Good morning or afternoon depending on where in the world you reside.
Week in Crypto (Top 3 Events):
#1 – Baakt continues to make headlines and progress in launching their proprietary digital asset market place that will offer an institutional grade custody program combined with a fully regulated digital asset exchange and physically delivered futures on Bitcoin. Their partnerships with Starbucks, Microsoft as well as their relationship with Intercontinental Exchange (I.C.E), which operates traditional exchanges like the NYSE is a newsworthy event to follow in the coming months. In the past two weeks they have closed initial funding rounds and have raised over $180M in funding. This week they are on a hiring spree for core developers. Follow their twitter for the latest updates.
#2 – Jack Dorsey – CEO of Twitter – was recently on the Joe Rogan podcast promoting Bitcoin and digital assets as a revolutionary technology. He believes Bitcoin will become the world currency in our lifetimes as it was born on the internet and will become the currency of choice of the internet. Square continues to outperform on the stock market and allows for bitcoin payments to be sent and received via their app as well as fiat.
#3 – Dan Morehead – CEO of Pantera Digital has said recently despite the market sentiment in prices the fundamentals in the ecosystem have never been stronger. He believes all the innovation and infrastructure that is being built to accommodate institutional investments have calmed any doubts whether blockchain technology and Bitcoin is here to stay or not.
Despite the positive fundamentals what does the technical picture tell us?
BEARS – have been successful squashing any short-term rally attempts by the bulls. Selling pressure continues and evidence for this is when the 20 Daily EMA (Pink Trend Line ) fell below the 50 Daily SMA (Orange Trend Line ) on January 23rd. This development confirms that more bearish price action is likely and that any bull rally attempts will be met with big resistance in this zone. If bears are successful in pushing prices below the 200 Week MA noted around ($3,310) a likely retest of the December lows of $3,126 is very likely. We also feel that a double bounce is unlikely at this level and that a break below $3,000 could ensue panic selling. There is historical support from 2017 at $2,990, but we feel more probable support would be a drop to the 161.8% Fibonacci retracement to around $2,400. We feel there is enough of a risk/reward ratio to place a short entry if the bears are able to break below the 200 Weekly MA.
BULLS – bullish signs will not be evident until there is a high volume event that breaks above the 50 Day SMA as well as the top of the descending channel . We want to be conservative going long in this pronounced bear market and patience is the name of the game. Therefore, we are suggesting to wait to place any buy orders until Bitcoin breaks above the channel at or around $3,900 at the time of writing. We will update this entry price as the market develops and possibly to lower levels. The 200 Daily MA (Blue Trend Line ) is sitting around $5,500. Any asset class that breaks above its 200 Day MA is a very positive price action that should lead to a long-term positive sentiment and bullish trend direction. Until Bitcoin breaks above and confirms this trend line as the support we will maintain an overall bearish sentiment.
RSI – There is a positive divergence on the RSI daily timeframe but this doesn’t hold much weight. RSI confirms bearish momentum as it is well below 60.
Trade suggestion: We are not recommending any trades until there is more market clarity whether you are a bear or bull.