The cryptocurrency market has stabilized for two weeks, limiting the break after two trading sessions on November 7 and 8. The FTX bankruptcy certainly brought a few dominoes with it, but the withdrawal dynamics from centralized platforms have calmed down, with a positive net deposit/withdrawal balance over the last 7 days. Technical analysis suggests that the market is in a long-term buy zone.
Bitcoin, Stock to Flow indicates a zone of long-term interest for the buyers’ camp
Ignoring the ongoing crisis of confidence in FTX cryptocurrencies after the bankruptcy, many technical indicators continue to indicate that the price of bitcoin (BTC) is in the zone of buying interest in the long term.
The current debate among Chartists is whether there has been a capitulation, i.e., whether a 76 percent decline from the old all-time high ($70,000 in November 2021) is enough to reduce the size of the mammoth.
The battlefield is between those who see the final drop to $10,000/$12,000 as the missing cleanup and those who have already entered a long-term bullish accumulation phase. You should keep in mind that these technical considerations are only relevant if the systemic risk has been eliminated and its probability is still significant at the current stage.
But let’s come to the end with a model very popular among bitcoin maximalists, the Stock to Flow model. This model is based on the relative scarcity of bitcoins, with the rate of production decreasing over time (via the halving process) compared to using the supply of bitcoins in circulation.
As I write this, the gap between the price of bitcoin and the stock line to the flow is at an all-time low, close to the gap level of 2011. The time aspect is also interesting as the average price of bitcoin ends its bear market 473 days before the next halving, currently 511 days until the spring halving 2024.
So, you say, “He looked again and found a deviation from the average argument in favor of a rebound.” Well yes, but only time will tell if this argument has any merit.
Figure 1: Stock to Flow pattern showing the time difference between the bear market bottom and the next bitcoin halving.
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Technically, a bullish divergence is forming on the weekly chart.
The overall crypto market cap and bitcoin price stabilized fairly quickly after the FTX bankruptcy, however, no bullish reversal patterns on the chart have yet been confirmed. It should be understood that as long as BTC remains below the main resistance on the $20,000 chart, the bear market continues to have the upper hand and the $12,000 target is engaged.
But on a personal level and at the level of amha (because, in my humble opinion, I like this abbreviation), this price zone is too conditional, everyone is waiting for it, even “findumondists”.
Be that as it may, one can join him at the slightest bad news of principle, I admit this to you. On the other hand, I continue to see bullish technical divergences after the last market drop, especially the one that is clearly visible on the RSI technical indicator in the weekly data. In short, only the god of the stock market has the final answer.
Figure 2: Chart showing the weekly Japanese Bitcoin price candles
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Source: Figures 1 and 2 — TradingView
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