StrateG Update - Week 35 - Q3 - 2023
No-men's-land
CONTENTS
Overview of this week
Bitcoin - $BTC
DCA-zone
2Y+ channel is broken
Bullish X
Step-like formation
Altcap
Stocks
US Dollar Index (DXY)
Supermacro context
Bitcoin
SP500
US Dollar Index (DXY)
Please note that while I can provide information and insights based on my knowledge, it's important to remember that I cannot offer specific financial advice. #nfa
Overview of this week
Financial News:
BRICS, including new member countries, collectively represent an economy with a combined GDP of approximately $32.5 trillion, holding a substantial 30% share of the global economic output. Some individuals, such as presidential candidate RFK Jr., suggest that BRICS was established due to concerns about the US government weaponizing the dollar.
July Core PCE (Personal Consumption Expenditures), a key inflation indicator, has increased by 0.2% month-over-month, aligning with market expectations. On an annual basis, the Core PCE has risen by 4.2%, matching the year-on-year projection as well. This data highlights persistent inflationary pressures. But since it’s a single reading, and the FED does not act much on a single one, for the next PCE-report it is important to show a decline.
Crypto News:
The crypto asset manager, Grayscale, has emerged victorious in a legal battle against the SEC (Securities and Exchange Commission). This triumph has spurred a surge in Bitcoin's value, driving it to $28k. Furthermore, the US Court's decision appears to pave the way for the first-ever Spot Bitcoin Exchange-Traded Fund (ETF) following Grayscale's legal victory, as reported by Bloomberg analysts. They note a 75% probability of Spot Bitcoin ETFs to receive approval. Critics argue that the SEC's concerns regarding spot Bitcoin ETFs is unfounded, given their approval of futures Bitcoin ETFs, which have a 99% correlation in terms of price action.
BlackRock, a prominent financial institution, holds substantial shares in four of the five largest Bitcoin mining companies, indicating its increasing involvement in the cryptocurrency industry.
A US court has classified both Bitcoin and Ethereum as commodities while dismissing a lawsuit against the Uniswap decentralized finance (DeFi) platform.
The SEC has delayed the consideration of all applications for Spot Bitcoin ETFs. However, former SEC Chair Jay Clayton expresses confidence that the approval of Spot Bitcoin ETFs is inevitable.
X, a prominent presence on Twitter, has obtained the necessary license to engage in cryptocurrency payments and trading, suggesting growing adoption of digital currencies within social media platforms
Hong Kong has officially introduced its first cryptocurrency and Bitcoin trading platform, accompanied by praise from the Hong Kong Financial Secretary, who recognizes blockchain as a groundbreaking technology. SEBA, a Hong Kong bank, has secured approval to provide Bitcoin and cryptocurrency services.
In a significant development, a Chinese court has officially recognized cryptocurrencies as legal property, affording them protection under the law, solidifying their status within the country's legal framework.
Tweet of this week <— “The tide has turned in the narrative around Bitcoin & energy”
Bitcoin (BTC)
In the realm of cryptocurrency, two moving averages - the halving EMA (in red) and halving SMA (in blue) - are proving to be powerful indicators, thanks to their alignment with key market events known as "halvings."
Bitcoin experiences a halving event approximately every 210,000 blocks, which cuts the mining reward in half. Notably, the halving SMA, represented by the blue dashed line, consistently corresponds with major bear market bottoms. This suggests that it acts as a dependable support level during market downturns.
Normally, the halving EMA (in red) trends higher than the halving SMA, reflecting a bullish sentiment. However, when these two lines converge, as they have recently, it often marks the end of a bear market and the beginning of a new bullish phase.
In essence, the current convergence of the halving EMA and halving SMA suggests that the bear market may be coming to a close, hinting at the potential start of a new bull market.
DCA-ZONE
In August, Bitcoin ($BTC) closed below the 200 Week Simple Moving Average (SMA), signaling a potential shift in the market. However, it's worth noting that it's currently resting on top of the 200 Week Exponential Moving Average (EMA) highlighted in yellow. This situation suggests a period of uncertainty where I'm adopting a cautious stance, awaiting clear direction.
Should the price drop below $24.8k, it could potentially result in a quick dip into the black "ALL-IN" zone, which is around $22k. This move might be a shake-out of the long-awaited blow-off wave, blue wave 2.
In essence, the market is at a crossroads, and a break below $24.8k could signal further downside, possibly down to $22k.
It's worth noting that occurrences of Bitcoin dipping into the black zone have been very rare, happening only in 2010, 2015, 2020, and 2022. Therefore, while a drop to around $22k isn't completely ruled out, it appears highly unlikely.
Instead, the more probable scenarios are either a period of sideways consolidation for another month or a direct upward move from the yellow Dollar-Cost Averaging (DCA) zone, which has been a well-tested support level for over 4 months now.
2Y+ channel - Update
Last week, the price faced resistance at the upper trendline of the 2Y+ descending channel and tested the 200 Week SMA, where it got rejected, resulting in another test of the 200 Week EMA. Note that it has maintained the Higher-High-Higher-Low pattern since November. Long-term crypto charts often show exponential trends, making EMAs preferable for capturing them. EMAs react faster than SMAs, have reduced lag and aid in adapting to market changes more quickly.
To change the bullish narrative, the price needs to drop below $24.8k, which hasn't happened. The August monthly was in between the blue and red line in no-man's-land, a region to be cautious.