In-house indicators say recent Bitcoin (BTC) weakness could be attributed to continued selling by miners and whales. In our view, these groups are going to sell themselves dry, creating less supply when/if Bitcoin (BTC) turns up.
Another reason for decline today might be tightening financial conditions in the global monetary system. In English, that could mean a smaller supply of speculative money available to flow into crypto. If that is the case, it would likely protract this annoying consolidation and/or bleed lower.
Looking at Bitcoin (BTC) on BitMEX (XBT), the recent decline continues to be an annoying distraction. Bleeds lower like this can occur right before a bigger move higher. There is some support below $3,700 (Figure 1). A drop below a Gann point at $3,600 could be bad.
This decline is testing our patience for sure.
One thing that is working in favor of Bitcoin (BTC) is symmetry. We noticed that the oppressively annoying range in 2018 that preceded the Q4 collapse lasted roughly 89 days. At present, the current range has lasted roughly the same amount of time (Figure 3). Here, technical voodoo may work in favor of Bitcoin (BTC) bulls, as 89 is a number in the Fibonacci series.
Markets love symmetry, so this read could be meaningful. In 2018, it was an 89-day countdown to a crash. In 2019, it could be an 89-day countdown to a melt up.
We examined the Ethereum (ETH) technical outlook. Support for Ethereum (ETH) on BitMEX is between $125 and $115 (Figure 3). The bottom Bollinger Band seems particularly important at $115. If $115 doesn’t hold, it could be bad. If $115 holds in a draft lower, that could be good.
On the superstitions front, the New Moon is March 6. Figure 4 shows that New Moon’s since November have been major inflection points in Ethereum (ETH). Several new moons seem to have been associated big moves down.
The last new moon was a bear trap and caught people as Ethereum (ETH) ripped. For what it’s worth, it seems like whatever trend exists going into the New Moon reverses itself.
Bottom Line: Declines like these are “designed” to discourage people and stop people out. To us, that just means less supply and more potential FOMO buyers in the event of a big sudden turn-up. We continue to favor the view that a massive gap move higher is coming, and it could pay to HODL. Crypto could blow up if support doesn’t hold, but what else is new about that. We’ve been living with that fear for 89 days.
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