Bitcoin’s Approaching a Fork in the Road

September 29, 2022

Cryptocurrencies: Weekly Update


Stocks continued to breakdown further to start this week and have actually been underperforming relative to the cryptocurrency market. Both the S&P 500 and Bitcoin did close at new multi-year lows in the past 10 days, but while stocks have been continuing to make lower lows this week, we’ve actually seen most of the crypto market holding up and even some streaky altcoin breakouts.

Sentiment indicators such as the McClellan Oscillator hit all time lows for the major stock indices, and with a strong bounce in the latter half of the trading day on Wednesday we may be seeing the start of some mean reversion from oversold levels in the stock market. If a short-term rally does play out for stocks over the remainder of this week, it is likely to lift the crypto market along with it.

This sets up an interesting scenario for Bitcoin, which is currently coming up close to decision time on whether or not it is ready to break out of the long-term downtrend that has been intact since the all-time high late last year:


The downtrend also looks to be coinciding with the 50-day moving average, the clearest resistance level on price right now. One encouraging sign is that underlying momentum has actually now regained its own 50-day moving average and looks to have plenty more room to run. If Bitcoin does manage to breakout above the 50-dma/long-term trend then it is likely to see follow through to as high as the $21,500 level.

Conversely, if Bitcoin can’t break out in the short-term then we could see new closing lows and possibly even another 30-40% move down.


2022 has seen multiple periods of extended accumulation in the crypto market followed by sudden 30-40% crashes which we have been referring to as a stair stepping pattern, and with Bitcoin coming up to the end of this long-term wedge it is very likely to make another large step in October.

The current accumulation period for Bitcoin which has ranged between $18,460 and $24,440 for over 100-days is nearly as extended as the accumulation range from January to May. Feel free to trade the short-term swing on BTC, just be wary of entering any large positions until we see which way the coin goes when it bumps back into its long-term trend. Either way, Bitcoin looks ready for a big move in the near future.

Ethereum has also been range bound for the past month and a half, but in a downward channel. ETH bounced as it approached the bottom of the channel as well as support at $1,242 last week, but this upside may be limited.


Ethereum may look to have room to run to around its 50-day moving average on price, but momentum is bumping right into resistance at its own 200-day moving average according to the RealMotion indicator. Any real breakout here for ETH will need to take out the top of the current channel, otherwise a relapse to the $1,040 to $1,240 range is the next step down before potentially setting new lows.

Although ETH hasn’t been very impressive since the Merge on September 15th, there are other altcoins that have been breaking out independent of the rest of the market. Chainlink (LINK) is the #6 coin by price change over the past 7 days and also remains the only coin on our radar with a positive trend strength measured by TSI.


Our CryptoPulse Quant strategy actually signaled for an entry in LINK on Tuesday night, right before a wild day for the token. The news that caused a brief pop in Chainlinks price was that the cross-border payments network SWIFT is working with Chainlink on a proof of concept in which the international banking network will utilize blockchain technology as it moves closer to a digital asset future.


We’ve been saying for a while that LINK is one of the few cryptocurrencies that is almost guaranteed to survive this extended bear market, and today’s update from the project is perfect evidence as to why. All of that aside, LINK is stuck in a tight range between $6.64 and $8.09 but the token has reclaimed its 50-day moving average for the time being. As this is the 3rd attempt to break the top of this range we may actually see an accelerated rally to $9.33 resistance.

There is plenty of room for LINK to run up to as high as $12.68, but in the event that it loses support of its 50-dma then we’re likely to see a sweep back down to $6.64.

One last thing to keep an eye out for this week is the chart of the Total Cryptocurrency Market Capitalization, which is sitting ever so slightly above its key 200-week moving average after closing below it last week for the first time since early 2020.


Our RealMotion indicator isn’t looking all too promising at the moment, showing momentum entering a Bearish phase with a cross of the 50-week moving average below the 200-wma last week. Two consecutive weekly closes below the 200-wma on price would be a really bad sign for the crypto market, so watch closely as the market closes the week this Sunday night.