Bitcoin Price AnalysisTechnical Analysis

Digital Currency Market Analysis 22 January (January 11)

Altcoins have been moving sharply over the past week, but have fallen sharply over the past two days following a sharp drop in the price of bitcoin. This could be a sign of a possible change in trend.

In the face of promising news of corporate acquisitions and the entry of institutions into the realm of digital currencies, traders need to track the sales flow of certain individuals, as the momentum of this uptrend will eventually be lost and investors will look for reserves. The profit will be their positions in the market.

The momentum rise in the price of Bitcoin has taken most traders by surprise. According to a well-known analyst named flibflib on the QuintelGraph website, this steady rise in prices is attributed to accumulation algorithms. These accumulation algorithms seldom value price because they aim to invest $ X in the Y period. This cattle market has caused more and more trading activity than in the past and has surpassed all its previous records. According to Skew data, in addition to Bitcoin cash markets, its futures volume has increased to more than $ 97 billion in a 24-hour period.

Traders should keep in mind that following the reversal of the market trend, due to the widespread price growth to the current situation, there will be a lot of selling pressure on the market, and this has the ability to correct the price sharply and suddenly. The price has not stopped on its way to the resistance levels, so in the fall of the price, these levels will not be strong support for the price.

For long-term investors, continuing the HODL trend and relying on forecasts based on a bitcoin price increase of more than $ 100,000 by market participants is a fairly simple and potentially risky approach to entering the market. However, for short-term traders or volatile traders who rely more on technical analysis to identify price targets and identify resistance and support levels, it will be difficult to continue trading without past price information above $ 20,000. Bitcoin above this level has entered the phase of price discovery and unknown territory, so it will be more difficult to identify support / resistance levels or supply / demand areas than in the past.

Now, given the circumstances in which the technical analysis of the Bitcoin price fails in certain circumstances (or so-called fails) and the patterns that occur in other markets with a high percentage of success (such as harmonic patterns), here it succeeds and Goals are not corrected, can it be said that this market is being manipulated drastically?

In other words, while exchanges can be somewhat exempt from market manipulation, there is a possibility that traders who hold large amounts of bitcoin and manipulate markets for personal gain will not, and no institution appears to be Take meaningful action to prevent this. Therefore, it can be said that the possibility of bitcoin price manipulation by skilled traders who use multiple exchanges (both regulated and unregulated) in parallel to influence the price by buying or selling large amounts of bitcoin in the Bitcoin cash market is very high. These people are trying to make big profits in derivatives markets (futures or options) by creating these turbulent fluctuations in the market.

Now that smart money has taken control of the market, we can use a combination of different factors to analyze the market. For example, in such cases, examining the coexistence of Fibonacci Extension and Projection levels of different market waves, Gann fan and open interest changes in futures trading can be a beacon to identify different market areas. On the other hand, by analyzing the Bitcoin and Tether Dominance index, the correlation and status of gold prices with Bitcoin will yield interesting results. In the continuation of this analysis, we intend to examine these factors.

We know that the Bitcoin Dominance Index (BTC.D) is a percentage that measures Bitcoin’s share of total digital currency market capitalization. This index is not a complete measure, but it helps to analyze the macro market. Using the chart of this index, we will be able to observe the capital turnover between bitcoins and altcoins and draw conclusions about the market situation.

In interpreting this chart, it can be said that in most cases, when the bitcoin dominance index is in an upward trend, it is better for traders to keep their capital in bitcoin. In the downward trend of this index, this approach turns into holding coins and converting capital into tetra. Take a look at the Bitcoin dominance index chart in the weekly time frame. This index is characterized by a resistance level of 61.8% of the bearish wave correction and has hit below the uptrend line (blue line).

Digital Currency Market Analysis 22 January (January 11)
Bitcoin Dominance Index chart in weekly timeframe

With another look at the same chart, we see the index collide with the ascending channel midchannel and complete the AB = CD harmonic pattern in the chart. These factors indicate the beginning of the correction of this index from the current levels and, of course, the outflow of capital from Bitcoin, which can eventually lead to a fall in prices.

Digital Currency Market Analysis 22 January (January 11)
Bitcoin Dominance Index chart in weekly timeframe

In parallel with examining the dominance of Bitcoin, we go to examine the status of the Tether Dominance Index (USDT.D). The price completes the Gartley harmonic pattern and shows the relative strength index (RSI), the hidden positive divergence (+ HD) in this time frame. The combination of these factors will warn the rise of this index and the inflow of money from Bitcoin to Tetra.

Digital Currency Market Analysis 22 January (January 11)
Tether Dominance Index (USDT.D) in weekly timeframe

Another point will be to examine the correlation between gold and bitcoin. By referring to this article, you will notice the correlation between these two assets, which can be seen in several time periods, both as a downward and ascending trend. Over the years of Bitcoin, we have seen many similarities between gold and this digital currency as a means of storing value, to the point that Bitcoin has often been referred to as digital gold. Therefore, examining the price of bitcoin in relation to gold and the correlation between the two will not be without merit. The candlestick chart below shows the price of gold relative to bitcoin, and at the top shows a yellow line chart showing the dollar price of bitcoin. What do we learn from examining the price movements of gold against bitcoin in the downtrend channel and the corresponding ceiling and floor of bitcoin price in dollar?

Digital Currency Market Analysis 22 January (January 11)
Gold price chart against bitcoin in weekly time frame compared to bitcoin price chart in dollars

If you look at the channel, every time the price of gold to bitcoin hits the bottom of this uptrend channel Long-term roof We have been priced in bitcoin dollars, these ceilings are marked with a light blue vertical line. On the other hand, and similarly, every time the price hits the middle channel of this channel, it witnesses the formation of a ceiling. short term The price is on the chart. These ceilings are marked with vertical pink lines. With these interpretations, if the price of gold has fallen in recent weeks and risen against the price of bitcoin, the chart has shifted to Middle Channel and we may see a short-term price ceiling.

Given all of these factors, we can conclude that trading profits and converting traders’ capital into tetra is above the $ 40,000 resistance. So this may be the short-term price ceiling level. But that may not stop large investors or whales from fluctuating in the market. So once again we realize the importance of risk and capital management in this volatile market. Finally, try to keep an eye on the market for the next two weeks.

The final suggestion is to control your risk in the trades by optimally adjusting the loss limit, and manage your capital by entering and exiting a step in support and resistance. If you do not have enough knowledge to trade, refrain from entering trades and gradually learn this knowledge by referring to the market analysis training section. This analysis should not be taken as a signal to buy or sell.


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