Cryptocurrency Breakdown - A Technical Analysis on Next Price Movement.
Hello Steemians, I trust everyone is going great. Despite the fud going on in the financial market, the crypto industry has come to stay, and blockchain technology is the future of finance. The problem we have in the crypto market is greed. We are always expecting everything to be bullish and do not acknowledge the fact that bear seasons are also part of the cycle. Also, we failed to understand the risk and high volatile nature of the crypto market. This makes us throw it all in and make risky investments. But that's not what this post is all about. In this post, we will be analyzing what's going on in the crypto market currently from a technical perspective.
The entire financial market had been bleeding for a couple of days with a major outburst on Terra (LUNA). Most cryptocurrency has witnessed their lowest low since January 2021. A lot of us are scared that cryptocurrency is crashing. The truth is that this is part of the cycle in the market. The bullish season and the bearish season should always be in the mind of traders. Also, we should know when to take profit off the market and wait for the next available time to buy back.
It's funny to see investors who bought Bitcoin at $40k expecting its price to reach $100k before they can take profit. Bitcoins bull run started in October 2020 from $13k and broke its all-time high then at $19.4k. This bull run lasted till March 2021 when BTC recorded an all-time high at $64k. As a result of profit taking, it retraced back down to $30k before reversing to retest the all-time high at $65k forming a double top. It's funny that after this bullish movement, people are still holding onto BTC to reach $100k before they can accept a bull run. This market is manipulated by the big guys who understand this cycle. Please always take profits and don't allow greed put you in a tight position of taking a loss and leaving money on the table.
Technical Analysis
In this section, I will be analyzing the current situation in the crypto market and also predict the possible future directions. The chart analysis will be carried out on Tradingview. We will be analyzing the market using Bitcoin/USD. Bitcoin has the highest dominance over the crypto market and every other cryptocurrency follows its direction.
Before we start the analysis, let's take a look at the Total global market Cap of the crypto market.
From the global chart above, we can see that the MarketCap of the crypto market reached its all-time high at $2.82 trillion in November 2021 before retracing down to $1.6 trillion. Currently, in the last month, the total market cap has dropped from $2.1 trillion to $1.4trillion. That's over - $700 billion in the global market cap.
BTC/USD Weekly Chart
Looking at the chart above, we can see the overall price movement of BTC since 2018. BTC created an all-time high at $19k back in 2018. This all-time high which forms a major resistance level was later broken in November 2020 during a strong bull run that pushed BTC to its all-time high at $64k in March 2021.
During this bull run, price retraced to $30k to create a support level before reversal. After the all-time high at $64k, price came down to retest the support level at $30k before reversing create a higher high at $67k. This forms a double top formation which is a bearish reversal signal. During this bull run, we can see price trading above the 50 moving average. Price broke the moving average to create a minor support level at $35k before retracing to retest the moving average line. We know that the moving average at this point is serving as a dynamic resistance.
The bearish pressure in BYC was high and this led to the break of the major support level of $30k. But this breakout cannot be confirmed until the close of the weekly candle. We will be looking at how price reacts to this support at the end of the week.
BTC/USD Daily Chart
Looking at the daily chart, the overall market structure is bearish with price creating higher highs and higher lows. Also, we can see price trading below the 50 moving average which also signals a bearish market. We can see the minor support level on the Weekly chart at $35k broken.
Ideally, when a support level is broken price tends to retest this level for a continuation of the original trend. We shouldn't see this retracement as price reversal, many novice traders might FOMO in thinking that price is getting back bullish. From our knowledge of market structure, the overall trend is bearish.
The information on the chart is another scenario that can happen in the market. Have this in mind, the market is predictive and price can't always go according to our prediction. The only thing we can do is to react to our prediction and not stick to it. In this chart analysis, we have predicted two possible movements of BTC/USD. Price can retest the broken support and reverse to continue the bearish market. Also, if more buying pressure is injected into the market, we will tend to see price break above the broken support level now turned resistance. Only then can we confirm a bullish reversal in BTC/USD.
A lot of people have lost their entire life savings in the last few days because of greed. They FOMO all in +50x leverage to capitalize on the dip. Over $300 billion was liquidated across crypto platforms due to this bearish price movement. The crypto market is highly volatile and this makes it a risky investment option. We should always take calculated risks and maintain proper risk management when investing in cryptocurrencies. The crypto market is still developing and a lot of factors are limiting its adoption including the SEC always fighting crypto companies. We should invest what we can afford to lose and not throw all our life savings into cryptocurrency investment.
In the next article, I will be looking at the overall market structure of STEEM/USD and how it has reacted to this bearish price movement.
Cc: @reminiscence01
Market psychology,
You have analyzed the BTC/USD chart for both weekly and daily. I still believe in crypto as you do and I have learned a lot from the crypto academy and I now manage my risk,
Most people who lost are as a result of greed or not managing their risk. They often go all in. Which should be the case in crypto trading
I haven't had time to check the reason for luna crash maybe you can make a detailed post about it.
It's heartbreaking for real
The luna crash was due to pegged ust, i believe the ust crashed due to bitcoin bear market, and the terra network loss the reserve BTC for the stability of the ust, which thus plunge into luna as reserve next, regardless, luna was unable to stabilized it till it eventually plummet.
Thanks. Now I understand better
Great explanation sir, if there is anything have understood about the crypto market, is that the history always repeat it self, and this is what i mostly discussed with people not to FOMO, its better to have proper insight of the market first, irrespective of the reward.
A clear market with little profit is better than gambling the trend, Thanks for sharing the info with us.
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You are so right, this happens to all markets. I’ve seen my husband many times watching candles and building graphs 24/7.
All that you can is to ride the wave.
I have a question for that. How much I need to power up. If the last month earnings is zero... ??? To participate in crypto academy.
You can power up any amount of Steem to join the contest from next week.
Oke Prof.. thank for your time..