When will bitcoin top out?
It’s the season where technical analysis seemingly loses some of its relevance as bitcoin, ethereum, and altcoins continue to slice through prices like a knife cutting through butter.
However, nothing goes up in a straight line forever, and a ‘blow-off top’ will eventually come.
During the 2019 mini bull cycle when bitcoin ground to a halt at $14,000, price-action was accompanied by abnormally high trading volume and large wicks to the upside. Similar scenarios were also observed when bitcoin broke down below $6,000 in 2018 and on black Thursday earlier in March.
Should the parabola cease its incline just under $20,000 or within the $21,000 vicinity, then one can expect the 2019 high ($14,000) to be tested for support. Typically, price trends back towards the macro breakout level before continuing the climb.
Bitcoin is no different in this respect. Ultimately, a market is made of people and the primal motivators are fear and greed. Once the market swings well into one direction, the pendulum eventually shifts to the other side with equal force.
During this rally, a running theme on the telegram channel was to ‘take profits on the way up’ and to keep enough capital to buy back in when the time is right .i.e. when there’s blood in the streets. No doubt, this incoming red wave will be accompanied by another news cycle filled with fear, uncertainty and doubt, and I suspect government crackdowns and CBDC’s will also have a part to play.
Irrespective of what is said here though, weak hands will sell into firm hands.
Rest assured, that a corrective period is coming though no matter what your favourite influencer on crypto twitter says. Best practice dictates that you continue to ride the wave to the upside while protecting yourself from losing capital gains.
Levels to watch:
- $17,600 parabola support
- 20-daily-EMA $16,700 at the time of publishing
- $19,000 local high resistance
On-chain data suggests strong bitcoin hodling and purchasing power
That being said, bitcoin doesn’t appear to have any intention of stopping just yet, and on-chain metrics suggest that the trends present before this parabolic run are still going strong. Indeed, on-chain metrics show that bitcoin on exchanges continues to dwindle even at these levels, where over 98% of bitcoin UTXO’s are in profit.
Bitcoin balance on exchange is a relevant macro metric because it provides insight into the market’s behaviour. Clearly, market participants are still buying bitcoin and subsequently withdrawing it from their respective exchange. Presumably, most of this bitcoin is finding its way into cold storage.
On a final note, the stablecoin supply ratio (SSR), which denotes the ratio between bitcoin supply and the supply of stablecoins, is still well within its ‘buying power’ range. On a macro perspective, there’s little reason to expect this bull-trend to shift until the SSR flips bitcoin’s price. At this point, buying pressure would subside and a major market turnaround could be in the works. Bitcoin might also be trading at $100,000 by the time this happens.
Catch you next time.