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Bitcoin’s price surged above $70,000 for the first time since early June, but was met with a wave of selling, causing it to plunge more than 3%.

The cause of the price movement is unclear, but it may be related to the U.S. government’s movement of over $2 billion in seized bitcoin connected to the Silk Road dark web marketplace.

This massive transfer has reignited concerns about increased selling pressure on the cryptocurrency

Is the crypto market overreacting? 🤔

It’s hard to be outright bearish after one of the most significant crypto events happened over the weekend.

Donald Trump, speaking at the Bitcoin 2024 conference, vowed to maintain and never sell the U.S. government’s seized bitcoin, proposing the creation of a strategic national bitcoin reserve to keep up with global competitors like China.

The U.S. government owns more bitcoin than any other government in the world, holding over 200,000 BTC, currently worth over $14 billion.

In his own words:

“Never sell your bitcoin, If I am elected, it will be the policy of my administration, the United States of America, to keep 100% of all the Bitcoin the U.S. government currently holds or acquires into the future.”

He likened the crypto industry to the early steel industry, suggesting it could overtake gold in value.

And that’s not all!

Aside from Trump, there were other notable visionary forecasts and bold political commitments. Other key highlights include;

  • Michael Saylor, co-founder of MicroStrategy, predicts that bitcoin will reach $13 million per coin by 2045. He believes bitcoin could potentially range from $3 million in a bear case to $49 million in a bull case!
  • Senator Lummis announced a bill for the Strategic Bitcoin Reserve aiming to hold 1 million BTC.
  • RFK Jr. proposed an executive order for the Treasury to purchase 550 BTC daily to reach 4M BTC in reserves.
  • The Democratic National Committee (DNC) is seeking to reset relations with the crypto industry.
  • Cantor Fitzgerald announced a $2B Crypto Financing initiative.
  • Michigan Pension Fund disclosed a $6.6M BTC purchase.
  • Franklin Templeton is launching a BTC ETF in Japan.
  • Wyoming is establishing the Bitcoin Research Institute.
  • Brevan Howard’s Crypto Fund is supporting companies holding crypto as treasury assets.
  • The SEC approved Grayscale’s BTC mini trust.
  • Unbound introduced a crypto-based path to EU citizenship.
  • Hong Kong is considering BTC as a sovereign reserve asset.

Bitcoin fundamentals sound super bullish, but what about the technicals?

Welcome to TA of the Day (TAOTD)! 👋

Here’s the daily chart:

📈 Technical Analysis of BTC/USD Daily Chart

Using technical analysis concepts covered in our forex course, let’s analyze BTC/USD.

Simple Moving Averages (10, 50, 100, 200):

  • 10-period SMA: Positioned around 67,145. The price is currently above this level, indicating short-term bullish momentum. The slope is upward, suggesting recent short-term strength.
  • 50-period SMA: Positioned around 63,370. The price is above this level, indicating medium-term bullish momentum. The slope is upward, reinforcing medium-term strength.
  • 100-period SMA: Positioned around 64,583. The price is above this level, indicating bullish momentum in the intermediate term. The slope is slightly upward.
  • 200-period SMA: Positioned around 60,872. The price is well above this level, indicating long-term bullish momentum. The slope is upward, suggesting sustained long-term bullishness.

If you’re new to moving averages read our School of Pipsology lessons on how to use moving averages.

Relative Positioning of Moving Averages:

  • The 10-period SMA is currently above the 50-period SMA, which is above the 100-period SMA, and ALL are above the 200-period SMA. This alignment indicates strong bullish momentum across short, medium, and long-term time frames!

Stochastic Oscillator:

  • Stochastic %K: The current reading is 65, indicating that the market is approaching overbought conditions.
  • Stochastic %D: The current reading is 79, indicating that the market is already in the overbought territory. This suggests that the price might face resistance soon and could be due for a pullback.
  • Recent Crossover: The blue line has recently crossed below the orange line, which often signals a potential shift in momentum. This crossover occurred in the overbought region (above 80), which some traders interpret as a bearish signal.

If you’re new to the Stochastic oscillator,  read our School of Pipsology lessons on Stochastic Oscillator.

🕵️ Key Observations

Price Action:

  • A strong upward trend from late January to early March, rising from around 40,000 to an all-time high (ATH) of over 73,000
  • A period of consolidation and slight decline from March to May, mostly ranging between 60,000 and 70,000.
  • A sharp correction in June, dropping to around 56,000.
  • A recovery starting in July, with the price climbing back up towards 70,000.
  • Overall trend: The price has been volatile but generally bullish, with significant ups and downs.
  • Bullish Momentum: The recent price action shows strong bullish momentum, with more green (up) candles than red (down) candles in the latest move up.
  • Price range: The price has fluctuated between approximately 40,000 and 73,000 during this period.

Support and Resistance Levels:

Key Area:

  • 66,000 – 68,000: This area has frequently acted as both support and resistance, suggesting it’s a key battleground between buyers and sellers.

Support:

  • Immediate support is around 67,145 (10-period SMA) and 64,583 (100-period SMA).
  • 64,000 – 65,000: This zone has acted as both support and resistance at various points, most recently serving as a support level in the latest upward movement.
  • 60,000: This appears to be a significant psychological support level that has been tested multiple times.
  • 56,000 -58,000: This zone provided strong support during the July dip and could be a key level to watch if the price were to decline again.

Resistance:

  • 70,000: This appears to be a significant psychological and technical resistance level. The price has approached or briefly touched this level multiple times but has struggled to maintain above it consistently. It’s currently serving as the most immediate major resistance.
  • 72,000 – 74,000: There seems to be a zone of resistance in this area, as evidenced by the price peaks in March and June.

Moving Averages:

  • The 10-period and 50-period SMAs are currently acting as short-term support levels, while the 100-period SMA provides intermediate support, and the 200-period SMA offers long-term support.

Stochastic Oscillator:

  • The Stochastic Oscillator being in the overbought territory suggests a potential for a pullback or consolidation.
  • Overbought Conditions: The indicator has reached overbought levels (above 80) several times in the recent past, coinciding with price peaks or consolidations.
  • Momentum Confirmation: The overall movement of the Stochastic from lower to higher levels over the past month aligns with the bullish price action, confirming the upward momentum.
  • Potential Warning: The recent turn down from overbought levels could be interpreted as a warning sign that the current upward momentum might be slowing.

Market Structure:

Based on the price action shown in the chart, the current market structure for bitcoin appears to be bullish overall, with some key characteristics:

  • Higher Lows: The chart shows a series of higher lows since the bottom in July, which is a classic sign of an uptrend.
  • Recent Uptrend: There’s a clear upward trend from the July lows to the current price levels.
  • Consolidation Near Highs: The price is consolidating near the recent highs, which could be seen as a bullish sign if it manages to break above resistance.
  • Break of Structure (BoS): A significant BoS occurred above the previous resistance at 63,800 in early July, indicating a continuation of the uptrend and reinforcing the bullish momentum.
  • Change of Character (ChoCh): A ChoCh would be observed if the price breaks below the recent higher low at 63,400, indicating a potential shift in market sentiment from bullish to bearish.

🤔 Potential Trade Scenarios

Is BTC/USD a buy or sell?

The following trade scenarios are provided solely for educational purposes. Since they don’t include full risk management practices, they are not intended to serve as actual trade recommendations, but merely food for thought to help you generate your own trade idea.

Long Bias:

  • Entry Point: Consider entering a long position if the price finds support near 67,145 and shows signs of a bounce, such as a bullish candlestick pattern or a positive divergence in the Stochastic Oscillator. Additionally, a break above the resistance level at 70,000 could indicate a continuation of the uptrend.
  • Stop-Loss: Consider setting a stop-loss below the support level of around 66,000 to manage risk.
  • Target: Look for a move towards the previous high around 74,000, or aim for a new all-time high around 80,000.
  • Rationale: If price can break and hold above the 70,000 resistance, it could signal the start of a new uptrend. The recent price action shows strong bullish momentum, and a break above 70,000 could trigger further buying.

Short Bias:

  • Entry Point: Consider entering a short position if the price fails to break above the resistance level at 70,000 and shows signs of bearish momentum, such as a strong bearish candlestick pattern or the Stochastic Oscillator moving below 80.
  • Stop-Loss: Consider setting a stop-loss above the recent high at 71,000 to manage risk. This level is crucial as a break above it would invalidate the bearish setup.
  • Target: Initial target could be the support level around 67,145. If bearish momentum continues, look for further downside towards 64,583 or even lower at 60,000.
  • Rationale: If the price fails to break above 70,000 and shows signs of rejection (such as a bearish engulfing candle), it could indicate exhaustion of the recent bullish trend and potential for a pullback.

📝 TAOTD Summary

  • Trend: The long-term trend appears to be bullish with a series of higher highs and higher lows, but the short-term trend shows some resistance around the recent high at 70,000.
  • Key Levels: Near-term support at 67,145 and resistance at 70,000. Very strong resistance at 72,000.
  • Momentum: The Stochastic Oscillator indicates an overbought condition, suggesting potential for a short-term pullback or consolidation.
  • Market Structure: Recent BoS indicates a continuation of the bullish trend, while monitoring for potential ChoCh is important for determining future price action. A ChoCh could occur if the price breaks below the recent higher low at 63,400, indicating a potential shift in sentiment from bullish to bearish.
  • Moving Averages Analysis: The upward slopes on the 10-period, 50-period, 100-period, and 200-period SMAs indicate strong bullish momentum across different time frames. The relative positioning of the moving averages shows strong bullishness in the short, medium, and long terms.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.