Dear Subscribers,
The last two weeks have been quiet on the bitcoin price front, yet have included important developments on the macro side, as well as in DeFi.
In this Uncharted:
We explore the calm before the storm in bitcoin price: Will the spike in volatility we are moving towards be to the upside or to the downside?
We analyze our moving views in terms of an upcoming altcoin season and what this means for ethereum in particular. Will we see renewed strength in ETHBTC?
The Curve Finance exploit was a significant development in the ethereum DeFi ecosystem that occurred since the last Uncharted. We zoom into this issue and provide our view on its underlying token, CRV, which was hit hard. Should we still expect a liquidation cascade as the “final hit” on this major DEX?
Let’s dive in!
State of the System
Let’s pick up where we left off last time in the Uncharted 44’s outlook on July 28th:
“Bitcoin is once again ranging sub-30k and the leg towards $35k seems further off. Within the next couple of weeks, we will keep a close eye on our signals and share the insights in our compasses: If the State of the System moves into bearish territory, we can expect to fall back into a lower range for a short period. If we stay in the bullish quadrant, however, we should see a recovery back above $30k in the next 2 weeks.
As both bullish and bearish narratives quiet down, we open ourselves up for surprises, and given the ever growing interest by institutions and countries with weaker currencies in bitcoin, we bet the next surprise is upward.”
A bullish State of the System would have seen bitcoin go higher, while a bearish one would have driven bitcoin back into a lower range. And what happened since the last Uncharted? Our State of the System metric (figure 1) went into neutral. This goes hand in hand with the continued $28.6k to $30k we have been experiencing.
Another thing that has stayed the same since our last publication is the pivotal nature of the $29.5k level. Notice in figure 2 how liquidity begins to build below and above (horizontal bars to the right). This means that if the price manages to hold over 29.5k, the price can continue to push higher. On the other hand, if we stay below $29.5k the neutral to bearish short-term structure remains intact. A hold over $29.5k would invalidate last week’s short-term bearish trend. We need to hold over 29.7k to turn the trend bullish.
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