Market Analysis 2021/11/19

in LeoFinancelast year

In the last few days bitcoin has lost 2 important supports in fact, after several failed attempts, the bearish have managed to breach the $58K area, reaching the local low at $55600. At the time of writing, bitcoin is trading at $57400.
I remind my readers that the support at $58K was a minor support, the more important one is in the $53-54k area, this is where there is a lot of liquidity that at this point is hoping for a retest to enter at a discount. I would like to point out that retests of supports are very important and are essential for a more solid long term price action, so don't panic!

The market capitalization dropped significantly to $2482B.
BTC dominance index at 43%.
Fear/Avidity Index 34, in the middle of the fear zone (no panic I said!!! :) )

Yesterday was very interesting; in fact, several members of the U.S. Congress wrote an open letter regarding the infrastructure bill, recently signed by Biden and previously approved by the same Congress. The bill will be funded by taxing cryptocurrency owners, forcing brokers to provide customer information.

The letter states that this requirement would introduce uncertainty into the cryptocurrency industry and deprive the U.S. of a major competitive advantage in the digital asset market. There is a good chance that the regulatory framework will be changed.

Moreover, for the umpteenth time, the MtGox FUD that is cyclically artfully re-proposed has been dismantled, thanks also to the attitude of the crypto media that are now reduced to spreading gossip: since Monday, rumors have been circulating that the Japanese court has authorized the return of 141,686 BTC to their rightful owners, victims of the MtGox exchange hack in 2014 (in those years, it was the most important platform in the market).

If we consider that these BTCs were purchased at a price ranging between $100 and $500, in addition to the fact that the owners have been waiting for almost 8 years for the return of the ill-gotten gains, concerns about an imminent release were far from unfounded.

The problem is that it would have been enough to investigate a little deeper, to find out that according to the Japanese court the compensation to former users will be credited to their accounts not before 2023. Therefore this factor can be ignored for one more year, in any case it is a news with a certain degree of certainty that the market (smart money) already at this moment discounts (moreover, it is not even said that who will receive back BTC wants to sell immediately to realize!).

But of course the (unfounded) news contributed to spread fear and uncertainty on the market, favoring the bearish which in fact had an easy time breaking technically important support levels.

Regarding the short term price action, the break-down of the support at $58000, has actually made the level a resistance and if the prices do not succeed as soon as possible to rise above that threshold again, the probability of a test of the key support level in the 53K region increases significantly.


Today we will have the expiration of a large number of put options with strike prices at $60K and $58K and it is possible that a significant share of the selling in the last days is associated with traders' desire to get back their investment. If this is the case, at expiration the short positions will fall significantly, easing the sell pressure on the market.

But from the macro point of view, the scenario has not changed!

In fact, analyzing the BTC liquid supply, we will find that the recent price action has favored the usual passage of bitcoin from weak hands (small speculators and margin traders) to strong hands (smart money, holders) that are not in a hurry to get rich in a few weeks.

The greed and fear index has fallen into the fear zone, showing how quickly enthusiasm has evaporated from the market. This is the perfect scenario for a resumption of the uptrend, also considering the fierce wipe out of altcoins, which in some cases have recorded losses of up to 25%.

Speculation on shitcoin and related (NFT) has been the main driver of the current correction.

Thanks for reading

Posted Using LeoFinance Beta


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