Bitcoin Market Update

Bitcoin is still stuck trending sideways between a range high of $10,500 and a range low of $8,800. The price was sticking close to the range low, however, it still hasn’t breached the level successfully.

While the market cap of bitcoin has stayed relatively stable over the last two months, things might change if there is a volatility-induced move soon.

As for the RSI, there hasn’t been any change either. Although for a brief moment RSI wandered below the 45-line, it has climbed back above it.

This sideways trend with little or no volatility will eventually blow over leading into a massive volatility-induced move, as mentioned above.

Bitcoin and Descending Triangle Patterns

Since its 2017 bull run, bitcoin has been forming large consolidation patterns in the form of descending triangles. The first descending triangle was in November 2018, during the peak of “hash rate wars”. This pattern broke out crashing bitcoin’s price by 50% over the course of 30 days.

During the hash wars, the Bitcoin Cash community split into two, one camp followed the ideas of Roger Ver and the other camp followed the self-proclaimed Satoshi Nakamoto. Eventually, BCH won the hash war and the other camp was called BSV [or Bitcoin Satoshi’s Vision] The breakout of this pattern pushed the price down from ~$6,000 to ~$3,000.

The second drop came a day after Bakkt launched, on September 24, 2019. This drop pushed the price down by 27% in almost 30 days. Bitcoin went from ~$10,000 to ~$7,300. Between September 22 and 25, a total of $786 million sell orders, and 36 million buy orders were liquidated.

The third descending triangle has the price consolidating for more than a month and the price has gone from $10,400 to where it now stands ($9,300).

For the breakout of the third descending triangle, there are three targets, indicating a potential drop ranging from 7% to 26%. The first target stand at $8,200, which is a 7% drop from the base of the triangle or an 11% drop from the current price of Bitcoin.

The second target ($7,470) is 19% lower than the current price, however, from the base of the triangle, the target is a 15% decline in the price. The final target, although unlikely, is $6,470, which is a 27% drop from the base of the triangle.

How is the big money positioned?

Knowing the direction in which the big money is positioned gives the average trader an edge and CME report does just that.

From the above, the positions held by leveraged funds (hedge funds), other reportable (professional traders), and non-reportable (retail) are observed. It is clear that leveraged funds are net short with 2,200 BTC while the retail money is bullish with a long position of 1,240 BTC.

A new development is from other reportables (professional traders), who have gone from being net short (1000 BTC) to net long (1,200 BTC).

From the above, it is clear that hedge funds are short BTC while retail and professional traders with relatively huge capital are long. While the long position looks favorable things might still change as the price nears the breakout zone from the descending triangle pattern.



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