The Bitcoin price is hovering just below the falling trend line, forming a bullish divergence while a significant signal has been flashed by one of the most important indicators. Sheldon took us through this and discussed altcoins that appear to be on the verge of breaking out.
- Bitcoin: Key levels, decreasing volume and dominance.
- Leverage, stock market, DXY, and inflation.
- Buying opportunity for investors and altcoins update.
Bitcoin: Key levels, decreasing volume and dominance
Bitcoin has tested the 200-day moving average (MA), but no candle has closed below it, which is a positive sign. The 200-day MA is a critical high time frame support that needs to be held, and it’s encouraging to see a comeback after testing.
Also note that when Bitcoin falls below the 200-day MA range, massive green volume bars arise almost instantly. This indicates that whales and major corporations are accumulating at discount rates.
The current trend is also positive because volume drops as prices fall, signalling that bears are becoming exhausted and that a bullish response is expected.
On the weekly time frame, another bullish indicator is in action with higher highs on the daily candles and lower lows on the relative strength index (RSI). The two previous times this year the RSI was at the bottom, Bitcoin was at $29k and $10k, igniting rallies.
Bitcoin’s dominance is starting to break out on the daily time frame after weeks of decline. This normally occurs when Bitcoin is set to ride independently before the market develops enough confidence and profits pour into altcoins.
Leverage, stock market, DXY, and inflation
According to CryptoQuant’s data, the estimated leverage ratio for all Bitcoin exchanges fell from 0.21 to 0.09 as a result of the correction, but is now on the climb, up to 0.18 at the time of writing (midday CAT 13 December 2021). The present level is the same as Bitcoin’s top price before the May crash. However, due to the Bitcoin futures ETF, there will naturally be more leverage in the market.
Despite recent drawdowns, the stock market is virtually back to all-time highs. This seems absurd and appears engineered given that there has been no accumulation movement and inflation is at its highest level in 40 years.
The US dollar index (DXY), which gauges the strength of the dollar in comparison to other assets, is expected to break out of a 4H trend, signalling a slow day for Bitcoin and digital assets in general.
Buying opportunity for investors
Solana, which is down 38% from its all-time high (ATH), is a good buy, as is Kusama, which has a strong fundamental and is down significantly from its all-time highs. LUNA is also a good buy in the $52 – $55 range. On longer time frames, Avalanche (AVAX), Fantom (FTM), Chainlink (LINK), Cardano (ADA), Render (RNDR), THORChain (RUNE), and Polkadot (DOT) are all showing excellent purchase opportunities. Investors are advised to use a dollar cost averaging strategy for all of them.
The market dynamics are reshaping at a breakneck pace with the advent of leverage derivatives and the combination of events in the traditional market. The bull market is still alive and well, but recovery will take some time. Bitcoin must hold $46,000 as support and establish a foothold over $53,000 before commencing another rally.