Cryptocurrency
Trading Bitcoin: Bear Flag or Recovery?
Bear Flag or Recovery? Bear flag or recovery: Today, Bitcoin has undergone a price flip to a green 1 on the daily sequential indicator. Additionally, Bitcoin is consolidating below the 200MA (orange) which is a bearish macro indication. Until price can break above this resistance level, a further decline to $7.2k is probable. However, there […]
Bear Flag or Recovery?
Bear flag or recovery: Today, Bitcoin has undergone a price flip to a green 1 on the daily sequential indicator. Additionally, Bitcoin is consolidating below the 200MA (orange) which is a bearish macro indication. Until price can break above this resistance level, a further decline to $7.2k is probable. However, there are some bullish signals which we will highlight later in the article.
4 Hour
While the 4 hour chart reached a red 2, price is still holding support above the 50MA (grey). There’s a chance price will rally to the 128MA (green) at $8.8k before a rejection. However, a drop to $7.2k seems more likely at this point. In order to remain bullish on the 4 hour chart, price must remain above the 50MA support level at $8.2k.
BitMEX Funding and Premium Index
Notably, one bullish signal is coming from the BitMEX Funding and Premium Index seen in the chart above. The Funding and Premium Index is a counter indicator which has been fairly reliable for the past year. Notice that the Index was bearish prior to the drop which occurred last week. Now the index is bullish and signaling that a short term bottom may be in.
Source: Crypto Fear and Greed Index
Market Sentiment: Crypto Fear and Greed Index
The Crypto Fear and Greed Index is calculated by incorporating data from a variety of sources:
Volatility (25 %)
Market Momentum/Volume (25%)
Social Media (15%)
Surveys (15%)
Dominance (10%)
Trends (10%)
If you’d like to learn more about how the index is calculated visit Crypto Fear and Greed.
As the classic saying goes, ‘be greedy when others are fearful’. It is careless to place a long trade strictly on sentiment alone, nevertheless sentiment should be considered as a major factor. (Especially when dealing with the immaturity and experimental nature of the cryptocurrency market).
Bitfinex & Tether Lawsuit
A New York based legal firm is suing Tether and associated crypto exchange Bitfinex for defrauding investors, manipulating markets and concealing illicit proceeds. This was seen in a tweet from the firm’s founding partner Kyle Roche on Oct. 7. There has always been a grey area regarding whether Tether was responsible for affecting the 2017 bubble which led to exponential increases in the price of Bitcoin. The suit alleges that the asset (Tether) was not backed 1:1 with USD as they claimed. Essentially, Tether and Bitfinex are being suited because they are suspected of propping up the price of Bitcoin by printing hundreds of millions worth of Tether which was, in turn, not backed 1:1 with USD. The suit document filed on Oct 6. states that Tether “issued extraordinary amounts of unbacked USDT to manipulate cryptocurrency prices.”
“Because the market believed the lie that one USDT equaled one U.S. dollar, Bitfinex and Tether had the power to, and did, manipulate the market on an unprecedented scale to profit from boom-and-bust cycles they created.”
Tether and Bitfinex said the so-called claims are merely “baseless accusations” and they will vigorously defend themselves. The impact the lawsuit could have on Bitcoin and the crypto market as a whole is yet to be seen.
Conclusion
As price stays flat, not much has changed since yesterday’s analysis. Bitcoin is still trading below the daily 200MA (orange) which is acting as resistance. Until Bitcoin can breakout above this resistance level, it is likely that bearish momentum will lead to a bear flag, thus, moving price down to a target of $7.2k.