Bitcoin experienced a powerful 15% crash over the past weekend, and total crypto market cap has been traveling in a steep downward trend since mid November, ’21. This piece covers 6 of the best Bitcoin charts to watch after this crash.
For the past few months, tailwinds from the US Federal Reserve have created bearish movements across risk-on assets. Last year, most crypto investors felt that $40k would hold as solid support for Bitcoin. Therefore, Bitcoin’s recent crash to $34k has left everyone stunned and speculating. Currently, most crypto investors want to know whether Bitcoin can go lower, and if it can, then how low can it go?
Bitcoin vs NASDAQ
2021 saw huge inflows from institutional investors into crypto. Now, supplied with all this new institutional capital, is it possible that Bitcoin has become a leading indicator for equities? That could be true, or, this apparent correlation could simply be a coincidence.
In accordance with our Senior Market Analyst Bill Noble, “This recent crypto movement tells us that inflation can’t be at 7% while the federal funds rate is at 0%. Additionally, the Fed needs to remidy this issue by August, so as to not be hiking rates near an election.”
Bitcoin RSI Low
Bitcoin’s daily RSI hit its lowest value since March 12th, 2020 (the covid crash). Such significantly oversold RSI levels (below 20) occur from correspondingly big price movements. Bitcoin’s low RSI value at 19.42 tells us that Bitcoin is moving at peak bearish momentum.
Buyers Of BTC Since December 2020 Near A Loss
As displayed in the chart above, $31k has acted as support for Bitcoin since December 2020. If Bitcoin’s downward trend continues, then all holders who bought BTC after December 2020 will soon be holding at a loss. Going forward, if $31k support does not hold, the next area of support lies on Bitcoin’s 200 week moving average (which is $19.2k at the time of writing).
Bill Noble – Elliott Wave Projection
Recently, in his Market Update daily livestream, Bill Noble shared an Elliott wave to project potential bottoms for Bitcoin. Bill believes Bitcoin is currently traveling in wave 3 of a bearish cycle. By comparing these waves with Gann support and resistance, Bill has projected $25k and $19.2k as potential bottoms for Bitcoin in the short-term.
Bitcoin Hash Rate
Lastly, Bitcoin’s total hashrate (the metrics used to calculate the total computational power utilized within the Bitcoin network) has surpassed its all time high. This means that, although Bitcoin’s price has recently declined, Bitcoin as a network is now stronger than ever.
Token Metrics Low Frequency Trade Strategy
The Token Metrics low-frequency trading strategy flashed bearish on Nov 22, ’21, back when Bitcoin was trading at $53k. Since then, the strategy is still yet to produce a buy signal. Normally, TM low-frequency buy signals occur after price has sufficiently bottomed. Therefore, according to this strategy, Bitcoin is still yet to find its bottom price.
There are numerous dynamics at play within the current crypto economy, and each work to make the crypto market especially susceptible to volatility. Among the most important of these dynamics, are:
- off-shore leverage
- regulatory uncertainty
- cross-collateralization (specifically in DeFi)
Going forward, the crypto market looks bearish, at least until the Token Metrics AI says otherwise. Currently, to hedge against downside, the TM Kraken daily index holds an over 50% position in PAX Gold and Bitcoin.
A bullish signal will occur when the Token Metrics indices shift out of gold and Bitcoin, and back into entirely altcoins.
Bitcoin’s chart, alternatively, appears relatively healthy and sustainable. Most notably, it will be interesting to see whether $28k will again act as Bitcoin’s macro bottom price, or, whether the recent wick to $34k will be the bottom.