10.5.2020 Weekly Outlook (Mon)

$10,671

+1.13%

BTC

$352.5

+1.82%

ETH

$0.2481

+6.48%

XRP

$46.7

+2.55%

LTC

$221.1

+1.14%

BCH

Summary

For the very short-term, we are likely to fill the current $200+ CME gap from $10.5k, and drop to the lower support of 10.3-10.5k. The trend continues to be a bull one, and the spotted smart money accumulation this week confirms such trend. Out of the two Elliot Wave counts below, we are leaning toward the bullish corrective count. The key continues to be buying dips. The daily “decr. in supply” alert should appear this week to signal the dip timing.

Fundamental Analysis

Smart Money Action

Bullish (Long-term)

The on-chain smart money indicator gave out accumulation signals. This indicates smart money has been accumulating during the past few weeks despite the price drop from 12k, and further indicates a strong support at 10k. This is a bullish sign for Q4. Price generally goes into a bullish trend when on-chain smart money accumulation is found. Can we drop in the short-term at all? If so, does that mean smart money made a dumb decision? Yes, then no. In Nov 2018, smart money accumulation is spotted at 6k, and price dropped to 3k in the next 2 months with more accumulation happening. While the BTC accumulated at 6k took an almost 50% loss, price soon rose to 12k+, generating a 2x.

Grayscale: raised $900M in Q2 (its ATH quarter since inception). Even though $900M is not significant when compared to the mkt cap, it does indicate a switch in accredited/institutional investors’ view on the crypto space – where the money comes from to push the next ATH. We’ll keep an eye out for Q3 stats.

China’s financial channel, cctv-2, claimed crypto as the best performing asset class of 2020 last week. Since the channel is strictly controlled by the Chinese government, the fact that such news is reported shows a potential loosening on crypto regulations in China. This is consistent with the Chinese central bank’s crypto experiments.

Miner Action

Bullish (Long-term)

BTC mining difficulty is now 10x higher than that of end of 2017. This means, firstly, the security of the bitcoin network is improving significantly despite the price decrease compared to the 2017 20k ATH. Secondly, miners are profiting ever since the March capitulation, and more miners are joining the game at the current price level (the 11%+ difficulty adjustment was made in September).

Market Sentiment

Neutral

Overall market sentiment is now neutral. For the seller group sentiment, this group remains in a bull trend. With the short-term drop to 10.3-10.5k (what I expect), another “decr. in supply” alert will likely occur. These have been generating great R:R setups and returns. Bull trend means buying the dips.

Margin & Futures Market Actions

Neutral to bearish (Short-term)

Neutral TO BULLISH (Mid-term)

Daily chart speaking, the margin market has been on the bearish side since the drop to 10k. This means, despite some short-term drop potential, the chance of us dropping to 9k this week is low. Periods of overly bullish/bearish sentiments have been marked out in the chart above. Prolonged overly bullish = price drop; prolonged overly bearish = price rise. For the shorter term, BTC sentiment is bullish. If we continue to rise to 10.8k, the sentiment will likely be overly bullish, and I expect a bearish pressure in the next 48hrs.

 

As for the CME institutional traders’ positions, things are getting less clear. Out of all of the other bullish indications, this is one of the few metrics that explains a more bearish scenario. However, I wouldn’t worry about this metric yet until this week’s data release on Friday. If we have another down tick, then it might be time to lighten up some mid-term long positions.

Global Market Impacts

Neutral

To ease the COVID impacts, the Fed is using all means to boost the economy, which means a continued rise in inflation. This will fundamentally push up the value of gold, bringing up bitcoin along the way as the main value proposition of bitcoin remains store of value rather than remittance.

CME Gap

Neutral to bearish (Short-term)

Currently, there’s a $200 CME gap from $10.5k. This is bearish for the short-term. I’m interested in longing after this gap’s filled.

Technical Analysis

Support / Resistance

Neutral

Short-term Resistance at 11.3k, 11.9k. Support at 10.3 – 10.5k. Another support below at 9.6k.

Elliot Wave

Neutral to bearish (Short-term)

Bullish (Mid-term)

see chart above.

RSI

Bullish (Mid-term)

Daily RSI looks bullish. Bull trend support (40) held, and we are potentially finding support above RSI’s MAs. Potential MA up-cross soon.

MACD

Neutral

1D up-crossed from the negative side, but with the sideway consolidation, MACD is not giving clear signs.

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