Crypto Market Update July 1, 2024

July 1, 2024
@Justin Wise
Lead Technical Analyst, Co-Founder

Bitcoin Weekly Analysis

Often when analyzing the markets, it's best to take a step back and regularly review the Higher Time Frames, to really get a fundamental picture of what's going on. Sticking to the fundamentals, and focusing on quality over quantity, is a key tool for long-term success.

On the Weekly Timeframe, we can see that Bitcoin is currently testing and consolidating at support in the form of the Weekly 21 Exponential Moving Average. Last week's candle closed as a Hammer Candle, generally a strong reversal signal. Should this week's candle close bullish, and more importantly, close above $64,000, then we will have formed a Morning Star Pattern, an even stronger Bullish Reversal Signal.

The reason closing above $64,000 is important, is because that is our current High-Volume Node that we're consolidating in. Last week's price action drove the wick into Low-Volume Node territory, where liquidations and large limit orders often sit. Price does not like to remain in Low-Volume Nodes for long, and it often violently crashes through them or violently reverse from them back into High-Volume Node territory, where the price is more agreeable to both buyers and sellers.

Note too, that last week's wick also gave us a Higher Low. We now have TWO Lower Highs and ONE Higher Low in this overall consolidation range, allowing us to begin to sketch the pattern that price is taking in the form of a Symmetrical Triangle. This is a Continuation Chart Pattern, and since we are in an overall Bullish Trend, we would expect the resulting breakout to be to the upside, forecasting a continuation of the Bull Market and that this Market Cycle is not yet over.

Bitcoin Futures Weekly Technical Indicator Analysis

Turning our technical attention to Bitcoin Futures, we can see the declining power of sellers as evidenced by the Volume Delta Indicator. Their selling power has steadily diminished over the last three weeks, and this week should either showcase the last gasp of sellers or the strong return of buyers.

As expected, the Bearish Crossunder from Time Transformation did herald another week of downside, and if we pay close attention to the last Bitcoin dip and bounce structure, even after the previous Hammer Candle we still continued to close another Bearish Week. The critical thing to watch for is how this weekly candle closes and any subsequent weekly candles. If we are indeed forming a Symmetrical Triangle, and we are indeed to bounce from this low, maintaining a closing price above last week's low of $58,218 is crucial.

Closing below last week's low would not only invalidate the Symmetrical Triangle structure, but also be a breakdown of this current consolidation range. It would turn the Bearish Crossunder from both Time Transformation and the Decision Point Momentum Oscillator into not consolidation signals, but bearish reversal signals, heralding a move lower to $50,000 to $55,000.

However, as long as last week's Low is respected, I expect prices over the next two weeks to rise to the mid-point of the range ($64,500) or even more optimistically the top of the range ($71,000).

Bitcoin Mining Analysis

To strengthen this bullish narrative, we once again turn to analyzing Bitcoin Mining activity. While Miners are still in Capitulation Mode, largely due to the popularity of Ordinals and Runes boosting demand for blockspace and supplementing Miner Revenue with transaction fees, Bitcoin has tested the Production Cost, a level we have never successfully closed below.

It remains my base case that we see a violent reaction away from this level, and that should we close below it, that would be unprecedented in Bitcoin's history and in combination with the cost basis of Short-Term Holders, lead a much longer and potentially deeper correction.

Bitcoin Liquidation Heatmap

The Market Makers have been busy bees over the last 24 hours, and short sellers are the ones who have been targeted. A nice reprieve from the constant abuse that leveraged longs have suffered over the month of June.

Liquidations began as price drove up $63,300 - the level I spoke about in my last update. In that report, I said that price needed to close convincingly above $63,300 for higher prices to be justified, and indeed we did do that. Price has now swept most short liquidity, however a last cluster remains around $64,000. I expect that will be targeted over the next two days, and that we will either see a pullback or consolidation for the following two days as we go into the Fourth of July holiday.

In other words, I'm not expecting us to make THAT much progress over the course of this week - most of it has already been done. Therefore, there are still likely opportunities to position long over this week for a larger potential move closer to $70,000.

Bitcoin Large Limit Orders

A large number of Large Limit Asks have now been filled on this rally to the upside. Notice the dynamic here, typically when Large Limit Orders get filled, price then moves away from that fill level in the opposite direction. That's because these traders are smart, and other traders and market makers pay attention to their levels and tend to respect them. Also, notice that one large limit order typically does not end a trend. They are a foreshadowing of what brews slowly.

Unfortunately, most retail traders are very short-sighted and do not have patience, and they get tossed around by the whims of instant gratification. Learn patience, and let the market come to you, as these pros do.

There is another large cluster of Large Limit Asks around $64,000 - which aligns with the large liquidation cluster I pointed out earlier. Anyone wanting to fade this rally would do well to position there, although I do believe the dominant direction this month will be to the upside. That does not mean we cannot capitalize on movements that last a few days.

Bitcoin Footprint Chart

The Footprint Chart shows that we are coming up to a critical juncture for Bitcoin - as price has been busy sweeping all previous Ask Imbalances in the market. We just tapped into the last of two clusters sitting above current price, around $64,000. That makes three factors aligning around that price as a very important zone for Bitcoin. It is the last (close) technical level where we might see sellers step in with some force and attempt to suppress price to fill more Long Limits - making longs yet again the target for liquidation sweeps for the upcoming days.

We can also identify from this chart the importance of Volume in decisive market movements. A nice Bullish Engulfing candle with high volume followed by tight consolidation is showcased on this chart, beginning the current uptrend. This pattern is very important. Often, High Volume can result in a reversal, but when it's followed by tight consolidation and not rejection, it's almost always a strong signal for the continuation of that movement.

If sellers do step in with force at $64,000 - my first down-side target would be to liquidate longs at $62,400 and test the Aggressive Bid Imbalances that appeared there.