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My Sun Conure Lucky looks at me and shakes his body from side to side.
This is what he does when he is intimidating me.
He is a male, but he seems to hate men thoroughly.

HTF 12H:

The middaily chart has canceled the prior “bullish” indication mid day, right along with bearish selloff on equities following the FED’s J Powell commentary over tighter monetary policy plans ahead.

The CTF Trailer remains the main breakout level to validate any upwards thesis at $42405. So far, it has failed to be reclaimed by the bulls, and the bearish advantage continues, while bitcoin consolidates inside a narrow range of prices $38500 through $43000.

The bears have maintained the control over the market in the near-term, at least.

The BWAP block implies resistance region at 40.2-40.6k USD region. As long as bitcoin fails to reclaim it, the bears have the upper hand in the market, aiming for potential price targets into the mid 30000s USD levels.

MTF 4H:

The MTF chart displays bitcoin’s price action attempting to build a local base at the BWAP region: 39.5-39.7k USD. However, there is a resistance level in near proximity, which does not give much space for bitcoin to unwind a larger move.

The CTF Trailer implies the bears holding the upper vote in the market for as long as the Stop invalidation level at $41457 resists.

Furthermore, BPRO Level Lines show resistances at:

46856
45842
44604
42713
40193

These levels could be anticipated to serve as level-to-level references. In other words, when one level is breached, the next one in the direction of the movement

LTF 1H:

The hourly chart continues to move in a slow-pacing upwards trend, which to me looks more like a correction than an actual trend developing. It can be seen as the sequence of small-bodied candlesticks, with a lot of indecision wicks on both ends of the candles.

Typically, such a movement would bring the impression of a continuation pattern, rather than a reversal formation, at least the way I see it.

The CTF Trailer resistance for the bulls to break through is at $40319. If reclaimed with a daily close above, it brings higher chances for BTC to continue upwards into the 40000-41000 USD area.

The Level Lines support is defined at $38791 by the BPRO, and it may be due for a retest, if bitcoin fails to hold the local BWAP support (orange box).

Overall, a lot of indecision and quite a typical price action recorded during the weekends – low volatility, lots of noise, little to no trend. This risky environment does not favor any trend-following strategies. Instead, it generates arguable opportunities only for the most skilled leverage traders within the intraday time frames, in other words – the whales and funds. If planning to trade through the weekend, make sure you are ready and well equipped to outsmart those smart money participants.

FEAR/GREED INDEX

Quoting over my recent texts: “The main premise to the contrary opinion investing remains that the crowds are always wrong at the extremes due to their perception biases – cognitive biases, or mainly – emotional biases, e.g. loss aversion bias, sunk cost bias which make them act irrationally.”

With 24 points on the scale, the market has turned even more pessimistic and bearish in terms of speculators’ expectations. The more extreme pessimism there is within the market, the more buying opportunities historically were proven over the time.

It does seem a bit “late” to sell off at current levels, as the market values bitcoin as “cheap” based on the historical records. However, it seems a bit “early” to enter, too. No man’s land it is.

More insights and full analysis were shared in my yesterday’s webinar. Catch the link below if missed out

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HTF 1W:

The weekly chart does promote a breakdown idea for the recent ascending channel pattern. That brings several technical implication scenarios.

First off, the said breakdown increases the chances for BTCUSD to retrace further into the range-low territory at 28800-30000 USD region.

The bitcoin’s correlation to S&P 500 equities has increased even more on the 7-week basis, taking both into the 0.93 coefficient value. It’s historically high value, which tends to grow whenever there is a market crash – the markets tend to crash together.

Technically, bitcoin has deviated strongly against its long-term 50-week mean price at $44629. The further to the downside it deviates for the excursion, the more potential the momentum trade scenario could have – mean reversion.

Price action wise, the definite and decisive levels remain 69000 USD on the top side, and the 28800 USD on the low end of the pattern. Should either of those get broken, the trend resurfaces and is likely to continue further in the direction of the breakout.

Until the breakout occurs, the long-term thesis for bitcoin assumes the chart pattern – a form of consolidation, sideways – rather than a bear market. The thesis should be revisited, provided that the 28800 USD support breaks to the downside with a reliable weekly close underneath.

HTF 1D:

The daily chart has finally approached a key daily support at $33000 and the follow-through decision is to be made with the daily close today.

For the downwards continuation, BTCUSD needs to close the daily candle/bar below the 33000 USD support in an unquestionable manner – a clean breakdown by 1-2%, rather than by a few points. Such a breakdown would imply another signal.

The daily breakdown would also confirm a downwards Momentum Band break unseen since January 2022 or December 2021. This would confirm that bitcoin has broken outside its regular volatility range, accelerating to the downside with higher chances of continuing in the direction of the breakdown. Otherwise, a Momentum High Band resistance is at 44000 USD.

The CTF Trailer Stop is at $38559, as the trend trailer continues to move lower. A clean break above this level would mean bulls have the chance to re-gain the control over the market. Until that happens, the bears are in control and in decision with the prospect of lower targets of 30000 USD, or 28800 USD.

HTF 12H:

The middaily chart continues to accelerate to the downside, as the new yearly lows are made.

The failed wedge pattern acted better than upside target, just like failed patterns typically do – they tend to perform better in the direction opposite than the anticipated.

An overall risk-off environment in the stock market has been supportive of the bitcoin’s declines. As Russia-Ukraine war does not seem to be disappearing anytime soon, the risk-on assets, including bitcoin, remain in danger of following through to the downside.

The CTF Trailer continues to decline sharply, whereas the CTF Trailer Stop has been adjusted to $36427. A positive break to the upside could revert the chances back to the bulls. However, until that happens, the bears are in control continuously (excluding the fake trigger) since early April, potentially aiming lower.

MTF 4H:

The MTF chart slips below its local supports consistently, following through to the downside amid an extreme panic stage in the market.

The CTF Trailer drops sharply in an increasingly vertical manner, which adjusts to the current levels of volatility and price deviations.

From the daily open, bitcoin has declined by more than 7%, not long after the recent -10% retracement day. It seems given that the volatility has increased sharply, as the downwards momentum accelerates.

Naturally, it’s too early to be calling a bottom anywhere here, before 28800-30000 USD region is retested, apparently, yet a rapid volatility increase over one or a few sessions is usually followed by at least a short-term reversal.

The bulls are in danger for as long as the CTF Trailer Stop $43325 remains unbroken.

LTF 1H:

The hourly chart continues to tumble, breaching into new lows consequently as the session goes on.

A clean break below the Low Band confirms an abnormal volatility to the downside.

it’s worth accounting that the more vertical and aggressive a trend gets in the upwards or downwards direction, the closer it is to forming a reversal pattern

Eventually, the historical volatility peaks at the very reversals. This is the most illiquid point in the market, where the greatest amount of hands exchange Bitcoin – one side out of panic or fear, and the other side because of calculated risks and mean-reverting strategies.

The upper volatility bound is adjusted to 34500 USD region.

FEAR/GREED INDEX

As the history learns, the crowds is usually wrong at the extremes. The more extreme the sentiment and consensus of the speculators, the wrong-er they are, and the higher the chances for the reversal in the market.

Having said thati, I keep highlighting how the sentiment index should not be taken as a timing indicator. Just like momentum oscillators, this index can stay “oversold” or “overbought” for longer than one can remain solvent. However, it still can become a source of valuable information to aid market decisions.

The fear and panic are now skyrocketing as the index slips down to the 11 points area, seen only a few times in the history (please refer to the chart of Philip Swift @PositiveCrypto attached in this report)

All things concerned, bitcoin is reaching an opposite end of euphoria, where there seems to be a form of a panic climax, typically leading to a reversal soon after. If the stock market continues to unwind to the downside, I would argue bitcoin may still see a bit lower objectives, even below 30000 USD support. However, for now I would expect a reaction off the 30000 USD lows.

More insights shared in my premium video report. Get discounted access with the link below.

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Following from the last On Chain Report, FED Rate Hike was 50 bps as expected and markets reacted accordingly as they were already priced in for such event. We saw positive moves from risk on assets like cryptocurrencies and equities but we are still early to call this a bottom.

The FED tried to show they are aggressive but they doesn’t have much room to go. A total 2.25–3%+ rate will break the system. The FED in total confirmed 1.50 % rate hike so far and next time the FED rate hike won’t do anything to the market and everything will be all about the balance sheet reduction; any hawkish comments about this topic will indeed reflect on the price as fear and uncertainty is still present. Rate Hikes will not work to control inflation while commodities prices are high; Rusia/Ukraine war is still impacting markets and the new China Covid-19 lockdown will cause greater supply chain shocks that will turn into pushing inflation higher.

The labor market is strong and the notion that that will solve everything is unrealistic as inflation is shrinking their purchasing power and they will afford less now. Supply chain issues are not going anywhere as we have a reverse globalization sentiment between superpower nations. FED is doing what they have to to get some mid-term vote for the upcoming elections. The FED’s only destiny is to break the system and come back with trillions of more dollars to solve it and be a hero. Only scarce assets will save you from this madness and there’s currently nothing better than Bitcoin.

Now that we know the macro conditions, let’s take a look at some of the on-chain metrics to asses what’s happening behind scenes on Bitcoin.

Metric 1 — Exchange Reserve

This is an important metric to assess the total amount of coins held in exchanges. We can clearly see that since July Bitcoin bottom at USD 29.500 the exchange reserve has been constantly declining and basically showing us that the selling pressure has decreased as coins are being withdrawn and taken into cold storage to be held.

Metric 2— Wallet Balances

When we look at the wallet balances, it is clear that in below graphs they show us that smaller wallet cohorts are the ones that have been accumulating quite aggressively since July Bitcoin bottom. Larger Bitcoin wallet cohorts in between 10 to 100 native units, have been steady and there hasn’t been any negative or positive move from them. However, the wallets with addresses greater than 100 and 1,000 Bitcoin have seen increases in numbers over the past week, particularly the 100 Bitcoins wallets.

Metric 3—Exchange NetFlow

Now we take a look into the Exchange Net Flow. As we can see from the below chart, overall accumulation of Bitcoin remains relatively neutral, red spikes are a little bit more aggressive than green spikes showing us a possible stronger outflow than inflow. However, it is important that we look into the wallet cohorts on above graphs, to see if this strength on outflows is real. In this case it would be more encouraging to see bigger strength on bigger wallet cohorts to have more aggressive red spikes.

Metric 4 – Bitcoin — Net Unrealized Profit/Loss (NUPL)

Looking into this metrics, we can see if coins are being sold at a net profit or loss. The current graph is showing us that investors sentiment is currently in “anxiety” phase and possibly selling at losses. It is also important to note that current NUPL is showing that investors are holding through unrealized profit/loss. Overall, this shows a neutral sentiment amongst investors but for a bull market sentiment we would like to see this metric above 0.5 in which “euphoria” kicks in.

Conclusion

HTF 12H:

The middaily chart has so far shown a significant demand lying in the books under the 28000 USD support. While this may be a subject to change, BTC had already seen a violent crash, liquidations, and selling climax.

After crashing into the 25000 USD support, bitcoin has bounced off the lows and managed to reach the resistance of 32000 USD – one of the supports prior to the crash. However, the main resistance level is yet to be attempted.

The CTF Trailer has naturally adjusted downwards, creating the most relevant technical breakout level for the 12H time frame. For this, I consider it a relevant level for shorter term traders, and – once broken – leading to longer-term implications. The CTF Trailer Stop is at $33639 and it is the main invalidation level for the bears. As soon as bitcoin breaks above the threshold, the bulls re-gain control over the market with higher chances of following through to the upside.

Otherwise, bitcoin remains in the danger zone, unless a weekly close through the prior support of $28800 is broken through. A weekly close above that level would confirm that the levels lying under the support have been demanded as the market was buying into the lows. This could potentially trigger a recovery rally. However, it is too early to confirm that, before the week close.

MTF 4H:

The MTF chart has retraced off the 31000 USD highs, locally and bitcoin is not attempting to build a base at the low 29000s USD.

The CTF Trailer confirms the main flat resistance to breach for the short-term traders is $31359 for bitcoin bulls. If this level is reclaimed, there are higher chances of recording a follow-through to the upside. Until that happens, I would expect bitcoin to continue trading sideways for a moment, within a range defined by the volatility.

The Momentum Bands imply the volatility range for the next sessions to come. According to the Bandwidth, the 26800-32800 USD zone is the one bitcoin theoretically should find most likely to trade within. It may be assumed that the chances are bitcoin would revisit the lows of 26800 USD at one point, and it would still be within the “healthy” projected volatility, without further consequence to the trend or prices.

A clean break outside the Low Band or the High Band may lead to a volatility breakout, if there is a higher time frame close through either of the boundaries given for the range. Such a volatility breakout would bring higher chances of BTC to continue to trade in the direction of the breakout.

LTF 1H:

The hourly chart suggests a local failure to break outside the bullish pennant pattern through the 31000 USD resistance. While this is not decisive, it would have been good-to-have for the bulls.

The failure to break outside the pattern to the upside raises questions of the bulls’ persistence and it may seem that bitcoin is not yet ready for the push and follow-through to the upside, against the bullish favors.

Prior to the pennant pattern, there was an instance of inverse head and shoulders pattern, where the head is the very trough level, with both of the shoulders marking lows around 28000 USD. A clean break back below the 28000 USD is a clean invalidation and a failure to the head and shoulders breakout, which led later to the failed pennant.

At the same time, the downwards trend line would be broken back below a key threshold level – the support of 28000 USD. It is worth noting that failed patterns tend to perform better in the opposite direction than anticipated based on the pattern itself. A breakout failure, hence, may lead to aggressive and violent move against the pattern traders. For this reason, it is suggested to consider tight & well-defined protective stops and reasonable money management.

The BWAP resistance block is formed at 29.8-30.2k USD zone, based on the price and volume factors. A clean break above the region potentially may lead to upside acceleration. Otherwise, bitcoin may search for lower price targets.

Overall, the BPRO Level Lines show resistances at:

40034
37859
35499
33403
29413

These levels could be anticipated to serve as level-to-level references. In other words, when one level is breached, the next one in the direction of the movement can be expected to act as the next “magnet”

FEAR/GREED INDEX:

The panic state seems to be at its climax levels.

While the fear/greed index is not a timing indicator, and should not be expected to be such, it is worth nothing the fear extremity has now reached 9 points on the scale. This is the first instance of such seens since the very bottom of the COVID crash in March 2020, or the bottom of the 2018 bear market. Of course, the past data is never a guarantee of future performance, yet, it is still worth accounting for the amount of irrationality in the market right now – rarely ever seen.

The contrarian traders may consider current levels of bitcoin to be “extremely cheap”, accounting for the past fear/greed index readings at the market troughs in the past, within the bull market cycle.

As traders, we all undergo emotional processes and perception biases, which distort our reality reading skills, due to cognitive biases – faulty reasoning, human errors, and emotional biases – driven by fear and greed. Regardless of the type of the bias, every time such a bias can lead to a mistaken conclusion regarding the market performance and cause irrational decisions.

Due to the saliency or representativeness bias, traders tend to believe that the trends last forever. If the market had been trending downwards, the fear climax comes with the greatest deal of traders believing it would continue this way forever. An inverse case may be explained for the upside trends, leading to irrational exuberance and excessive spending at the market peaks in euphoria.

Statistically speaking, the longer the downwards trend lasts, the lower the chances for the downwisde continuation, because, as the theory of runs explains, the probability decreases sharply the run of many losses will be sustained. Again, an inverse case may be applied for the upwards trend instances.

Finally, this thorough explanation is to serve traders’ rationale and enhance logical analysis and reading of the market, so one can have higher chances of winning and benefiting from it.

I hope this helps. God bless all.

P.S. If missed yesterday’s emergency webinar regarding BTC, LUNA, UST and market analysis, catch up below.

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