My Views on Bitcoin’s Future— Bear and Bull case for Cryptocurrency
ALL you need to know about 2022 Bitcoin fundamental analysis and Technical Analysis
Bitcoin Fundamental & Technical Analysis - 2022
1.Bitcoin Macro-economic Outlook 2022
2.Fundamentals Has NOT changed !!!
3.Bitcoin Technical analysis — Current Price Movements
4.Price Targets for BTC — Bull case and Bear case
5.Things to look out for in 3Q, 4Q22
6.Conclusion & StrategyBitcoin Macro-economic Outlook 2022
Bitcoin and US Equities are increasingly correlated in the past year, the current correlation between NASDAQ and BTC had reached 0.9. People are not considering Bitcoin as an inflation hedge or safe haven asset, instead Bitcoin is priced as a risk-on asset along with the other Tech stocks. The Market is currently valuing BTC as a Tech stock, which is heavily impacted by the recession fears and rate hikes by the FED.
Along with the DXY spiking up, reaching its 20-year high, the market is shifting to a risk-off investing environment. BTC had fallen 74% from all-time high and had been moving sideways for the past week.
Fundamentals Has NOT changed !!!
While the price of Bitcoin took a big hit, fundamentals of Bitcoin is continuously improving.
Looking at the number of active addresses across the years. Although it is not at all time high currently, but the number of active addresses is in an upward trend. Indicating an increase in adoption of Bitcoin.
Exchange net position change is now looking at near COVID crash levels to around -150k outflows/mth. This indicates people are buying and buying from the exchange, but not selling BTC in the exchanges. Or this is just an indication that people are avoiding CeFi exchanges to hold their Crypto, given the recent Celsius incident. [ go to my other story to find out what happened to Celsius ] So I would say this would not be an accurate indicator in the current bear cycle, but overall it indicates the growth and demand for DeFi and Crypto.
Despite the solid fundamentals, I remain cautious as this is the first time that Bitcoin is experiencing a true bear market or a potential recession. Things could get ugly really fast in Crypto.
Bitcoin Technical analysis — Current Price Movements
With the use of the bitcoin price charts and technical indicator, I was able to outline the range of Bitcoin prices. Once again I am bullish long term on Bitcoin, but given the poor macro-economic environment, it is hard to believe that Bitcoin will skyrocket in the next few months.
The chart formed a bear flag in May, so the breaking of the upwards channel was followed by a downward price movement. The price movement did follow the bear flag prediction and fall below the last cycle’s peak at $19,700. BTC price quickly rebound to $20,000 and had been consolidating around that level ever since.
Price Targets for BTC — Bull case and Bear case
This is the chart I plotted. I see $19,000 to $20,000 as an important resistance before the fall to $17,000–$18,000 regions. If the $19,000-$20,000 do not hold, I will be looking at $12,000 to $13,000 regions.
For long term investors looking to invest for a 5–10 years time frame, some would slowly add between the $12,000 and $20,000 zone. You could do DCA with reference to time frames or price levels, it really depends on what you want.
If price really break through the $12,000 resistance, I would be looking at $10,000 and at worst $6,500 levels for further support.
$12,000 is going to be my target based on the below technical analysis. Bitcoin prices previously keeps getting rejected off the blue trend line, then ultimately gets rejected by the 200 day SMA (purple).
The analysis I am using is called a measured move where we assume the previous move have the same magnitude in dollar terms as the future move. We see a -$35,800 move from previous highs to lows. Then we form the bear flag pattern in red and price breaks down after losing the upwards channel support. If we expect the same downside of -$35,800, we will get to the $12,000 level.
For short term traders, I think it’s best to control the size of your position in this kind of uncertainty. I think we are due for a bounce to at least the $23,000 resistance, if we were to break out, I would be looking at the $30,000 — $33,000 levels at best. If we get rejected off the $23,000 level and loses the $19,000-$20,000 liquidity zone, we will be looking at the $12,000 levels. The $12,000 level is a middle term target for me, I would see equities and Bitcoin to have a relief rally in the coming weeks or months. I think it’s best to trade the pullback from a resistance (red line) or to trade the retest of a support (green line).
The Bitcoin dominance is described as the ratio between the market cap of Bitcoin to the rest of the cryptocurrency markets. It is a good indicator for the strength of Bitcoin compared to Alts. Similar to previous bear markets, Bitcoin will most probably be stronger than the Alts. I am anticipating a breakout for Bitcoin dominance in the near term, thus I will be mainly holding Bitcoin in my long term portfolio.
Things to look out for in 3Q, 4Q22
The obvious thing to look out for is the FED’s attitude towards further rate hikes and inflation data, since Crypto is now following equities and the risk-on and risk-off play in the market.
The market is mostly pricing in a 75 bps rate hike in the coming meeting.
CPI data and employment data would be a key indicator of the wider economic environment. The current market is reacting to “good news” as if they were “bad news”, meaning a low unemployment would result in more room for aggressive rate hikes, this would be detrimental to the Equities and Crypto Market.
Another things is the liquidation data. My advice would be keeping a close eye on whale wallets and look for potential liquidations. As mentioned in my previous article, there are huge liquidations coming in at multiple price points. These liquidations will drive price to a deeply oversold level and that’s where you want to buy the dip or perhaps short the coins they hold before their liquidation. The Crypto market tend to favor the side with less leverage since they can squeeze the side with leverage.
The lesson I learnt from the recent crash is the importance of having a cold wallet. Multiple CeFi crypto lenders and Venture Capitals such as Celsius and 3AC are facing liquidations and pausing withdrawals, so I would suggest using a cold wallet if you really want to invest now. Again, “not your keys, not your coins”.
Conclusion & Strategy
I remain bullish on Bitcoin in the long term, but at the same time am cautious of the short term macro risks and CeFi collapses. For short term plays, I would long Bitcoin once it bounce off the $20,000 support on the retest or shorting once it is rejected by the $23,000 or $25,000 resistance. DCA is my current strategy for my long term position, I would start to buy slowly below the $20,000 area. I am spread my money into multiple portions and buy at different times, NOT going ALL IN.
The bear market could potentially last for a year or two, start now to learn more about the Crypto market. FOLLOW ME on Medium and Twitter for more Crypto content and Bitcoin technical analysis to prepare yourself for the next BULL RUN !!!
Good luck and be safe !
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FOLLOW me on Twitter : https://twitter.com/tvstsang
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Go see my latest story on Bitcoin bottom indicators : https://medium.com/@tvstsang/best-bitcoin-fundamental-technical-analysis-in-2022-bear-and-bull-case-for-cryptocurrency-c72cdfbecddc
Go see my story on what happened to Celsius and how Alameda Research played a role in it. : https://medium.com/@tvstsang/celsius-network-crash-what-happened-to-celsius-network-adc363387c21
