Buy the rumor, sell the fact?

2023년 10월 24일

In a wild sequence of events, we saw the number of Bitcoin addresses (with holdings exceeding 100 BTC) soar last week, followed by the announcement of fake news and the breakout above $30,000. But as if this was not enough, Bitcoin did not stop there, and euphoria around Bitcoin Spot ETF approval caused it to spike almost as high as $36,000 overnight. While these events are bullish in nature, we want to reiterate that the price behavior and movements across Bitcoin addresses are very reminiscent of the period leading to new highs in April 2023 and July 2023 (with big players unloading their holdings once new highs were constituted). Due to that and news combined with emotions seemingly driving the market, we feel uneasy about the current rally and the prospects of its sustainability.

Therefore, to confirm that this whole sequence of events was not merely “buy the rumor, sell the fact” (and the ultimate trap for bulls), we would like to see Bitcoin defend the ground above $32,000 (and, ideally, close above this price tag for multiple consecutive days). Contrarily, to spark fears about impending reversal, we would want to see Bitcoin drop below $32,000, accompanied by a drop in the number of Bitcoin addresses with balances exceeding 100 BTC and 1,000 BTC. As for our stance, we continue to think it is proper to stay on the sidelines for a while longer (ideally until the emotional whipsaws start fading); we do not see the need to chase the market.

Illustration 1.01

Illustration 1.01 shows the 1-minute chart of BTCUSD. It can be observed that in merely four minutes, Bitcoin managed to jump more than $2,000. Again, we want to draw attention to how similar these 1-minute spikes are to the ones we showed earlier this year (leading to peaks in April 2023 and July 2023).

Illustration 1.02

Illustration 1.02 displays the daily chart of BTC.D (Bitcoin’s market dominance).

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

2023년 10월 24일

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Illustration 1.03

The price rises while volume declines on the hourly chart. We will pay close attention to this relationship in the very short term (also on the daily chart).

2023년 10월 27일

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Bitcoin addresses with balances exceeding 100 BTC have trended down for the past three days, suggesting some of the big players might be taking profits amid elevated prices.