Bithoveen's last Symphony

The last few days the cryptocurrency world is in a fever. Almost a year ago we witnessed a rapid growth of digital assets, which was immediately changed by a slow but very tangible collapse. Bitcoin broke the level of $5000, which was held almost since the beginning of the year. Is this the last Bitcoin's symphony? Technical analysis is what makes it possible to assess the scale of the disaster and to understand what to do and who is to blame. Together with DEEX experts in trading strategies we are trying to undersatand what will be next.

We will conduct a small analysis of the Bitcoin's price over the past year using the "Saucer" shape (Fig. 1). This figure is formed over a long period of time and is a reversal one. In the middle of the figure there is usually an increase of volume, but the level of the bottom can withstand the load. In our situation the bottom is broken on the increased volume. This suggests that the fall will continue and reach the level of $1000 - $1500 per Bitcoin.

Consider another graph using the shape "Wedge" or "Triangle" (Fig. 2). In this case, a downward triangle with a support line around $6000 is drawn. Such figure is usually continues the trend's figure. Currently, we are seeing a breakout of the support level in the area of $6000. This breakout occurs at increased volumes and indicates that the fall will continue. For a global point you can take the cost of about $1000 per Bitcoin within the next 6-9 months.

We will try to determine the fundamental factors affecting the value of the asset. The short-term factor is primarily “expiration of futures” - the process of completion of the circulation of fixed-term contracts. Apparently, the major players put on a fall, first selling their futures and then Bitcoins.

Among the long-term factors, we can note the quantitative tightening of the US Federal Reserve system. And it is already pushing other central banks to similar behavior. What is quantitative tightening? This is the process of withdrawing money from the economy. The less of money leads to rise of rates and more expensive loans. And all the assets, gold, real estate, cryptocurrency are beginning to fall in price. Since the Federal Reserve was the first to start this process, we also see a strengthening of the dollar with the outflow of capital to the United States.

Currently, the market is clearly oversold, and we would not recommend to take active actions, as it is possible to return the cost to the level of $5500-$5800. In the case of such a scenario, we recommend selling your Bitcoins.

More analytical materials can be found on our YouTube channel.

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