Technical Analysis is about viewing the historical data of charts, along with valuable visual indicators, to determine the likely future value of an asset.
Fundamental Analysis is the news/real-world-based events, sense of well-being in the world, positives and fears over market performance and other data that give a person perspective regarding how assets might perform regardless of their technical patterns.
With TA, we tend to see a 'numbers don't like' approach to information, but there is such an incredibly wide permission for interpretation, that in truth there is something in the data that can support just about any future result. With FA, we have to decipher the difference between fake news, promotional noise, and real world factors that can affect real bottom-line value and people's reactions to such things.
Let's break the TA down a bit more.
Rumors of wars can cause fear, and this can translate to economic fears. It involves people's sense of safety, physical uncertainty, but also national security, and also the impact on businesses and flows of money. It can involve supply chain, access and many factors. Critical weather events, or acts of God as they might say, can bring devastation to communities and their businesses, often reflecting such concerns and impact at market. Announcements about interest rates, housing markets, inflation, economic downturns, over spending... all of these things impact the market. Then, there are specifics to each field. Something bad happens to a company in the tech field, it may be felt across all tech stocks, etc. Fears of regulation, for instance, are a big FA to pay attention to in crypto.
Usually, we can see some very strong correlations between TA and FA, and once events have already passed, we can look back and see real world issues impacting markets in ways that happen to align with technical data analysis. It is fascinating.
So now, let me get to the purpose behind writing this post.
Take a look at this long-span TA chart I made for Bitcoin.
This shows you roughly from when Bitcoin broke $10,000 this past time around, up to its ATH above $60,000.
Now, take a look at these trends where it essentially dipped hard before forming the next spike.
These lines I drew in yellow represent the length of time that concerns me the most about how long it took before Bitcoin built up enough interest and momentum to start mooning again. I could easily do the same thing zoomed in heavily just to the left side of the chart, but it pales in comparison to the massive mountains since December.
My purpose in looking at the TA for this period of time, is to determine what seems to be happening at the peak where we are right now.
In this version, now I'm looking at when the absolute top of the peak took place.
After $61,000, you'll see I'm drawing a very sloppy question mark, which corresponds to my questionable yellow swoop above. The question is what happens next, and will that final formation build up to the next spike? Or, have we already seen the next formation, and it looks like a weaker foothill instead of the next upward pumpadooo.
You can see that there is a correlation to the oscillating wave indicator at the bottom, known as the MACD. These provide different averages over two different long periods of time, showing an extremely strong indicator for when upward/downward movement is coming based on whether the asset is historically believed to be overbought or oversold. The issue, is that every time Bitcoin does something from here forward, it is unprecedented. It didn't just beat its ATH, it tripled it! It would be perfectly reasonable for market fears to reflect a weakening around $60,000 since Bitcoin has tested it a few times now. It is hard to tell from the above, but if you zoom in, you will see Bitcoin moving extremely sideways right towards the top between $55K and $59K. If it remains where it is too much longer, I have a strong feeling it will shoot down below $48K and I could be completely totally wrong. I don't forecast such predictions, but rather do my best to analyze what is happening until it is the right time to make my move.
There are two main ways to view the TA here, in my opinion. The first, is to say that the waves of activity are getting shorter over time, but they are staying equally strong. Heavy volume has been bought and sold for weeks, consistently, and the end result has been an increasingly higher new price. There is a lot of evidence to suggest this is about to happen again. But the other way to view this, is that the next spike appears to be a very weak, frowny face instead of a hard spike, which tends to show weakening momentum in price movement, and that is the reality of the last 2 weeks. It ain't bad, don't get me wrong, but it isn't a $12,000 rise like we've been seeing in context. If the latter is true, then Bitcoin will either build up to a massive pump when volume drops, because that is how it has worked its entire prior history, it will lose interest or build emotional fear by not peaking, and will get a harsh sell-off and correction, which it has done in smaller trends its entire career, or it will form a series of these smaller foothills until it makes logical sense for whales to pump it full on until $70,000.
I do not know the answer, but my job at this stage is to look, and ask the right questions. I believe regarding price, these are the right questions to ask.
As I zoom in, I can see a lot of evidence for all 3 directions, I really can.
So, now we look to see what kind of week has it been for crypto. It has been massive for Ether, big for Litecoin, sideways but huge volume for Bitcoin, massive for alts, and PayPal announced opening crypto to their massive marketplace, Elon announced Tesla will accept Bitcoin for payment, NFT's are shooting through the roof, and Goldman Sachs announced exposing rich clients to Bitcoin. It has been one big fat bull press release after the next, but Bitcoin has remained essentially sideways. In fact, it dropped 12% during the first half of that dip and barely corrected during Friday liquidations, so 10-20% IS sideways for Bitcoin.
What does it mean when the fundamentals, which suggest massive, MASSIVE optimism for the market, appear as fairly weak movement in the technicals? I think the answer is that the marriage of the two speaks to a true story, that there is a great deal of uncertainty underlying the market.
I could speculate, but I think one issue involved is that people are getting numb to the great news. They widely accept everything is going to moon and Doge is a real thing and they get used to high expectations. But then, they also see that Bitcoin did NOT break through to $70,000 like so many figured, and they sense the disconnect. It is also very possible that the extreme illogical focus on NFT value is simply taking a great measure of funds out of circulation, causing small pumps to center around alts, while more expensive movement has to wait for Bitcoin.
It could be none of these things, and it could be all of them. Something else of interest, in my opinion, is that there was retaliatory market manipulation boosting the dollar against gold, in response to corporate strategies largely led by Saylor and Musk, to hedge against a weakening dollar. I think that may have pushed the upward rise of Bitcoin down, and there are many banker-oriented investors who it would make sense for them to benefit from this. They want to weigh BTC down a little longer before it moons, so the top of the pyramid can continue to buy supply before it crosses upwards of $100,000. I think this may be the larger ulterior motive we see in the market. So, it would not surprise me at ALL if Bitcoin looked like it would break through $59K again only to take a dive for a week or even a few. I would prefer a moon, but I'm observing both TA and FA.
What are your thoughts? Do you feel there is data in the news and in the charts to suggest a unified future movement?
Thanks for reading, and for now, Crypto Gordon Freeman, protector of analytics, rescuer of FOMO... out.
