🔥 Bitcoin: Fundamental & Technical Analysis Signaling Bullish

3 במאי 2022

In today's analysis I want to give a comprehensive analysis on why I think that we're about to see a mini bull-run in the coming weeks. It's going to be a longer than usual read, but it will be worth your time 😊.

Contents:
1) FED Interest rate hike on 04-05-22 & BTC bear-flag
2) SP500
3) DXY (dollar index)
4) VIX (SP500 volatility index)
5) Concluding remarks

1) FED Interest rate hike on 04-05-22
Tomorrow, the FED will announce the new interest rate. The expectation is that they're going to hike the rates by 0.5%. The FED has been signaling this hike for the last couple of weeks, so I'm expecting the FED to keep their word on it. There's currently a lot of fear in the markets, so if the FED decides to hike more than expected we can expect a strong sell-off. This contradicts the FED's "soft-landing policy", hence I'm expecting they won't deviate from the +0.5% hike.

The last time the FED hiked the rates was at 15-03. Back then there was also a lot of fear in the markets, but the fact that the FED has kept their word led to a big run-up in both stocks and crypto for several weeks. During periods of high fear (like now), neutral news = good news = bullish price action.

Lastly, BTC is trading near a very important support at the moment. The fact that we haven't fallen through yet means that the market is still indecisive of the near-term trend. If the FED news will be positive we can expect the support to hold, leading to further continuation of the pattern.


2) SP500
After the initial March run-up, the SP500 has given back all gains made during that time. Reason behind this fall is a further deterioration of the market outlook in the long-term due to rising interest rates and inflation.

In the picture below you can see that the last rate hike on 15-03 has led to a huge bullish move. During the current sell-off, the price got slightly below the support area. This fake break-out has now trapped many bears who were eagerly waiting for the price to fall through the support area. If the price keeps rising, said bears will have to cover theirs shorts, leading to further bullish pressure.


3) DXY (dollar index)
A lot of analysist (me included) have been talking about the DXY recently, so I'll keep it brief. A bullish dollar means that investors are flocking to safety, which leads to bearish pressure on risky assets like BTC and tech-stocks.

At the moment, the DXY is severely overbought on the weekly chart. Furthermore, the DXY is trading inside a strong 5-year resistance area. See the chart below.

Personally, I think that we're long overdue to some sort of correction and that we need some weeks to cool-off. This will be bullish news for risky assets like BTC.




4) VIX (SP500 volatility index)
The last chart of the day will be the VIX. The VIX measures the volatility in the SP500 index. A rising VIX usually means bearish price action. If you're unsure what the VIX is and how to analyze it I'd advice you to take a look at my analysis below where I talk about how to time Bitcoin bottoms with the VIX.

If we take a look at the current value of the VIX you can clearly see that we're (again) trading in a very important area of resistance, see picture below. The area between 35-40 has been an area of reversal for the last couple of years, so chances are that this area will hold and that the VIX will see some kind of reversal. A bearish VIX is bullish for stocks and therefore for crypto.



5) Concluding remarks
In the long-term, I'm still bearish until proven otherwise. In previous analyses I wrote that I still expect one more capitulation below 30k before we can safely assume that the Bitcoin bottom is in. However, that doesn't mean that we can't have another 2-4 green weeks. I doubt whether this will be the moment that we're going to 50k, but in the end no one knows.

Don't use this analysis to go make bullish entries already. Wait for the market to react to the FED rates and adjust your game-plan.