Bitcoin Price & Market Analysis #1

Our bitcoin price and market analysis is intended to give you a clean overview of current markets and underline important support and resistance levels as well as the current macro-structure.
Bitcoin price analysis cover

Note: The price levels may slightly adjust depending on which bitcoin charts you are using. Our bitcoin price and market analysis is intended to give you a clean overview of current markets and underline important support and resistance levels as well as the current macro-structure.

Analysis Introduction

The general price action on bitcoin is very exciting right now, after several months of price consolidation and a record low volatility we have broken out of our consolidation and reached price levels that we have not seen since August 2019.

The stablecoin amount on exchanges has decreased with around 1 billion dollars in the last couple of months, this would suggest that a lot of capital has now been employed in the crypto market, as the recent price surges we have experienced would also suggest.

Bitcoin monthly performance
Source: Kraken

July was an excellent month for bitcoin as we experienced a nearly 25% increase in price, making it the second most profitable July month bitcoin has experienced since 2011.

Bitcoin and Gold Correlation

bitcoin gold correlation
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The bitcoin correlation with gold, which is the gold standard (no pun intended) when it comes to store of value, has sharply increased since early July.

The correlation coefficient between bitcoin and gold is represented above, and we can see it is close to 0.83 at the time of this article, which is quite remarkable. Going back five years, we can only find two other times that bitcoin had an equally high correlation with gold.

Why is this positive? Because this will allow for more investors and institutional money flow into the crypto markets, which will overall benefit the majority of people exposed to bitcoin.

A recent example of institution money comes from the company MicroStrategy, a billion-dollar company that has reportedly accumulated more than 21 000 bitcoin to function as their primary treasury reserve asset.

Read more on MicroStrategy adopting bitcoin.

DeFi Tokens

The market has shown immense interest for DeFi tokens, what I would comment on this is that the price surge is not driven by new money, but rather people that are already exposed to crypto in some way. DeFi tokens/coins are not very accessible to the majority, as it requires sending ETH and paying gas to use a decentralized software that does not seem that user friendly.

defi perp ftx

This is naturally not that appealing for most retail investors, however, exchanges such as FTX have been actively adding DeFi tokens on the exchange, and they also have a DeFi index which will allow for basket exposure. 

Monthly Outlook

monthly levels bitcoin
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Resistance: $13 900

Support: $10 800

We are identifying the critical support and resistance levels for our current range and we can see we managed to break into a new range early June after being below the $10 800 level for a whole year. The resistance at $13 900 was formed during our previous bull run. 

Macro Outlook: Bullish

The macro outlook on the monthly level is bullish as we are above our support at $10 800 after a year, and outside of price action there is alot to suggest that there is institutional interest in cryptocurrency. The longer bitcoin can maintain a higher price, the further it strengthens the validity of bitcoin as a store of value and currency. 

Weekly Outlook

weekly levels bitcoin
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Resistance: $11 490

Support: $10 550

Support: $9 680

Breaking things down further, we identify support and resistance levels found at the weekly timeframe, monthly support is shown with a blue stippled line. 

At the time of this writing, we have rejected the $11 490 resistance for the third time now. We have not seen any major sell-offs like we saw in 2019 around these same levels. Since we are at the brink of rejection, longs should not be opened in this area, shorts can remain open. 

Market structure

The market structure is bullish seeing as we were able to create a higher high at $10 600.

Daily Outlook

Daily levels bitcoin
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Resistance: $11 900

Support: $10 940

Weekly levels in solid blue and monthly level is shown as a stippled blue line. 

The price action for the daily range is in the middle of our two ranges which is not the place you would want to take any trades, at least not for a daily level swing trade. Preferable actions are to either long support or short resistance, traditionally speaking. 

Hourly Outlook

hourly bitcoin range
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Don’t mind the colors on the levels on the 1-hour timeframe, the levels are the same levels we have been looking above. 

You can see how clearly the price action comes together on even the lower charts once we have set up our higher levels. Even though it may seem very easy to trade using these ranges, you should be aware that risk management decides how successful you will be at the end of the day. 

You can see the recommendation based on the weekly not to open any longs at the current price is reasonable judging by the 1-hour timeframe, seeing how close we are to resistance which we just rejected. If price were to go to $10 500, we would still be in a macro bullish structure. 

Summary

The macro price structure is overall bullish as we managed to close above $10 600, creating a higher high. The monthly has also entered a new range with support at $10 800. 

If price action is unable to find support on this rejection, expecting to see price reach $10 600 is not unreasonable. 

The bulls would like to see a quick surge above $10 600, as this would suggest that $13 900 would still be in play, but judging by our rejection it looks like there is not enough buying interest around these levels at this time and price action is favoring shorts on the lower time frames.

 After sudden price surges as the one we have experienced, correction must be expected. 

gold price chart
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Click to see the live view of the gold chart.

We looked at the record high correlation between gold and bitcoin briefly, so I would drop a little tip to help you out. Look at the price movements between these two assets and see which ones moves first, this will allow you to take predictive positions based on the movement and earn profits as the other follows after. Hint: GOLD has been the first mover. 

Because of this, I would recommend paying attention to gold (XAUUSD), because as of right now, these two assets are highly correlated. Please keep in mind that the correlation is not guaranteed to stay this high for a long time, so use risk management. 

TradingView

The tool you see in this analysis is called TradingView and it is the most popular charting software used by cryptocurrency traders today. TradingView allows for easy alerts, drawing, monitoring and the use of hundreds of different indicators. You will have access to all cryptocurrencies, stocks and commodities. Basically, anything you can trade that is listed on a reputable exchange. 

If you want to give TradingView a try, you can do so for free, however, for extra features and the use of multiple indicators, you will be required to upgrade. The different plans are displayed below. 

Tradingview plans
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