🧘♂️ALERT: What's Next For Bitcoin?
Our Full Technical Analysis
It’s been a very volatile day for Bitcoin.
The millionaire dollar question becomes: why is this happening?
There’s no clear answer but we can point to a few factors: Chair Jerome Powell’s powerful reinforcement of plans to curb inflation in this week’s FOMC Meetings, geopolitical tensions, and renewed coronavirus fears have created a melting pot of factors to contribute to nervousness.
BTC Technical Analysis
Breaking Down the Events of Black Thursday
The Latest on FTX and the CFTC
⏰ Top Headlines
🧲 The Power of the Magnet
Macro Structure: We’ve been firm in our bearish bias, with every bounce, despite most analysts calling wavering. We are now at a crucial point.
Key Support: $36k which we have been calling since April.
Key Resistance: 30 Day Moving Average and the $40k Psychological level.
Looking Forward: Pay attention to the 7 Day Moving Average and the daily close. A daily close below the $36k level will suggest the support is unlikely to hold. If the 7 Day Moving Average goes below the $36k level then we can assume the support is gone. Friday will be an important day to watch. Less likely to see big moves on a Saturday or Sunday.
Macro Structure: On the weekly things aren’t quite as bad, the structure is neutral-bearish rather than full-blown bearish.
Key Support: 100 Week Moving Average.
Key Resistance: 30 Week Moving Average.
Looking Forward: If we lose $36k, we are likely to see a test between $32 - $30k. Really important to hold the 100 Week Moving Average. What might happen is that we see a slight deviation from the 100 Week Moving Average where the price goes down to $30k, chops around there for a little while, and then goes back up. Note since December 2018 we have not seen a bearish crossover of the 30 and 100-Week Moving Averages.
📉 Black Thursday
The ongoing debate of crypto’s correlation with conventional markets may be far from over, but when the Dow suffers the worst trading day since 2020, there’s enough pain to go around for everyone.
Bitcoin dropped significantly yesterday, sharply contrasting a new hope provided on May the 4th when price jumped to briefly touch the $40,000 level before rolling over.
Traditional markets didn’t fare well at all. The Dow Jones Industrial Average lost over 1,000 points while the Nasdaq closed with losses at nearly 5%. This marks the worst drop either has experienced in a single day since 2020.
Some took advantage of falling BTC prices. The Luna Foundation Guard reported purchasing approximately $1.5 billion Bitcoins to add to their reserves, though the purchase may have been made before the BTC dump.
The rate hike announced by the Fed on Wednesday played a part in worsening conditions across most markets. Even though the increase didn’t exceed most expectations, the combination of war in Ukraine, China’s lock-down status and Russia’s oil policy formed a perfect storm for contracting market conditions.
Downturns happen in every market. The path to the top is never a straight line. Focus on fundamentals and strengthen your resolve. You can’t appreciate the tops without experiencing the bottoms.
👴 Sayonara to the Middle-Men
The House Agricultural Committee, which oversees the Commodity Futures Trading Commission (CFTC) has scheduled a hearing for May 12th titled “Changing Market Roles: The FTX Proposal & Trends in New Clearinghouse Model.” The proposal seeks to offer crypto derivatives directly to users, similar to the international FTX model.
This new model would differ from the current model (used by CME) by eliminating futures commission merchants, which typically handle the clearing of traditional futures.
According to Brett Harrison, FTX.US president, “the most critical piece of the application was going through the actual margin model. Very few new margin models have been approved in the history of the CFTC.”
The new margin system would update every 10 seconds, differing from the 24-hour window that is the current standard.
It would allow the integration of spot & futures portfolios, allowing traders in the derivatives market to use their spot holding as collateral, permitting US residents to put more of their portfolio to use (already applied on the international exchange).
Harrison is trying to sell this new system as user protection from cascading liquidations since the market can change dramatically in 24 hours.
Although the proposal is directed at crypto, the end goal is to use this model in traditional futures also.
Committee chairman, David Scott (D-GA) showed his disdain for the proposal at a previous meeting, saying he “is very concerned about a proposal pending at the CFTC by a cryptocurrency exchange that is seeking approval to operate a new and untested system of clearing derivatives trades.” In response, Rostin Benham, the chair of the CFTC, assured lawmakers that his agency had been reviewing the proposal cautiously, deliberately, and patiently. A witness list has not yet been provided.
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