Big Move Coming – Crypto Piece
Q4 2024 Looking Bullish
The Crypto market has left investors confused after a 6-month consolidation that consisted or time and price capitulation. Many are calling for a Bitcoin cycle top to be in and are anticipating lower prices in September because of Bitcoin’s seasonality. But these investors are missing the bigger picture and micro details. That’s exactly what we’ll cover in this article, so that you can be on the right side of the big move that’s building.
Bitcoin Technical Analysis
Despite the 5th of August sell-off and the early September sell-off, Bitcoin continues to hold its weekly 50-SMA on a closing basis. This is a key weekly MA that has been systematically held during Bitcoin bull runs. The fact that Bitcoin is still holding it is a promising development for the bulls.
Back in Summer 2021, people started calling for the top being in, but the weekly 50-SMA. What happened next was a big rally that was able to make slightly new highs. The sharp bear market drawdown only started in late-2021/early-2022, when the weekly 50-SMA was broken, and price got rejected from it.
In our last Crypto Piece (found here), we had outlined the scenario where Bitcoin could go as low as $52.9k in September. We got that number off by just $300 as Bitcoin’s 6th September wick reached as low as $52.6k.
Bitcoin has now reclaimed the daily 9-EMA (green line) after reaching $53.9k on a daily closing basis. This close has the potential to form a double bottom with early-August’s daily close.
The next real test will be the $60k level, which coincides with the daily 55-EMA (red line). But the key number we’re eyeing is the $61.7k level. If Bitcoin is able to reclaim that on a daily closing basis, it would significantly flip the momentum in favor of the bulls.
Ethereum Technical Analysis
Let’s rewind to 5th August 2024: The markets were in panic mode following the Japanese Carry Trade and Ethereum made a big downside wick reaching $2130. This was followed by a sharp bounce that reached $2822.
However, during this bounce, we emphasized on the probability for price to fill the capitulation wick, while forming a bullish RSI divergence. You can find our exact write-up in the image below (or in the article here).
That’s exactly what ended up happening in early-September as price reached $2220 on a daily closing basis (with a wick down to $2150). Simultaneously, there’s a daily bullish RSI divergence that’s formed, which is a typical outcome for such structures. Lastly, Ethereum’s recent move also retest the uptrend line as support, which a scenario we had highlighted in our last Crypto Piece here.
This textbook price action has played out perfectly, which gives us confidence that we have a good read on it. The key level to hold now is $2109 and the level to reclaim is $2825 on a daily closing basis. Once the latter is achieved, it would confirm the last couple of month’s basing pattern and result in the bulls being back in control.
S&P 500 Market Breadth’s Influence On Bitcoin
It’s important to note that the stock market backdrop is favorable for Cryptos. When the percentage of stocks above their 200-day MA (market breadth) is above 70%, that’s when Bitcoin usually sees big moves up. We’ve been in such an environment for sometime now, so it’s very likely that the stage has been set for Bitcoin (and the rest of the Crypto market) to spring higher.
Bitcoin NVT Ratio (Fundamental Analysis)
Even from a fundamental standpoint, Bitcoin is in extreme value zone. The NVT ratio, also known as Bitcoin's PE ratio, shows the ratio of on-chain transactions to the market cap. Simply put, above red = over-valued and under green = under-valued.
Right now, Bitcoin is in deep value zone. The past times when the NVT ratio was below green, it provided very profitable Bitcoin buying opportunities. In our humble opinion, this time shouldn’t be any different.
September Statistical Data – Profits Lie In The Details
Crypto Twitter is filled with the belief that September is often a hard month for Bitcoin. While that is true, the real Edge comes when you investigate the statistical details for September. We usually cover such details in the Premium Section, but we wanted to give you a glimpse of the type of Alpha you can get by being a Paid Member.
The average September low happens 14.7 days into the month, suggesting that the first half of September has more downside pressure than the back half. But, here's where it gets interesting: In the 3 September's following a Bitcoin halving (2012, 2016 and 2020 – highlighted in red rectangles in the image below), the September low came within the first 8 days.
While the sample size is small, this is something to keep in mind as a factor. 2024 was another halving year, so it won't be unusual to see the September low in by now if history were to repeat.
Also, weekends were the most common time for September lows to occur (refer to above image). Since 2011 (13 instances), the September lows occurred 3 times on Friday, 3 times on Saturday and 3 times on Tuesday. This means a Friday or Saturday has a 46.15% chance of seeing the 2024 September low.
Here’s where it gets even more interesting: Since June 2024, Bitcoin has often seen a reverse in trend from the 5th of the month (refer to the chart below). This month it did go lower on 6th Sept (Friday), but since then it has been showing signs of reversing. Do note that 6th Sept was a Friday, which aligns really well with the point made in the earlier paragraph about Friday being a high probability day for a September low.
Now that we have a confluence of factors aligning for upside, when can we expect this move to happen? That’s exactly what we’ll cover next in the Premium Section. You’ll get our September proprietary Cycle Forecasts for Bitcoin and Ethereum.
Then, we’ll analyze the state of the altcoin market. There’s a pure alpha chart that’s waiting for you to time the altcoin market. Finally, we’ll cover 3 attractive altcoin setups that have very high potential. 2 of them are available on Coinbase and 1 is only available on decentralized exchanges like Dextools (we are not affiliated with them).
Find our membership cost/benefits below. If you’re serious about Making Money (our primary goal at Cycles Edge), then the Premium Sections are key for you!
Bitcoin Cycle Forecasts