A Few Setups For Bitcoin

I thought things were getting better in the crypto market when Bitcoin rose 10k USD between March 14th and 29th, but the sales that took place in April messed things up. Sales have accelerated in the last two days. Although the panic seems to have dissipated in the last few hours, we do not know what will happen in the coming days (or even hours).

The daily Bitcoin chart shows us that we have been in an uptrend since January 22. If Bitcoin can hold the 40k level, we can continue to look to the future with hope.

It is also possible to look at the price decline we experienced in April as a pullback caused by the rapid rise experienced between 14 - 29 March. If we look at the event from the Fibonacci retracement perspective, we can argue that Bitcoin has experienced a pullback up to the 78.6% Fibonacci level.

The high volume purchases that triggered the previous rise came from 39k USD on March 16. We see that people are buying Bitcoin at the same level again. However, it is not possible to talk about a high volume yet. Other technical indicators are currently showing a mixed outlook. While the moving averages give a 'sell' signal, the oscillators predominantly give a 'buy' signal.

And what about Ethereum? Ethereum also had a %50 percent Fibonacci retracement after the last rally that took the price from 2.5k to 3.5k USD. 2.9k - 3k USD band is a critical support area for Ethereum.

Those who buy and sell crypto, of course, also take into account the macroeconomic situation. The recent hawkish statements from FED officials gave rise to concerns that the rate hike would be faster than expected. On the other hand, the attitude of other major central banks such as Europe, China, Japan, and England will also have an impact on the liquidity level. We do not yet see concrete tightening steps from other central banks, which is positive for markets.

It is argued that the rising correlation of Bitcoin with the Nasdaq is effective in the sales in the crypto market. In the chart below, the purple zone shows the Bitcoin Nasdaq correlation. There seems to be an increase in correlation from 2022 onwards.

When we look back and examine the historical data, we see a similar increase in correlation in February and March of 2020. During this period, Covid-19 concerns were effective on the markets. In the period of September - October 2018, there was a Fed interest rate increase agenda, similar to today. Bitcoin-Nasdaq correlation increases during periods when negative news is effective on the markets, but this correlation weakens later.

In the last few years, we have experienced sad events, the effects of which we still feel. The biggest of these events was undoubtedly the Covid-19 outbreak. The Russia-Ukraine war, which brought the world to the brink of the third world war, was also an unexpected and sad event. The Russia-Ukraine war caused a series of economic problems, especially inflation, as well as the human drama it created. When we focus on the big picture, we see that Bitcoin is performing well in this difficult economic environment. I believe this performance will become much brighter in "normal" times.

Thank you for reading.

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