All Good Things Come To Those Who Wait

Crypto Compass 34

“You may have to fight a battle more than once to win it.” ― Margaret Thatcher

• Bitcoin has been trading sideways between $31.25k and $29.64k. A range formation allows to re-establish bullish momentum and extend a bullish surge, as the Risk Signal remains at 0. Consolidations are typical in trending markets because they allow purchasers to catch their breath before resuming the bullish advance.

• BTC price is likelier to break above the $31.25k barrier, providing buyers with an excellent foundation to ascend toward the next resistance level of $33k, followed by $34.85k. Even if the price breaks below the $29.64K support level, traders can remain bullish until the buyers reach the 50% retracement level near $28.23k. In our view, anything above that represents an interesting opportunity to enter this pullback and accumulate BTC before the next leap.

Figure 1: Bitcoin Risk Signal is a proprietary signal that gauges the amount of risk of a major drawdown in Bitcoin price. A reading of 0 can be considered a sign of low risk of a major drawdown for bitcoin.

• Liquidity continues to lag, and volume has declined even further in the last three months, hitting its lowest level since 2020. However, reduced liquidity exacerbates swings to the upside and downside. This could have contributed to bitcoin's recent significant advance and its 83% year-to-date gain.

• There are glimmers of hope that hint at a brighter future, particularly if these spot ETFs are permitted. Looking at volume in derivatives markets, it has been rather consistent. In fact, it is markedly up in the second half of 2022 relative to spot volume (see our latest Uncharted for more details), signaling that the regulatory crackdown has significantly impacted the spot market.

Figure 2: BTC Liquidations (left) and Volume of all tracked coins in the cryptocurrency market (right).