Market Overview + Technical Analysis #2
Content:
Market Overview-
The Current State of the Market ($BTC)
What to Expect Next? ($BTC)
Technical Analysis Review-
$XRP Technical Analysis
$KDA Technical Analysis
TOTAL + Dominance Review
Closing Thoughts
Market Overview-
The Current State of the Market ($BTC)
At the time of writing this Bitcoin is trending at $20,540 as it ranges above its previous all-time highs from 2018. This range has bored a lot of traders to death as the volatility has stabilized for the past month. This lack of volatility has many traders sidelined waiting for a move, leading us into a 10% rally from 19k to 21k. This rally resulted in 1.2 billion dollars in short liquidations, the biggest liquidation event in 15 months. Could that be a signal from the bottom? Whatever the answer to that is, those who are sidelined will get trapped on either side if you buy with emotions. Those who stay tuned in on my YouTube Channel know that I have publicly stated that Bitcoin has already set its local bottom from 19k. This doesn’t mean we can’t go low again, but the market moves in waves so we have to pay attention to the fundamental factors at play. Currently, Bitcoin’s hash rate has hit an all-time high and the cost of Bitcoin isn’t rising. This may lead us to another drop as whales love to flush out any weakness in the market as firms display signs of weakness. On the contrary, Bitcoin’s volume is the primary reason why I am becoming more bullish as it’s never been this high before without making a new low.
Figure A
2. What to Expect Next ($BTC)
Currently, Bitcoin has been ranging so while there is no “real” update is best to understand that we must remain patient. We will also look at $TOTAL and Dominance to better gauge the market as it might give us hints on what we can expect next. For now, Bitcoin is breaking past a trend-line resistance with good follow-through and volume. This is because many were liquidated and could lead us higher to range highs of 25k. Another thing that we should pay attention to that is never discussed is subdivision. Subdivision determines how strong a move may be. Do we reach 25k with sideways, choppy, low-volume price action or do we reach it with three candles with lots of volume? This is what I will be watching as we rise, and that will help me determine if we are going to continue rising to the upside.
A Bearish Scenario*
I don’t think it's impossible to revisit the range lows sweeping out traders which would set the macro market bottom for Bitcoin. The real question is, are the whales done flushing out all the little players, or are they going to drive up liquidity to 25k and then take them back down to the range low? This is something to think about because while I am bullish I am not blind to another scenario playing out.
Figure B
Technical Analysis Review-
$XRP Technical Analysis
At the time of writing this $XRP trades at ~.47 cents. The chart used below is from BitStamp as it displays the full price action of $XRP for this technical review. To preface this I want to disclose that I shared my thoughts on $XRP on August 8th this year. In the technical analysis section, I covered that the price should hold the .30 cent level as I presented two scenarios in which both were bullish. From the .38 cent mark on that article, we rose to .56 cents (+50% gain) which was on the money from the August 8th article. I want this to be an example of how simple this all is, it is not that complicated if one can zoom out and look at key levels to depict the direction of the market.
Figure C
2. $KDA Technical Analysis
At the time of writing this $KDA trades at ~1.28 cents. The chart used below is from Coinex as it displays the full price action of $KDA for this technical review. To preface this I want to disclose that I shared my thoughts on $KDA on September 8th this year. In the technical analysis section, I covered that the price should hold the .90-1.22 dollar range as I presented the case of being patient for the price to reach lows. When I wrote the article, the price hovered at 1.48 and fell to as low as 1.20. If we take a closer look, I do not see a reason to consider going long unless the 1.37 region is reclaimed by the bulls. My alerts are set, and I will remain patient until the setup provides the confirmation I shared below.
3. TOTAL + Dominance Review
TOTAL REVIEW
After sharing my thoughts on $BTC and a few $ALTS, I think it's important to also discuss the rest of the market and where I think we are headed.* As I have covered on my YouTube channel I am expecting an (s) alt season to occur as most wouldn’t expect that. A lot of altcoins are at critical support levels while others are not looking so good. I have shared a few altcoins that I am bullish on in a recent video here. Nonetheless, if you look at the TOTAL chart below you will see that it is in a gorgeous range. If we can reclaim the 1.12 trillion dollar mark then the whole market has potentially* bottomed. This is something that I am anticipating as the market moves up to gauge whether or not things are becoming macro-bullish.
DOMINANCE REVIEW
In the below chart, you will see a dominance chart that displays the sum of ETH.D+BTC.D. This sum does a great job displaying when ALT season takes place. If you look closely, we can see that in 2021 there was a clear loss of dominance as ALTS outperform $BTC and $ETH dramatically. Additionally, we see that we are currently seeing the chart at resistance(red shaded box) accordingly. If the dominance is not reclaimed, then most likely one of two things play out. 1) Alts bounce harder than BTC & ETH like a dead-cat bounce before dominance reclaims highs. 2) We witness an explosive ALT season that most people completely don’t expect. In either scenario, one may assume it's better to be in strong ALTS versus ETH and BTC for the mid-term.
Closing Thoughts
It's no secret that the overall market is range bound. But the big question that everyone has on their mind is, “Do we go lower?” That question is yet to be answered in confidence as more data is presented. However, I still believe it is clear that a mini ALT season is inbound due to the TOTAL and DOMINANCE charts. While I am mainly positioned in ALTS, I am also positioned for both sides to play out if I am right or wrong. I think that what’s mostly overlooked when investing is risk management when I talk to friends, family, and other traders. It is important to understand your strategy before investing because “markets can remain irrational longer than you can remain solvent.” This is the harsh reality but I would rather be transparent than give one false hopium. With that, I thank you for reading and remind you that none of this is financial advice!
