Bitcoin weekly: Bear flag rising
Overall the picture is the same as last week: stock markets remain strong, while bitcoin is trying to decide whether to bounce higher or not. Until there are clear signs of a reversal, beware of a bitcoin bull trap, eventually leading to a lower low.
Also watch the accompanying chart analysis on YouTube.
As expected, on Wednesday the FOMC cut US rates by 25 bps, down to 3.50-3.75%. At the press conference, chairman Powell came out not too hawkish, not too dovish. Stocks were initially up after the announcement, but then ended the week slightly down on renewed AI jitters. But let’s not overanalyze the situation: US stocks remain strong, with no signs of a long term top being in.
Bitcoin ended the week slightly down, as bulls and bears continue to duke it out after the breakdown four weeks ago. Permabulls are buying the dip on the one side, and on the other side bears are selling into the bounce after the breakdown. Which side is going to win? We’ll just have to wait and see.
On the daily bitcoin chart, a bear flag might be forming. This suggest a lower low in the weeks or months ahead is to expect, although the flag has not yet confirmed by breaking to the downside. Long term bitcoin support remains at $72-76k, and major resistance at $100k and $109k.
If bulls can push price back above $95k, the bounce can continue up to test $100k or even higher, as shorts get liquidated, and sellers FOMO back in. If that happens however, we should be extremely suspicous of a major bull trap, which risks eventually breaking down to lower lows in the months ahead.
As for bitcoin dominance, I’m changing the chart to exclude stablecoins. This gives a more accurate picture of bitcoin compared to altcoins, which is the fundamental dynamic we seek to understand. Even with stablecoins removed however, the picture remains mostly the same: bitcoin dominance has been confined to a narrow range over the past month. At some point it will make a sharp move, either up or down. But until it does, all we can conclude is that altseason stays on pause.
