Resistance Breakout in BTC and ETH – White Paper March 30, 2022

In the new issue of Cred and DonAlt, authors of the Technical Roundup newsletter, discuss the exit of BTC and ETH from narrow ranges in which theytraded in recent weeks.This is the most significant change in terms of TA in these markets in recent months, so it has been given maximum attention. The authors concluded the review with a commentary on the purchase of BTC by the Luna Foundation Guard and changes in the macroeconomic environment.

https://coinmarketcap.com/coins/views/all/

Bitcoin overcomes resistance

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After many weeks of sideways movement, the BTC rate toThe dollar broke out of a narrow trading range. The price closed above the key area of ​​~$46K, which was resistance on all high time frames.

Despite the rather complex (as we will discusslater) the fundamental factors affecting the market, from the point of view of technical analysis, the situation looks quite simple. In essence, the market is bullish, unless this macro breakout fails.

An unsuccessful breakthrough can be ascertained whenthe price closes below the breakout point of about $46,000. Falling lower with an instant recovery is a variant of the norm, but the loss of support at the site of the high of the previous range will be a signal for us to further decline, and a short-term exit from the range in this logic will be considered as a short squeeze.

Remember how great BTC/USD looked above $60K - until it turned into a failed breakout. The market just blinked, and the price fell by half. Failed breakthroughs should be taken seriously.

In the absence of such a negative scenario, the targetthe level on higher timeframes is the maximum of the range at $56-60 thousand. This is completely consistent with the arguments we expressed earlier about the range of $30-60 thousand.

In the short term, we can also highlight a decent “technical” level of ~$52-53 thousand.

To summarize, this is a significant breakthrough with potentialserious prospects. From a TA perspective, the price chart looks bullish, although rational repositioning towards growth is likely to be difficult in the short term. If this breakout holds, then we expect profit taking at the levels of $52–53 thousand and $56–60 thousand. If the breakout does not hold, then the market is screwed.

Ethereum also overcomes resistance

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The ETH/USD rate also went up from the multi-weeklateral range. The price closed above the key $3,000 resistance. Within a wider range, macro support can be identified at $2,000, resistance at $4,000, and a midpoint at $3,000. A recovery above the middle of the range is likely to be followed by a retest of its highs.

In principle, for Ethereum, our analysis is no different from Bitcoin: a break of resistance is great, losing this level as support is unacceptable.

As long as the $3,000 support remains, $4,000 remains the target level of movement.

With any strong evidence of a failed recovery above $3,000, our outlook is immediately changed to bearish.

Conclusion from all that has been said:do not underestimate the importance of these breakouts and rush out of the position unless it is a very good price (higher) or you have strong confirmation of a failed breakout.

Commentary: inflation and fast changing narratives

A couple of weeks ago, traditional markets ominouslywere declining, crypto-Twitter influencers (of the new ones) wasted their lifetime reposting any headlines that could potentially affect the market, the confrontation in Ukraine only escalated, and BTC/USD invariably rolled back after any reasonable attempts to issue a green candle.

Fast forward a couple of weeks and seea colossal purchase of billions of dollars of bitcoins from the Luna Foundation Guard (LFG), Michael Sailor raised a couple of hundred million more for the purchase of BTC, the “special operation” in Ukraine (as it is ordered to be called in Russia) shows signs of some de-escalation, altcoins are growing, and so on.

We would like to express several considerations in connection with all these changes.

First:trying to go against the market now when LFG is confirmed to be buying huge amounts of BTC is probably not the best idea. Not only because you are selling to a well-defined spot buyer with huge capital, but also because of second-order effects. Namely, knowing about this wave of spot demand, other participants will look for opportunities to go long, and sellers will most likely wait, since they can practically guarantee themselves the best price. More importantly, how the market will react to the suspension or completion of the purchase of LFG. If it was enough to bring the market out of the lull and bitcoin continues to show strength without this big buyer pressure, that's fantastic. If the market reverses when buying stops, it is a sign of weakness. In short, don't try to beat the market as long as LFG continues to buy, and pay attention to how the market reacts to the completion of this purchase.

Second:many of the macroeconomic factors that determined market movements have not yet completely dissipated. It is possible that the surprise threshold is higher than the market, and more factors are included in the price than have already been worked out, but, for example, inflation still does not look “temporary” or defeated, and there are chances for the Fed to accelerate the growth of rates. This is clearly an unfavorable factor, which is unlikely to lose relevance in the coming months. Not to mention the fact that the leadership of the FRS announced its intention to show more flexibility in relation to rates, taking into account the “special operation” in Ukraine. De-escalation (obviously the preferred option for any reasonable person) may also lead to an unwanted surprise for risky assets, as the fight against inflation will again come to the fore.

And lastly, don't become a slave to narratives.The market can still grow despite the "special operation" + higher rates + other macroeconomic factors. The market can go down despite the buying of rich people and large funds, a rebound in the stock market, or any other possible narratives. As they say, it is better to ask the market about the affairs of the market.

 

BitNews disclaim responsibility for anyinvestment recommendations that may be contained in this article. All the opinions expressed express exclusively the personal opinions of the author and the respondents. Any actions related to investments and trading on crypto markets involve the risk of losing the invested funds. Based on the data provided, you make investment decisions in a balanced, responsible manner and at your own risk.

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