Don’t Get Too Greedy On Bitcoin, Analyst Suggests, Here’s Why
04 Febbraio 2023 - 01:00AM
NEWSBTC
Bitcoin has experienced a significant trend change; the market
sentiment has also changed in 2023. Since breaking from
consolidation, Bitcoin’s momentum has shifted to the upside,
transitioning from a bear market to potentially the early stages of
a new bull market. Related Reading: Shiba Inu Whale Withdraws $60
Million In SHIB From Binance, Bullish? In a monthly newsletter,
veteran quant investor and the inventor of the Hash Ribbon
indicator, Charles Edwards, share essential industry updates,
significant trends, and technical and fundamental analysis related
to Bitcoin. A Momentum-Driven Shift, A New Regime For Bitcoin
According to Edwards, as prices become more attractive, the market
becomes saturated with long-term holders, those who do not intend
to sell until prices are significantly higher. For the analyst,
long-term holders recognize the value of the cryptocurrency and are
“price insensitive;” when the market reaches this stage,
exchange/broker order books become more illiquid as there are fewer
marginal sellers. As prices become more and more attractive, the
market becomes saturated with long-term holders, those who no
longer intend to sell until prices are substantially higher. In the
chart above, Edwards points out that bitcoin is becoming
increasingly illiquid, with an exponential increase in long-term
holders, who now represent 49% of the network, a new all-time high.
For Edwards, once a whiff of demand hits an illiquid order book,
deeply undervalued assets rocket up in a short-squeezed fashion.
The reason is that there are very few active sellers in the market;
buyers have no sellers to buy from. This results in bullish
momentum as the closest available sellers place orders. The Market
Leverage Ratio, a Capriole Investment measure of aggregate leverage
and positioning in the market used by Charles Edwards, suggests an
almost identical pattern occurred in January 2023 as in mid-2021
when Bitcoin entered a price discovery phase. The analyst wrote:
(…) “We saw the same long liquidation, capitulation and short
squeeze structure in mid-2021 as in January 2023. Both lasted 9.5
weeks. In crypto, we call this a “sell side liquidity crisis”.
According to Charles Edwards and Capriole Investment, this phase is
a significant turning point, the “beginning of a new regime.” It is
expected to have a positive 2023, with more significant returns
coming in 2024. Bitcoin Bear Market Bottom Confirmed? Bitcoin’s
Percent Addresses in Profit metric has bounced from a typical bear
market low of 50% to 70% to this date. The typical bear market
pattern shows a performance grind down in addresses in profit as
long-term holders see the value of their Bitcoin plummet. (…)
“Percent addresses in profit have bounced significantly from
50-70%, a structure which usually sees some profit taking, but also
marks a regime change”. Related Reading: This Lesser Known Altcoin
Blows Up 91% In The Last Week – Find Out Here In brief, Edwards and
Capriole Investments have identified confluences and several
factors for Bitcoin’s recent breakout and further upside price
action in the coming months: Optimal halving cycle timing where
Bitcoin typically bottoms (Q4 2022 and Q1 2023). Bitcoin cycle
drawdown has hit typical -80% levels. In November/December,
Sentiment was at its worst, and market hedging was at its highest
on record. Gold strength in November/December as a lead for Bitcoin
in January onward. More in our December Newsletter. A likely Fed
rate pause and change of policy in 2023. All of the above suggests
that the market is at the early stages of a new Bitcoin bull market
regime. Bitcoin is currently trading at $23.450. It’s 2.1% down in
the last 24 hours despite the favorable news after the Federal
Reserve (Fed) raised the basis points by 0.25%. Bitcoin still has
managed to profit in the seven days, up 1.8%. Bitcoin’s price
action suggests a pullback to the support line for a further
counterattack to regain the $24.500 level. Featured Image
from Unsplash, chart From TradingView.
Grafico Azioni Bitcoin (COIN:BTCUSD)
Storico
Da Nov 2023 a Dic 2023
Grafico Azioni Bitcoin (COIN:BTCUSD)
Storico
Da Dic 2022 a Dic 2023