Bitcoin returns to underlying bull trend
The downside of cross-asset analysis was shown this week. Broader studies remained bearish stocks, suggesting that crypto could see an extension of the correction we were in.
Macro vs technical
The downside of cross-asset analysis was shown this week. Broader studies remained bearish on stocks, suggesting crypto could see an extension of its correction. That was not the case, with an aggressive reversal led by bitcoin. Although the banking crisis seems to have calmed down, for now we are waiting to see if it affects the Federal Reserve’s walking path this week (it did not deter the ECB from raising interest rates by another 50bps). Bond markets currently believe that is more likely and are even pricing cuts again this year. Regardless, crypto appears to have entered the next phase of the underlying bull market.
Ethereum vs Bitcoin
My studies have been wrong here. They suggested that we had held range support and could extend to range resistance. While we saw some of that process, the spread has collapsed back through the triangle declines. A reversal back to that area is needed to suggest a false breakout. Otherwise, we seem to be in a new dynamic with bitcoin that will give better results in the coming weeks.
Ethereum
We did not see the extension of the correction phase expected this week, reversal from the 117-day move, the break back through 1520/1550 confirms that the correction was over. We now appear to be moving into the long-term bullish outlook. As with bitcoin, pullbacks should be choppy, corrective and limited, with 1610-1550 support. A decline there and then 1370 would nullify the current bullish outlook.
From a longer-term perspective, the decline from the 2021 high of 4866 completed a bear cycle of 880 in June 2022. Now the short-term correction appears to be over, we should see an extension of last year’s reversal up to test the 2020 reaction high and then towards 2450 long-term goal.
Bitcoin
The short-term studies suggested an extension this week to the 19,215 (Fibonacci) to 18,100 (wave 1 highs and pivot region from 2022) support region to complete wave C in the correction phase. Despite a risk-off move in the broader markets, bitcoin reversed sharply from its 117-day moving average, through 21,600-22,000, to confirm that the correction was over.
We now appear to be in a more dynamic trend phase within the long-term bullish outlook. As such, pullbacks should now be choppy, corrective and limited. Support in this regard is seen in the 24,500-22,700 region. A decline through it would be a warning sign that we have seen a false upside breakout, while a return through the 19,578 lows would invalidate the bullish view.
From a longer-term perspective, the bear cycle completed from last year’s 2021 highs of 15,574. We now appear to be in the next bull phase after the recent short-term correction, targeting 33,000.
Robin is a global market veteran, with over 30 years of experience on the sell and buy side, as a strategist and trader. He now provides strategic trading and investment advice to hedge funds, family offices, HNW individuals and trading desks worldwide.
Image credit: depositphotos.com
(The commentary in the article above does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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