Attention: Powering Up
Uncharted 38
Dear subscribers,
If you have followed our Compasses since Uncharted 37, you may have noticed a stronger conviction regarding the markets and particularly bitcoin’s price action coming into the summer. In this new Uncharted, we take full advantage of the longer format to dissect the current price action even more. We'll explore the macro background, examine crucial bitcoin futures trading data, and discuss a few intriguing altcoins, even though the beginning of Altcoin Season remains hard to pin down.
Let’s dig in!
“Much of our trading comes down to a battle between our patience and our impulses.” – Steve Burns.
At a glance
State of the System
Bitcoin consolidates within the $27k-$29.5k range, with potential bullish movements toward $35k, pending liquidity and market catalysts.
Altcoin Season has not kicked off yet, as conditions outlined in Uncharted 37 are not yet met; bitcoin is currently driving the market with ethereum likely to take the lead in the next phase.
Macro Environment
The Fed raises interest rates by 25bps; a pause in rate hikes may be bullish for risk assets, with upcoming economic reports potentially catalyzing liquidity influx.
Liquidity decreases on weekends, possibly due to institutional involvement, creating barriers to entry and affecting market volatility.
Crypto's Course
Stablecoin liquidity and open interest decline, with fresh capital needed for the next leg up.
Heavier weighting in bitcoin is currently prudent, with high-beta altcoins offering attractive prospects once bitcoin starts moving. Some interesting high beta plays are mentioned in the “Zooming in” section.
Outlook
Based on moves in open interest of stablecoin-margined BTC contracts on Binance, CVD developments, and the current price action are setting the stage for this weekend’s move
Additionally, we share our expectations on the price level for the next Uncharted.
State of the System
In Uncharted 37, we anticipated that the bitcoin price would fluctuate within a +/- $1k range after touching the $27.9-$28k support, ultimately finding liquidity in the $27k area. The movements between $27.5k and $32k occurred as expected, but aggressive volatility on April 26th led to liquidations on both sides. The bitcoin price was approaching the $30k area when rumors of a massive sell-off involving Mt. Gox and the U.S. government's offloading of bitcoin holdings caused a nearly $2k retracement in under two hours, resulting in almost $200 million worth of liquidations.
Despite the recent setback, the mid-term outlook towards $35k remains largely unaltered, with the key question being the timing and driving force behind the anticipated move. We are still within the bullish quadrant (figure 1), albeit with fading positive momentum. To maintain a bullish stance, a daily close above the $29.3k area is desirable to enter the upper side of the range and beyond. The setup coming into the weekend today is very interesting, as we will see below. Another interesting perspective on the coming move is shared by
in its May 1st publication Ecoinometrics - Bitcoin’s price trend: is it a tsunami or just some small wave?Keep reading with a 7-day free trial
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