Crypto Market Update July 10, 2024

July 10, 2024
@Justin Wise
Lead Technical Analyst, Co-Founder

Market Fundamentals

With the Ethereum ETF Approvals looming, applicants have re-submitted their S-1 forms with the SEC. The deadline to do so was yesterday, so this is a very positive sign as it shows that communication from the SEC is in-line with the communication that applicants for the Bitcoin ETFs received - and that positive communication is occurring.

This is rhyming almost identically to how the Bitcoin ETFs were approved several months ago. Interesting to note of course, that this is likely a "buy the rumor, sell the news" event. Bitcoin's price rallied powerfully in the months leading up to the ETF approvals, but once the approvals were in, Grayscale's Bitcoin Trust AUM declined by 45-48%.

In other words, we anticipate rallies leading up to the approvals, however once the approvals are in we anticipate the ETH selling pressure from Grayscale to offset inflows into the ETF.

In addition to this, Thursday will see an important economic metric that could implications for Bitcoin's price. United States CPI, year over year, and month over month in addition to Core CPI will be released on Thursday. Expectations are that Core CPI will come in at 0.2% or below, while CPI y/y is expected to decline by 0.2% to 3.1%. This is very positive, and is associated with bullish swings in both traditional markets and crypto.

United States CPI Graphs and Expectations

Bitcoin Daily Trend Analysis

Bitcoin is struggling to re-claim the 200 Daily Simple Moving Average, a critical level for price. Today's price action saw Bitcoin fail to reclaim this important level, rejecting from a small High-Volume Node slightly below $60,000.

The 200 SMA itself has ceased it's uptrend, and gone sideways and flat, Confirming the shift in trend for Bitcoin. Negative momentum continues to rise as evidenced by the Daily Average Directional Index and rising Bearish Directional Movement Index.

Discretionarily, I feel a more pronounced movement to $60,000 - $62,000 is on the table, however with tomorrow's CPI print being released, we often see a buy the rumor sell the news situation. During past releases, Bitcoin's price rose up to the CPI announcement, then fell immediately afterwards.

If we fail to close above $58,843, which I've marked as a Lower-Time Frame Breakout, then we will re-visit $56,000 - $54,000 within the next few days to re-test liquidity and the conviction of the buyers there.

Bitcoin Daily Technical Analysis

Bitcoin remains in a Daily Bearish Trend, with the critical level to break above being approximately $62,000. While we anticipate a short squeeze up to the $60-$62,000 level, failing to close and hold above would not mean a trend change, but an opportunity to short Bitcoin's price down to the $50,000 range as the market continues to digest the overhang from the German state of Saxony & Mt. Gox Payouts. Likely, this selling pressure both physically and psychologically needs to be processed by the market before any later year bullish narratives of FTX Creditors and Elections can take the reins.

We have identified Regular Bullish Divergence off of the lows, however I will caution that during downtrends it's not often until the third such oversold signal that we see a sizeable bounce. This would only be the second so far.

Volume Delta shows that buyers have been in control and gaining strength for the last four days, however volume still remains quite low across major exchanges.

Bitcoin 4H Technical Chart

Here we can see Bitcoin's failed attempt to break out of it's current consolidation range, with Time Transformation having successfully called both local tops over the past week.

The Meso Uptrend is controlled by the price point of $56,600, closing below that level would, as stated earlier, likely lead to a plunge to approximately $54-55,000 if not lower.

Note however, that DPMO has not confirmed this movement, meaning that it still believes an uptrend is in tact.

Bitcoin Liquidation Heatmap

Market Makers have shifted their attention from liquidating short positions to their favorite activity for the past three months, liquidating longs!

Bitcoin made a triple bottom in the cluster of $57,400, however we have now just double topped below the closest short liquidation position. We now move for a fourth test of this zone, and buyers appear to be exhausted. Should we break below this it is likely we will clear most long liquidations below $57,000.

Bitcoin Footprint Chart

We are forming a Symmetrical Triangle Pattern, and we can see the failed breakout attempt Bitcoin made overnight. American and European traders, who had showcased themselves as quite bullish in stark contrast to the Asian cohort, flipped into active sellers today.

I am currently in a short position, targeting the $55,500 zone. I will reevaluate the position at that time.

Aggressive Sell Imbalances and Short Liquidations lie close to current price at $58,000 and $58,300. Price would need to close convincingly above those levels to invalidate the short setup. Those would be entry targets for those looking to follow along.

Large Limit Asks were filled between $58-59,000 overnight.

Bitcoin Dominance

Bitcoin Dominance continues it's Symmetrical Triangle Consolidation, and approaches the ascending support level. Altcoins have continued to perform well in this consolidation, and most look as if they are breaking out or on the verge of breaking out while Bitcoin struggles.

With the Alt Season Index indicating that now is a historically profitable time to enter altcoins, a breakdown of Bitcoin Dominance with surging altcoin prices could indicate that Bitcoin will largely consolidate over the summer and we could get a nice Altcoin Summer.

This is something I'm watching very closely.

Altcoin Dominance

Altcoin Dominance currently sits at 16.9% of Total Market Capitalization.

Stablecoin Dominance

Stablecoin Dominance continues to rise and sits at 7.43% of total Market Capitalization.