Bitcoin [BTC]: Momentum Is Shifting In Crypto. Watch ASAP.

Michael Pizzino

Market Overview

The bears have taken control of the market, with new lows likely before a break back into price discovery. Trends are mixed, but the S&P 500 has broken to new yearly lows, indicating a clear downtrend.

Traditional Markets

  • The S&P 500 has broken to new yearly lows, with all trends pointing downwards across lower and higher term timeframes.
  • A solid line of potential support is at 5,700 points.
  • For a shift in sentiment and market structure, a break of the 50% level and the overhead trend line is needed.

Cryptocurrency

  • Crypto has not yet flipped into the same downtrend position as the stock market, with some neutral and uptrend signals still present.
  • However, crypto is getting close to breaking into new lows.

US Dollar

  • The US dollar is showing a clear trend confluence on multiple timeframes, having broken back into the strong half of its 50% level and through the last line of resistance at 108 on the US dollar index.
  • A strong US dollar typically weakens assets priced in dollars, contributing to the current downtrend in stocks and cryptocurrency.

Total Market Cap

  • The total market cap had one of its quietest periods over the weekend, suggesting a big drain of liquidity.
  • A "fourth time breakout" signal is in play, which could lead to a genuine move down to the next potential support zone if triggered.
  • The potential breakdown signal has not yet been triggered, with price not having come down to retest the zone.

Bitcoin

  • On the weekly timeframe, Bitcoin has broken its weekly uptrend and is now down on the one-week, one-bar timeframe.
  • The major level beneath the current support zones is the previous all-time high from March of last year, which would indicate a potential top and bear market if broken.
  • On the daily timeframe, a "one, two, three" signal is marked up, indicating a potential fourth-time breakdown.
  • The support zone beneath the market, should the breakdown occur, is relatively close, with a trend line coming in at around $89,100.

Volume and Liquidations

  • Overall exchange volume has been low since early December, indicating weak rallies.
  • Liquidations are very low, at $160 million in a 24-hour period, with a need for a large flush-out to potentially reverse the market direction.
  • The long/short ratio is at a perfect 50-50, making the direction of the next breakout crucial.

Outlook

  • Sustainable rallies are unlikely until volume trends change and breakouts above resistance areas occur.
  • The breakaway zone for Bitcoin to indicate sustainable rallies to the north is around the 50% level of the correction, intersecting with a trend line around the 18th of January.
  • Short-term charts show a clear range being established, with a need for a breakout with volume to confirm the direction of the next move.