicator on the market, it only works after the fact. That is when the outcome is already known. For a general understanding of the market, this is, of course, useful. But this model cannot predict the future, contrary to the author’s claims. Moreover, the forecasts from PlanB are constantly changing, much like the ratio of the parameters that define his calculations.
In other words, at some point, his model will fail just because it doesn’t consider the possibility of market manipulation driven by sudden large-volume sales or news stories. In that case, PlanB will throw up his hands and dish out new indicators for everyone to see, after which he’ll continue saying that his model works like a clock and practically predicts the movement of BTC. Although, all he sees is dynamics and possible price peaks delimited by time frames.
That’s not to say that S2F is useless. Like any other index, it provides additional information that helps traders get a clearer picture of what is happening in the market right now. Nothing more.
The current movement is still fully in line with the global bullish picture. We are still operating within a triangle whose key element is the “bullish wedge”. Consolidation (accumulation) is an invariable factor in this pattern, which we can also observe on higher time frames. Visually, it looks like a series of green and red candles on the chart, forming towards the upper and lower walls of a narrowing trading range. It resembles global accumulation, after which it will be possible to exit the figure via a pump.
Speaking of support, the level closest to us is $45,000. Other round numbers do not have the potential to contain bears since we passed these values almost in one go. To create a zone of resistance, bulls and bears will bargain until they find an optimal foothold for both camps.
On the other hand, the weekend has already begun. So we can both break above $50,000 and return to $40,000 with equal probability. Therefore, be careful not to neglect stop-losses. Consolidation above $51,000 would be a strong suggestion of continued growth. But at this stage, the bulls are marking time, which may be due to both a lack of strength and the fact that other players haven’t started trading yet.
Ethereum continues to tread in the footsteps of its older brother. This phenomenon is so natural at this point that TradingView didn’t even bother properly drawing the last few candles on the chart. The service, in this particular case, refers to the Binance indices. However, in the Binance app, the graph is perfectly normal.
ETH is crawling out of the downward channel, but like Bitcoin, it still hasn’t settled in the new range. At the time of this writing, ETH is changing hands at about $3300 with the local peak of $3350.
Like Bitcoin, Ethereum is still under pressure from the global downtrend stemming from its last absolute high. To escape this pressure, ETH needs to go back to $4100 and break above. Only then will the downward dynamics change to upward, thus leading to a global trend change.
On the ETH chart, we are seeing the same old inverse head and shoulders, which means that the second-largest altcoin shows no intention of straying away from the course of the flagship coin.
One pump – and the market shifts from fear to neutral. Still, the recent collapses are nothing more than skilful manipulation, the purpose of which was to shake out the most assets from retail players at the lowest possible cost. And as soon as the needle hit “extreme fear”, the whales figured it was time to push the pendulum again.
Some say that being an investor/trader is easy. Like it’s just about buying assets cheap and then selling them when they grow more expensive. However, as practice shows, few players on the market understand where this “cheap” and “expensive” begins. The icing on the cake is the ubiquitous fear of lost profits that makes even the most persistent of crypto enthusiasts dump their trading strategies and just blindly hit “Buy” or “Sell”.
The market isn’t just about news and charts, it’s also about psychology. It’s important to understand the motives of those around you and control your own desire to become a one-deal millionaire. In 99.9% of cases, giving in to that desire leads to bitter losses.
Slow and steady wins it.
It is important to remember that the most profitable trades are closed precisely at the moments when the coin has already fallen and is not yet showing any signs of growth. This strategy, of course, will not bring you instant profits. However, it is more reliable than many others. Buy the rumour, sell the news. Each action has its own time and place. Do not rush to short if the price has already collapsed. Don’t rush to buy, even if everyone around you has already gone into a frenzy.
The top ten cryptocurrencies have finally made it into the green zone. Cardano (ADA) has regained its third place in the CoinMarketCap ranking, and Solana (SOL) has not only added in price but also is about to displace Ripple (XRP) from its position again. Winter may be coming, but so far, the market is blessed with an out-of-season Spring.
The fourth quarter of the year traditionally becomes profitable for cryptocurrencies. Over the past eight years, Q4 has only closed red on two or three occasions, just at the times when a lengthy crypto winter fell. Let’s hope we’ll be seeing that again this year.
The well-known GameFi asset Axie Infinity (AXS) becomes the gainer of the day. This coin brought its holders almost 50% of the profit over the past day and about 60% over the week. The only downside is that SLP, the second token from the ecosystem while looking terribly appealing to buy, shows absolutely no intention of moving up.
It’s hard to tell whether or not technical analysis is generally applicable to assets related to blockchain games. However, technically, AXS is looking at a pullback since right now, soon after the pump, the coin will try to find a mark at which its adequate cost price will most likely be.
The second time in a row, dYdX (DYDX) becomes Loser. However, this time, the asset isn’t lagging as far behind as it was before. It’s likely that DYDX has already found a local bottom, and now, riding the wave of general growth, it will go on to meet a new price maximum. This asset brought only about 3% of losses per day. But the weekly profit is about 80%.
At last, the weekend runs the show. Yesterday’s Bitcoin pump will give retailers more confidence in the future. However, do not forget that Saturday and Sunday are magic days, a time when anything can happen. So it would be best to play it safe with stop losses in case of a sudden pullback. On the whole, it’s likely that at this point, we are looking at growth, at least until it’s clear that buyers do not have enough strength to break through the resistance.
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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
|BITCOIN (BTCUSD) ₿||$30,338.40||0.16%|
|ETHEREUM (ETHUSD) Ξ||$2,043.94||1.29%|
|IMM. US (REIT)||$2,457.09||0.5%|
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