Daily Report – Bitcoin and Market Update (December 12 2022)

HTF 1W:

The weekly BTC outlook suggests a better chance of falling toward the triangle target area in 10-12k USD, technically.

Will it go there? I wish it were obvious to guess.

However, the job of a technical trader is to manage risk according to the probabilistic aspects of the charts. And the BTCUSD chart suggests a rejection at the critical level of $17500.

With strong negative correlation coefficient values, unseen since 2019, it seems that BTC moves inversely to the large-cap stocks mostly. It may suggest that if stocks decline locally, BTC may pick up.

However, the dominant tendency is focused on the momentum principle and momentum investing UMD (Up Minus Down – Long relative strength and short relative weakness). The underlying weakness of BTC vs. $SPX makes investors more likely to focus their capital on the stocks and pick Bitcoin. It speaks not in favor of the Bitcoin bulls, for now.

Otherwise, a clear breakout above the 17500 USD resistance may prove an extended swing to the upside in the direction of the resistance at 21000 USD.

HTF 1D

The daily BTCUSD chart suggests that Bitcoin is at the edge of a potential cliff drop as it breaks the bottom trend line of the bearish pennant pattern.

A technical objective for such a breakdown could potentially place the 15.5k USD target on the horizon. A daily close below the lower trend line could validate such a breakdown.

Overall, a sharp twist with a close over the 17500 USD resistance may accelerate a further lift-off toward the 200-day resistance at 21000 USD.

Otherwise, a technical outlook suggests a move to the downside and toward the 10-12k USD technical area.

MTF 4H:

The MTF chart displays a bearish divergence defined by the BPRO.

Following an overthrow on top at 17500 USD, BTC has declined slightly, proving a local distribution process above 17300 USD.

The low volatility period BTC finds itself in is not the most convenient for the buying side of the market. There is a clear pattern where the buyers refuse to step in and buy loads of BTC at the moment.

Such temporary weakness can be easily cured in sideways or bull market dominant trends. However, in the depths of the bear market, when the investors’ pessimism dominates the sentiment, it instead is a sign of weakness, leaning more toward the downside.

As the market moves inside a pattern, the frames spread between the 15500 USD floor and the 17500 USD resistance. If such a pattern breaks down, the price objective becomes 13500 USD.

FEAR & GREED INDEX

At 27 points on the index scale, the market sentiment is classified under the “Fear” category, showing decent dose of skepticism from the investors.

Meanwhile, the derivatives breadth shows a fairly balanced daily outlook at almost 50/50 split between longs and shorts. This proves that, locally, the traders don’t have a clear directional consensus. When it happens within the fear territory, this should more likely prove a move to the downside, near term.

Otherwise, the lower the index print, the better the contrarian odds for a good investment.

Hence, BTC seems heavily cheap, but it doesn’t mean it can’t get any cheaper.

Bitcoin Average Mining Costs

Locally, it seems the disparity between the BTC price and the production costs seems to be rising, against the will of the bulls. With the BTCUSD at 17000 USD, the mining costs line up at 19500 USD.

It puts the miners more deeply underwater.

The longer the BTC prices stay below the mining costs, the greater the chances that the miners will eventually capitulate, letting the Bitcoin prices slide down in a sell-off

Hence, caution is recommended. There is a risk of a deadly selloff spiral in the market.

Hope it helps. God bless.

P.S. Don’t forget to uncover the free training #3 in the coming newsletter.