Breaking Bitcoin 10-11: Bitcoin Finds Support, Tether Scares and Whale Movements.
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BTC/USD
Our wedge pattern broken down last night. I've spent the morning researching the fundamental reasons that might be behind the drop in price. The largest speculation is the mass exodus of USDT from the Bitfinex exchange to Huobi and Kraken, where traders were offloading their USDT for other assets to get out of the market. This exodus was large enough to demote Bitfinex from the second largest holder of USDT to the third, with Binance and the Tether Treasury as the first and second respectively. Here are some interesting articles to research this further:
https://cryptovest.com/news/tether-usdt-exits-bitfinex-wallet/
https://smartereum.com/37299/tether-on-bitfinex-crypto-community-caught-by-surprise-as-tether-usdt-exits-bitfinex-suspectiously-tether-news-today/
Huobi USDT Wallet: https://www.omniexplorer.info/address/168o1kqNquEJeR9vosUB5fw4eAwcVAgh8P
Tether Treasury USDT Wallet: https://www.omniexplorer.info/search/1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz
Here is another interesting article researching the effects of Bitcoin "whales" during large market moves. The dominant narrative seems to be that Bitcoin whales manipulate the price of Bitcoin en masse, and are an evil cabal similar to the Illuminati overlord lizard men. However, new research by Chainalysis purports that in actuality, Bitcoin "whales" make up a small minority of large wallets and in general their activity is a net buying effect during times of market dips, not sells. This paints a bullish case for Bitcoin, as it lends credence to the fact that these "whales" are overwhelmingly professional institutional traders. If they're actively buying Bitcoin during times of market dips and not selling, that means that they're aim is to accumulate more Bitcoin for the long-term during times of discount price. I'll state this again: analysis of the Blockchain shows that professional, institutional traders are concerned with buying as much Bitcoin they can at the best price possible, NOT in selling Bitcoin during times of panic. That means they have a much more stable finger on the trigger of their investment thesis. It seems that they have a strong faith in Bitcoin's capacity to gain value over the long term.
https://blog.chainalysis.com/reports/bitcoin-whales-oct
Technical Analysis
Bitcoin found support at the 1.618 Fibonacci retracement that we had plotted as a worst-case scenario. Individuals that had buy orders set at low levels of support as recommended by our long-term strategy were quite happy to get their buy orders filled at such cheap prices.
We did complete a full nine count setup as displayed, which is an indication of momentum exhausting. We see this playing out confirmed by price action and volume. Buyers were able to step into the market and push price all the way back up to our first downside target, yet the bears were able to step right back in and re-test that lower level of support. Luckily, for the bulls, buyers were able to defend support yet again. Now the doji candle that formed because of this is a weak hammer style candle. Candles of this nature are typically seen in reversal patterns when bears attempt to push price down and the buyers step in numbers sufficient enough to defend support.
Price is currently ranging sideways with pressure from both sides, yet bullish volume is picking up as more buyers step into the markets.
There is a world-wide economic event that is currently happening in traditional markets right now, as many things have taken a plunge which has been correlated to the current drop in Bitcon's price. Looks at the SPY and the DJI indicate this as well. Rumors of China selling off large amounts of American debt as a retaliation against the "trade wars" has also been speculated as a reason of this global downside. However, compared to traditional markets, Bitcoin seems quite resilient here. The SPY and DJI seem to be finding support as well at key Fibonacci levels, levels we teach extensively in our workshops to improve the ability of individuals to empower their financial success through proper trading.
Our Smoothed Stochastic oscillator shows us yet again at an oversold position, a reliable confirmation that price has temporarily found support at current levels.
We're going to need to see more volume moving into confirm a legitimate movement to the upside, but the most likely scenario is upwards movement from here. However, capitulation is still a danger if we see the bulls falter in confidence and we see a break below support levels.
For the most likely scenario of an upside movement after this defense of support, buying prices around or underneath $6200 are recommended with short-term targets of $6400 and $6500.
For leveraged trading, we recommend low-leveraged trading now larger than 5x with the same entries and targets.
However, if we break below support at $6146, $6106 there is cause for concern. This would indicate the inability of bulls to move price upwards from this level, and price would be destined to consolidate at this level.
A worse capitulation event would not occur unless price drops below $6036, in which case we except much lower prices starting with $5902 and $5782.
Sincerely,
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