July 30, 2021
Cryptocurrencies: Special Reports
It has been one hell of a week for the cryptocurrency market. Sentiment has quickly changed from 50/50 bullish vs. bearish to almost fully bullish in just the last 10 days, and this is indicative of the significance that non-technical factors can have in the price action of cryptos. On the other hand, technical analysis of recent market action spells out clear trade opportunities that investor sentiment may ignore.
Similarly to the S&P 500 (SPY) being commonly used as a benchmark for the stock market, Bitcoin (BTC) has and continues to be the best gauge for determining the overall sentiment and activity of the cryptocurrency market. During cycle changes, Bitcoin has historically moved first and set the pace for the remainder of the market (with the occasional exception of Ethereum being the first mover).
Likely being catalyzed by The B Word virtual conference featuring Jack Dorsey, Elon Musk and Cathie Wood, Bitcoin made a significant move starting on 7/21 from $29,500 to a daily close around $32,150. This one day move of +9% was built off of the largest support level ever recorded by Binance’s exchange order book at $30,000. It wouldn’t be a surprise to see a sudden drop in price as Bitcoin establishes strength at higher levels, but you can expect BTC to stay above the 30k support area for the foreseeable future.
So now you’re seeing this chart of Bitcoin’s performance up to 7/30 and wondering when would have been the right time to buy… I mean just look, BTC had 8 green days in a row (the longest streak since October, 2015) and the most obvious buying opportunity appears to be when price gets back over the 50-dma around $34,200.
However, using our RealMotion indicator you would have seen a buying opportunity several days before Bitcoin’s price broke through its 50-dma.
The big move on 7/21 that I mentioned earlier shows that BTC was able to close over its 10-dma after over a week underneath.
Now, looking at RealMotion we can see a far more significant move as the indicator shows a reversal right at RM’s 200-dma and the lower bollinger band, jumping above both moving averages and stretching all the way to the upper bollinger. This rapid change in momentum from a distribution phase to bullish could have shown you a buying opportunity 3 full days before Bitcoin’s price action would have given you a buy signal.
Currently BTC is sitting right above $41,000, with market sentiment once again being a battle between the bears expecting a crash back down to $30,000, and the bulls hoping for a move over $41,000 with the next level to beat around $43,500.
Expect the altcoin market (any cryptocurrency that is not Bitcoin) to continue to follow Bitcoin’s trend, whichever way it decides to move over this weekend.