Weekly Recap – 01-08-23

Top 5 by MCAP

Although this recap is mostly all about Bitcoin, it’s still important to discuss the overall health of the Top 5 as numbers 2-5 do have sway in the altcoin world.  

Cardano has recently flipped $DOGE for the Number 5 spot. The Top 4 remain the same as they have for a very long time. For the first time in a very long time, all Top 5 crypto are showing green for the very short-term trend. Only $XRP is failing to flip the M30 and H1 trends to Bullish. This is extremely interesting for the Top 5 and absolutely something to be aware of.

 

Bitcoin Monthly - Long-Term

We already spoke about December closing red but not breaking the November Low. That was an essential move on Bitcoins’ part, but it most certainly does not solidify any reversal. The current action in January is a small rally back to the $17K area. We completed that task a few hours after closing the Sunday candle. At the time of this writing, we are almost exactly at the $17,255 resistance level. We are showing $17,252.

These specific levels are more for the short-term analysis, but they are worth mentioning on the Monthly because they are considered close enough to the June Low to consider a backtest. This is an area to Short, rather than get excited about longs BUT, that can all change with a candle or two. When an area that should be resistance gets flipped to Support, then all bets are off, and you follow the new action. We are approaching those levels now in early January. A breakout could cause the beginning of a rally. However, the probabilities are on the side of resistance and continuation of downside action.

 

Bitcoin Weekly - Mid-Term

Our Weekly candle closed with a 3% gain. At these levels, that is just over $500 for the week. We have breached the upper resistance of the mini range only after opening this week. We tried last week but failed to remain at that level. Of course, this mini range is nothing to write home about. The real test is pushing beyond $20K. 

The next local test for Bitcoin will be near $17,560. That would be a structure retest. We have made three attempts since the break in November. So far, all three have failed. Of those three, only one actually reached the target area. 

Generally speaking, without any significant catalyst, resistance should hold, and further downside would be expected. Weekly levels could bring Bitcoin from $13-10K. 

 

Bitcoin Daily - Short-Term

The Bitcoin Daily chart is more interesting than the Weekly as we can see the individual days compared to just the sum of seven trading days. Starting on November 21st, Bitcoin made a decent rally. The rally was cut short, slightly above the bounce created after the major fall from $21K. This breaks that downtrend and creates an area of interest as well as an area of invalidation. With that resistance, Bitcoin did get pushed down. However, the drop was not lower than November 21st. In turn, this creates three parts to a trend. Albeit, a very local trend. What Bitcoin needs to do now is hold that Higher Low and break the failed high that created the invalidation. If Bitcoin can pull that off, some traders will buy that break as it now becomes a validated short-term trend. 

The first sign that Bitcoin will not be able to pull the upward trend off will come from the local trend line holding the current price action as support. Keep in mind that this trendline is very weak and overly abused.

 

Daily Bitcoin Volume

Volume continues to slide as we crossover from 2022 to 2023. Since we are in a new year, any volume candle can act as the yearly high without any significant significance. We have let a week play out before adding the node to the chart, but you can see it now with the green horizontal line. 

Two green days did yield a break of the 30-day average for volume. That is significant as they came on buying days instead of selling days—a shift in the narrative for the last year. Declining volume is only good in Bearish markets as it helps to call the end of the selling and the potential for reversing. The newest action is too new to make significant changes to the 30-day average. We will need to wait at least a week or two to see if buying volume can help shape the average into an upward slope.

 

Bitcoin Dominance

Arguably one of the funniest charts in all of crypto. This Dominance chart and the respected levels are almost unbelievable. There were a few days when Bitcoin was looking to finally flip 42% to support and make a real run. That was short-lived, as it died shortly after and has declined ever since. Sadly, we all know where the support is… 40%. Time will tell if we use 40% as support again if we are to reach it. 

It’s not all bad news, tho. As we saw earlier, the Top 5 are trending in the short term. The entire market is having a good day… I stress… A SINGLE GOOD DAY. Let’s not get crazy and call reversals and 2023 Bull Trends just yet. This upward action will go against BTC Dominance as the entire market goes up, and there are more Alts than there are Bitcoins, literally.

 

Bitcoin CME Futures

The last few weeks have left a lot of gaps but almost all of them were filled with the following candle. With the open today, we have yet another Weekend Gap. If we are to see a decline from our current position, there would be little doubt that this new gap will get filled. What Bitcoin does from there is still up for debate. We remain open on both sides of the coin. Upper and Lower gaps both remain and they can all be filled eventually given the right momentum.

 

Conclusion

We remain inside a grey area. This area has both an upward potential as well as a downward potential. This is different from the majority of the last year as there were very few times a potential reversal, no matter the size, was even on the table. With the current setup, Bitcoin has a few things it absolutely needs to do. Otherwise, it’s simply ranging. 

The downside, unfortunately, is not precisely set up to hold if support is tested. At that point, further downside would be expected, and the weekly or monthly levels will likely play out.

Of course, no one knows for sure what will happen next. The overall sentiment is still terrible as the dominos from FTX continue to fall, with more and more lining up to close, fail or file shortly. A lot of good comes from flushing out the bad actors, but it’s also not something that happens overnight. Unfortunately, the most prominent bad actors on the planet remain in crypto and continue strengthening their positions. 

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