Welcome readers, and thanks for subscribing! The Altcoin Roundup newsletter is now authored by Cointelegraph’s resident newsletter writer Big Smokey.
Welcome readers, and thanks for subscribing! The Altcoin Roundup newsletter is now authored by Cointelegraph’s resident newsletter writer Big Smokey. In the next few weeks, this newsletter will be renamed Crypto Market Musings, a weekly newsletter that provides ahead-of-the-curve analysis and tracks emerging trends in the crypto market.
The publication date of the newsletter will remain the same, and the content will still place a heavy emphasis on the technical and fundamental analysis of cryptocurrencies from a more macro perspective in order to identify key shifts in investor sentiment and market structure. We hope you enjoy it!
Time to go long?
This week, Bitcoin’s (BTC) price has perked up, with a surge to $21,000 on Oct. 26. This led a handful of traders to proclaim that the bottom might be in or that BTC is entering the next phase of some technical structure like Wyckoff, a range break or some sort of support resistance flip.
Prior to getting all bullish and opening 10x longs, let’s dial back to a previous analysis to see if anything in Bitcoin’s market structure has changed and whether the recent spat of bullish momentum is indicative of a wider trend change.
When the last update was published on Sept. 30, Bitcoin was around $19,600, which is still within the bounds of the last 136 days of price action. At the time, I had identified bullish divergences on the weekly relative strength index (RSI) and moving average confluence divergence (MACD). There were also a handful of potential “bottoming” signals coming from multiple on-chain indicators, which were at multi-year lows.
Let’s take a look at how things are looking now.
The Bollinger Bands are tight
The Bollinger Bands on the daily time frame remains constricted, and this week’s surge to $21,000 was the expansion or spike in volatility that most traders have been expecting. As is par for the course, after breaking out from the upper arm, the price has retraced to test the mid-line/mid-band (20MA) as support.
Despite the strength of the move, the price remains capped below the 200-MA (black line), and it is unclear at this moment if the 20-MA will now serve as support for Bitcoin’s price.
After bouncing off a near-all-time low at 25.7, the weekly RSI continues to trend upward and the bullish divergence identified in the previous analysis remains in play. A similar trend is also being held by BTC’s weekly MACD.
In the same chart, we can see that the most recent weekly candle is en route to creating a weekly higher high. If the candle closes above the range high of the previous five weeks and the price sees continuation over the coming weeks with a daily or weekly close above $22,800, this could be the makings of a trend reversal.
On the daily timeframe, BTC’s Guppy multiple moving averages (GMMA or Super Guppy) indicator is eyebrow-raising. There is compression of the short-term moving averages, and they are converging with the long-term moving averages, which typically indicates an impending directional move or, in some instances, a macro trend reversal in the making.
For the past few weeks, Bitcoin’s “record-low volatility” has been the talk of the town and when using the Bollinger Bands, the GMMA and BVOL, the tightening price range does hint at expansion, but to what direction remains a mystery.
Bitcoin has been trading in the $18,600–$24,500 range for 36 days and from the perspective of technical analysis, the price remains near the middle of that range. The move to $21,000 did not set a significant daily higher high nor escape from the current range, which essentially is a sideways chop.
The price is holding above the 20-day moving average for now, but we have yet to see the 20-MA cross above the 50-MA, and the majority of the Oct. 26 rally has retraced back to the low $20,000 level.
A more convincing development would involve Bitcoin breaking out of the current range block to test the 200-MA at $24,800 and eventually making some attempt to flip the moving average to support.
A further extension to the $29,000–$35,000 range would inspire confidence from bulls looking for a clearer sign of a trend reversal. Until that happens, the current price action is simply more consolidation that is pinned by resistance extending all the way to $24,800.
Related: Why is the crypto market up today?
Bitcoin on-chain data says to accumulate
Like BTC’s spot price, the MVRV Z-Score has also bounced around in the -0.194 to -0.023 zone for the past three months. The on-chain metric reflects a ratio of BTC’s market capitalization against its realized capitalization (the amount people paid for BTC compared to its value today).
In short, if Bitcoin’s market value is measurably higher than its realized…
cointelegraph.com