Dear subscribers,
Welcome to Bitcoin Onchain, Offchain, and Beyond.
What a crazy market! Influenced by traditional market volatility, BTC rallied 5% before dropping another 8% in the past 24 hours. This led to most alt coins rallying 10-20% before dumping.
Below is a summary for market conditions on May 6th 2022 (current price $36.5k):
Long term/Cycle:
Not much have changed on the long-term cycle from a week ago. Whale accumulation continued, and institutional selling pressure keeps being depleted. The market continues to be in a state of fear and USDT dominance is at its historical all time high level, indicating a high degree of purchasing ability in the market.
Short term:
With FOMC relieving some short-term macro uncertainties, I was hoping for on-chain and off-chain indicators showing signs of bullish sentiment/demand on the past daily close. Unfortunately, they didn’t. I think any uptrend could be split into the following 4 stages.
Stage1: Market oversold (Downward/flat trend)
Stage2: Existing participant sentiment becomes bullish (Chop)
Stage3: More demand kicks in (Bullish Trend)
Stage4: Market overheated
Currently, we are in stage 1, starting stage 2. While some early signs of demand is showing on the futures market, general short-term sentiment has not yet turned bullish. In other words, confirmations are not enough yet for potential May rally starting. Keeping both profit taking and stop loss targets tight is currently the key.
Cheers,
Phi
High Level of Market Purchase Power
The indicator above is the USDT dominance. The lower the USDT dominance, the more overheated/greedy the market is, while high USDT dominance indicates market depressions and high levels of relative purchase power in the space. Currently, USDT dominance is at its all time high level, which signals a profitable long-term accumulation level. Do note that the USDT dominance has not started its bullish trend yet, which is needed for a May rally.
General Sentiment still Bearish
The chart above shows whether short-term traders are selling in profit or loss. The short-term hodler SOPR has been below one throughout April, meaning whenever price reaches the short-term hodler break-even price level, they have been selling. For a May rally to kick start, the existing trader group needs to move away from the “sell” button.
MACRO Short Term Relief
No surprises came out of the May FOMC, with FFR raised by 50 basis point. The good news is Fed Chairman Jerome Powell commented that a 75 basis point rate hike (which was the general expectation for June FOMC) was not currently under consideration and the Fed could consider 50 basis point hikes at the next couple of meetings. The bad news is the Fed will start trimming the balance sheet from June. BTC has had relief rallies post past FOMC meetings, and with whale accumulation going on, I do think we have a good chance of a May relief rally to the BTC long term mean reversion level (44k) after short-term sentiment picks up.
Free Indicator Links:
Onchain Whale Demand:
https://www.tradingview.com/script/9Fhu9LGQ-BTC-Transaction-On-Chain-Volume-Basic/
Altcoin vs. BTC Season:
https://www.tradingview.com/script/95QlU7Uk-Altcoin-vs-BTC-Season/
Auto MACD Divergences:
https://www.tradingview.com/script/NvtunxPO-MACD-w-Divergences/
Auto RSI Divergences:
https://www.tradingview.com/script/CuB4Dgs0-RSI-w-MAs-Divergences/
Disclaimer
NONE OF THE INFORMATION IS INTENDED AS INVESTMENT ADVICE, AS AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL, OR AS A RECOMMENDATION, ENDORSEMENT, OR SPONSORSHIP OF ANY SECURITY, GROUP, POOL, OR FUND. IT SHOULD NOT BE ASSUMED THAT THE METHODS, TECHNIQUES, OR INDICATORS PRESENTED IN THIS NEWSLETTER WILL BE PROFITABLE OR THAT THEY WILL NOT RESULT IN LOSSES. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE CONTENT AND ANALYSIS IN THIS NEWSLETTER IS FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO BE AND DOES NOT CONSTITUTE FINANCIAL ADVICE OR ANY OTHER ADVICE. THE INFORMATION PROVIDED IS GENERAL IN NATURE AND NOT SPECIFIC TO YOU. YOU ARE RESPONSIBLE FOR YOUR OWN INVESTMENT RESEARCH AND INVESTMENT DECISIONS.
Great, this artical is highly recommended. The traditonal market collapsed and also the BTC, no worries, the purchase power is accumulating