Bitcoin & Crypto Market Update 01-04-2020

Bitcoin collapses amidst global uncertainty


What a difference a few candles can make. Last week at this time I was resolutely bullish given Bitcoin's weekly support of $9,500 was intact and was successfully re-tested. However, the day after the last update was posted, Bitcoin did something I wasn't expecting and immediately dropped a few hundred dollars to re-test $9,500 again; the fact this was re-tested so shortly after the successful weekly re-test made me reconsider my bias as I posted on Twitter. There's a lot of reasons for my bias changing so shortly after the weekly close but Crypto Cred details many of them far more eloquently than I can so give this a read if you're curious: Diary of an offside bull.

Shortly after that after looking at the crypto market beyond Bitcoin I became at least short term bearish.

Add in the global markets starting to correct significantly with the spread of Coronavirus and it became fairly obvious that $9,500 was not going to hold. The key takeaway here is that the outlook for a market, especially one as volatile with crypto, can change at any time. So although I do my best to provide reasonable outlooks in these updates the simple nature of them being on a weekly basis means that something posted one day can become completely incorrect days or even hours afterwards. Please don't follow these charts blindly and at the very least make sure to follow me on Twitter to see if I've said anything that invalidates what is posted here.


The last piece of context I want to expand on further before jumping into charts is the global markets. It's unclear at this time whether the stock market dumps are a knee-jerk reaction to the spread of coronavirus or if it's only the tip of the iceberg. If it's the latter, I expect at least another 10% drop across global markets, if not more, and I want to be very clear about the impact I expect this to have on crypto markets. I'm fundamentally a Bitcoin advocate but it's not at the point where it can be deemed a safe haven in any way - in other words, no matter how much I like Bitcoin and how much I may like it at a given level, if the market continues to drop I expect Bitcoin to follow suit no matter what TA may say.


Bitcoin

Bitcoin Monthly

The monthly closed yesterday, providing another valuable data point to work with; unfortunately, it's not a bullish one. We can see there was a clear rejection at the former monthly high and monthly resistance and Bitcoin proceeded to close below the monthly level it previously smashed below making it look like a pretty ugly deviation. I don't generally trade off the monthly chart but it does make it hard to entertain bullish scenarios in the coming months.

Bitcoin Weekly

On the weekly chart the $9,500 level collapsed, cut through the mid-range and went straight to the next level down at the $8,500 support which lines up with the 20 week moving average. This level is technically very strong and an area where I had planned to heavily, heavily buy the dip if we ever did revisit it given the historical significance of this area and the 20 week moving average. Well, here we are with Bitcoin sitting right on it and although I have added a bit of spot, I'm not adding anywhere near the amount I was planning. Why?


For starters, the reaction to this level. A level in itself is only one part of the equation; how price interacts with it is another. As you can see, there's hardly any wick on this weekly candle which means price hit the level, but didn't react much to it which is far from ideal. Furthermore, funding remains in favor of bears despite the multi-day sell-off, price blew straight through the mid-range, the 200 daily moving average was lost and the global markets look poised to potentially experience further declines. What we have is a good local level in the context of concerning price action and global uncertainty. Given that, the only position I'm willing to take is adding a bit of spot to my long-term bags and waiting for uncertainty to resolve.


Logically, I can't short this level; if it's lost I might look for a quick short but the high-$7,000's look very attractive, especially with the potential to set up a massive inverted head and shoulders with a bounce from the weekly trendline. On the flip side, I can't make a strong case for longing given the weak reaction and market uncertainty, and even if I were to long I couldn't confidently expect much beyond $8,750-9,000 given these conditions. In fact, a weak bounce from this level and failure to reclaim $9,500 would look horrendously bearish. The highest R/R situation to me right now is buying dips in the vicinity of $7,700-8,100 if it gets there, but I'll be watching for signs of strength that would give me reason to jump in at the current level.


Support: Right here at the $8,500 weekly level and 20 week moving average

Resistance: Mid-range at $8,750ish; beyond that there's a number of daily, weekly and monthly resistances from $9,100-9,500


Ethereum

The $200-230 region is a level I'd been watching to buy the dip on Ethereum when it started to stall at overhead resistance. I didn't expect it to get there in one candle, but here we are. I bought a bit of ETH at $210 with plans to hold onto it for the foreseeable future as the strength Ethereum showed in the past few months has been incredible to watch. I intend to add on any dips down to $190-195 and the 21 week EMA which I'm expecting given overall market weakness but the safest play right now is to for a reclaim of $230 to long ETH. Losing $190 would be my level of invalidation for a bullish bias.


Support: $200-210

Resistance: $230


Crypto Market excluding Bitcoin

The crypto market (excl. BTC) is hanging on but seemingly by a thread. A close below $80B would pave the road for another 15-20% in my opinion and therefore I'm trading altcoins cautiously. Ideally I'd like to see $90B reclaimed before entertaining any swing trades, though there are a few alts that look stronger than others.


Summary


Bitcoin lost $9,500 on a weekly basis and dumped straight into the next support at $8,500 and the 20 week moving average. Thus far the reaction has been weak and the global markets continue to be uncertain so the best play here is to be cautious. My overall bias is neutral - price is at a strong technical level but external factors cast doubt on that, as does price action in this vicinity. If Bitcoin does drop further I like the $7,700-8,100 region. I'll be watching for strength from the current level but a weak move up and failure to reclaim $9,500 would look fairly grim.


Despite the generally sober market outlook, I am a buyer of Ethereum in this region and down to $190. Aside from that I'm pretty hesitant to jump into any long-term altcoin plays until the broader market shows some signs of strength.


As always, I'm trading BTC on Bybit which remains the undisputed best option for trading Bitcoin with leverage in my opinion. They are currently offering up to $90 bonus for new sign-ups so if you want to learn more you can also read my full review of Bybit.


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