Riding The Wave Weekly Outlook #3

A drop down to $43,000

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Table of Contents

1. Where are we Short-term?

2. Where are we Long-term?

3. Supporting Evidence

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Where are we Short-term?

The start of 2022 did end up being a breakout, just not the direction I was hopeful for. Bitcoin has continued to decrease in price to the low $40,000 range (approx $43,000 at this moment) which puts it below the most moving averages traders point to as support (8 week, 20 week, 50 week). This doesn’t change much as we have been under the 50 week SMA for a while and thereby in relatively uncharted territory but it is noteworthy when considering where we will have to climb back up to and push past to be considered in the clear.

The key details I am looking out for are if we hold $40k as support & if we maintain the pattern of higher highs & higher lows.

Red boxes show higher lows with the current area we are fighting for support, lines are weekly SMA’s (red: 200, yellow: 50, green: 20, purple: 8)

In terms of the higher lows, I am looking for where this candle closes for the week (on Sunday). If it closes below approx $43,200 that would break the higher lows and could mean that we are seeing a bear market (Which would surprise me) or we are going to go sideways/down for some more time before recovery kicks in. In terms of closing below $40,000, I would be extremely surprised if we dropped and closed below. Either of these events occurring would make me more cautious for the short to medium term.

The rush of companies I thought may jump in & raise the price didn’t occur which I think is likely due to more of them holding off for government regulations to become clear than I expected. I do think a lot of Institutions are quietly averaging in at these prices which will raise the price floor in the long term but won’t be noticeable during a drop like this.

We are seeing lots of Bitcoin being moved off of exchanges into hard wallets which makes it take more time to sell (you need to move it from hard wallet to exchange & then exchange it for another currency) & is usually done when people plan to hold there bitcoin for a long time period. This gradually pushes the price higher in the long term by decreasing the liquid supply of bitcoin that can be bought. Mining difficulty has also increased making it take longer for Bitcoin to be added to the markets. Both of these will decrease the liquid supply which will hopefully make our next extended price increase more explosive.

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Where are we Long term?

I still think we will see a double top but with the drops, we are seeing it is completely possible we could enter a bear market at this point. I’ll do my best to show a couple of reasons in this section why I think this is unlikely.