Weekly Recap – 01-02-22

Price Action

Weekly Winners - Peak Gain

Weekly Losers - Peak Drop

Well… Happy New Year!  It is officially the second day of 2022 and it is our first Weekly Market Recap of the year.  Last week came off the heels of Christmas and this week comes right off the heels of New Years.  

Last week was not a particularly good week for Crypto as a whole.  ALGO is the only T-25 Token that is currently in the Green when looking back a full week from writing.  Almost everything that gained anything, gave it all back – of course, there are some exceptions.  ATOM, HNT and XMR are among the few that fall in the Top 50 that actually show a gain from this time last week.  

We some some explosive moves from FARM, QUICK, POWR, FXS and KP3R but then we saw some heavy drops from FARM, QUICK, OG, ICX and GXS.

Correlation Matrix

Bitcoin and Ethereum back in the 90’s for correlation.  They posted a correlation of 0.92.  The next highest, coming in at a correlation of 0.88 is Litecoin and Bitcoin.  Not a whole lot of surprises after that.  Fairly standard correlation across the board with most falling somewhere in the 0.70’s.

Crypto FEAR and GREED

Bitcoin was trying to get a move up but the $52K level held for the Bears and the Bulls retreated back to safety above $45K.  This has brought the Fear Meter back down from the 40 it was showing last week to the 29 it shows right now.  Traders and Investors will continue to feed the fear if Bitcoin cannot trade over $52K and especially if Bitcoin starts trading below $45K.

Daily Bitcoin Volume

We saw some very heavy volume last January.  Past performance does not indicate future predictions but we have very little to go off here, so it’s worth mentioning.  Overall Volume is pretty even and has been ever since the Summer of 2021.  There ha been a very steady and very slow increase in the average volume but by and large, nothing trend shifting.

Bitcoin Dominance

13 of the last 13 days have interacted with the 40% Dominance Level.  We don’t consider it Support for no reason.  Yes, Support is holding but just like a lake covered in ice – the more you keep pounding away at the same spot, the more likely the ice will break and you will fall through.

If we are to break 40%, we expect something pretty significant in return.  This could be an event of some magnitude that can really effect the price action of Bitcoin.  Potentially a massive dip or even potentially a massive spike in price.  When it comes to Dominance, we can move in all directions.

Bitcoin CME Futures

With the close on Friday at $45,815 and the open earlier today at $47,120, we have ourselves a pretty big downward Gap.  Don’t be surprised if we fill that near the same time the Traditional Stock Market opens at 9:30 AM EST.

We do still have the Upper Gap to contend with at some point.  $52K has been a very strong level of Resistance and every time Bitcoin gets close, it fails.  

Bitcoin Monthly Red/Green

2021 left us with a solid 50/50 year between the Bulls and the Bears.  The first six months were three green followed by three red.  The final six played out as five months of trending upward but that also included two red months.  December ended red as well, making it another three green/three red six month period.  

All things considered, the structure of the larger trend has not broken.  If we break that low in September, that’s a different story…

Bitcoin Weekly S/R

As is sometimes the case, everything we gained two weeks ago, we lost last week.  We can see that the Weekly is respecting the high $46K area as seen by the last five weeks all closing or opening above $46,600.  The lows near $45,500 are fairly consistent as well for the last three weeks of trading.  We can see the wicks down to that area three times were all bought up by the Bulls.  

$52K still remains the main level of resistance for the Bulls.  The Bears have defended this area well for over a month now.  We talked about the $58,800 area last week and that still remains a potential if we see some life pumped into Bitcoin for January.  

We did add the Lows from September and November as a new potential trendline of Support and that does converge with another trendline around the $43K area.  A dip into that area would not sweep the wick from late November but it could come close.  The late November low is $42,333.  These wicks do often get filled.  A good example of this is back in May when we dropped to $28,800 and then went on to sweep that low twice – once 5 weeks after the low and the other time was 9 weeks after the low.  That was followed by a 7-week bullish rally.

Conclusion

Here we can narrow down the real Support Zone to $45,727 – $46,166.  Not a very good look for the Bulls and certainly not a good overall look for Bitcoin in General on the Daily.  Anything below $48,600 only empowers the Bears even more.  The Bulls have a lot of work to do if they want to try and salvage the Macro trend.  

These things can and do take time.  It is possible that Bitcoin trades sideways for a long period of time.  Consider two to nine months as a sideways market would not be unheard of.  We have more or less been sideways now for about 30 days.  It takes a while to build a good level of Support and a good level of Resistance for traders to consider as rangebound.  As of this moment, the Lows of the range would be the Zone we mentioned earlier but the highs would not be the $52K peak as we have spoke about.  The High side of the range is $50,850.  Range, for now, will look more like the picture below.

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