Daily Report – Bitcoin and Market Update (June 26 2021)
Bitcoin’s struggling again and balancing on the edge right at the range lows territory. Middaily price action took a downswing yesterday the same minute Elon Musk tweeted the bitcoin joke. Although I do not believe it was a coincidence knowing that trading algos track Elon’s tweets for sentiment, it does not matter much what the reason was. As mentioned on my yesterday’s webinar, performance of bitcoin during the weekends this year has been nothing but terrible. I personally can’t recall the last time BTCUSD performed well into weekends in past 4 months. Yesterday’s option expiry provided volatility as usual. Derivatives (futures/options) expiry days bring volatility (and risk) due to rapid closing positions on the settlement dates. As a result, open interest decreases as open contracts disappear from the market – they are realized at the strike price. At the same time, volume increases once unrealized contracts get closed as realized. This provides nothing but price action getting wobbly, no matter the direction as risk is directionless. Since the same minute the tweet was posted, the market has tanked by 15% providing another capitulation series as the onchain data suggests. BPRO wise, it flashed upside trend change indication right before the tweet was sent and ever since we’ve seen nothing but selling off into support areas. Of course, BPRO just like any other trading algorithm or indicator is not capable of predicting when or what kind of message key opinion leaders just like Elon, FED, Bill Gates, etc. post. No technical, fundamental, sentiment, onchain, intermarket analysis is able to predict unpredicted events like black swans, pandemic crash days, hurricanes resulting in supply shortage on some commodities or food markets, etc. Price action wise, we’re still in the same range we started in mid May, 1.5month ago. Deviation on the bottom – fakeout is bullish itself while price of bitcoin moving in chaotic manner inside the range 28.8-42k is neutral. Key level to close the day above is Breaker Low 31554 based on BPRO. Otherwise we are risking reaching S1 27053 support level. Major resistance cluster remains within BVWAP trendlines 41-44k and only once this zone is reclaimed, bulls can be safe. Guessing the bottom is like winning a lottery. Many different indicators provide symptoms that we’re in the bottoming process. Process always takes time and patience.
MTF picture brings chaos typical the range that we already know too well. Nothing bullish or bearish inside it by definition. Pure cluelessness and nondirectional moves. BPRO suggests Breaker Low 31916 is the key to hold for short-term bulls to speak of upside potential while currently we’re hoovering above lower volatility bands territory. In case 28.8k lows are broken, volatility suggests 27.7k level is next to test with high chances of falling knives into S1 25213. Breaker High 39610 is level over which bulls can feel safer. We’re in high volatility zone full of capitulations from retail traders as onchain analytics suggest. High volatility is expected and the closer to the bottom we are, the more it should intensify. BVWAP trendlines supply is 34.4-35k and this is average fair price of bitcoin based on volume. While hoping for the best, we should always be ready for the worst in case last support breaks. Do not over trade this chop either for bitcoin or for alts. It’s way too dangerous. Highly suggested to either stay away from the short-term trades for now or keep your stops tight. Be ready for traps, liquidity hunts inside and near outside this very range we’re in. Do not apply leverage.
Bitcoin: Net Realized Profit/Loss
It is defined with “Net Realized Profit/Loss is the net profit or loss of all moved coins, and is defined by the difference of Realized Profit – Realized Loss.” This onchain metric suggests that there’s extreme capitulation going on, mainly from the retail traders with -3.5B liquidations or closed positions on losses. It has NEVER been this massive nominally because of the size of the capitulation and the market cap. It is the very opposite state compared to April 6th when the main Net Realized Profit/Loss spike appeared on the bullish side – the biggest liquidity pool from retail bulls. It shows how unprecedented and rare situation on the market we’re having right now. It could be depicted as nuclear bomb going off on crypto market. Nobody knows how much pain there’s left for bulls or when the bottom forms. Gauging by historical records, we’re in the capitulation phase which historically has always been the best buying opportunity. It does not promise though where the bottom forms. It suggests instead, that not long after the capitulation, those who longed into capitulating selloffs were profitable in a moment. Do not try to guess the bottom. Instead, if long-term focus is your play, Dollar Cost Averaging might be the answer. For more information, check out my full webinar yesterday where I explained even more. Stay safe and God bless.