Weekly Recap – 08-28-22

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.  All Long-Term trends are down across the board and by Long-Term, in this case, we are speaking to the Daily Trend from the PAS.  The entire market took a hit two Fridays ago and there has been no recovery since then. We are now about 10% away from our low we put in around early June.

Bitcoin Monthly - Long-Term

The long-term Monthly outlook on Bitcoin is struggling with last month’s advance. We are rapidly approaching the July low and doing so would get us even closer to knocking out the low from the entire 3-month gain. Outside of the wick in Mid June, we are currently trading in our long-term support zone. If this is to give out, then we are looking at testing mid teens.

Bitcoin Weekly - Mid-Term

Last week closed with a 9% loss. The close of this candle landed on the 2017 ATH Zone. This is the same area where support was found from June 13th to July 11th. In that span, on the weekly chart, we found support 5/5 times. We are now back on that same support level and the previous rally looks more and more like a false rally. If the Support does break then our next major weekly level sits between $10-12K.

Bitcoin Daily - Short-Term

Our 10-point relief rally is over and we are now 4 steps deep into our local downtrend. If we were to add a support zone that makes the most sense from the last three months we would have to look at $19,252 – $18,948. Breaking this area would very likely test the low from June and create a potential double bottom. That being said, we would be on very thin ice and if we were to approach it with a lot of momentum then we would likely smash through that low and continue further down. This is a very dicey area for Bitcoin.

Daily Bitcoin Volume

Overall average volume has been consistent, but the major volume spikes have all been on Red days. This means that there is more volatility and more pressure on the downside than the buyers can keep up with. This brings the overall sentiment down and adds to the selling pressure from whales and retail.

Bitcoin Dominance

Bitcoin Dominance remains near 40% as we hover on the high side of our 40% Support Zone. This zone was initiated in May of 2021 and has been used for 3 major clusters since then. This would be the 4th major cluster touch and that adds to the probability of breaking down. As support or resistance gets hit over and over and over again – it tends to get weaker. 

Bitcoin CME Futures

Here we are again… This time down, we are coming off of a break in trend and an aggressive sell-off. We just may have the momentum to fill these big gaps that were partially filled back in June. This would entail an aggressive drop just below $17K. When you think about it, it’s not all that far away. Over the last week, we filled all the smaller Daily Gaps. We have created a new Upper Gap from today’s open.

Conclusion

As mentioned before, this area is pretty dicey. Losing all these support levels created over the last few months, especially with this momentum to the sell side, can create a very slippery slope for Bitcoin. As most people don’t want to hear, a 50% drop from this area would bring us nearly $10K. That seems impossible by some people’s standards, but we can assure you it’s not impossible. This is Bitcoin, and anything is possible. 

That being said, Bitcoin does tend to trick a lot of traders by liquidating shorts only to liquidate longs a few days later. At the rate of decision, more downside is expected. The global economy, war, and pandemic, as well as election season in America, only spell more doom and gloom for the world as we know it. Although this would be a time for Bitcoin to shine, it seems that people just haven’t quite come to grips with inflation and the value of an actual dollar.

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