On this Wednesday, August 3, 2022, bitcoin seems to be both bullish and bearish and divides a good number of investors. Although some analysts were considering a bullish recovery since the breakout of the range, opinions are more mixed at the start of August. And a bulltrap returns to the front of the stage as a privileged scenario. I detailed this scenario in the article written last week. The macro-economy leaves a lot of room for volatility, and offers us stressful days on the upside as well as on the downside without real convictions over the long term. Let’s start right away with this week’s bitcoin 360 point. I will try to be as complete as possible in sharing my feelings about the market. Good reading !
Bitcoin still in a downtrend
The crypto market leader is still struggling to regain strength. The trend is clearly bearish, just go in daily or monthly time unit to realize it.
2 levels are interesting to be able to reposition downwards (in short), or at least take profits. The area between $25,400 and $30,000 (in pink on the chart) is very important. It highlights entry points for sellers who are likely to reposition themselves on the long-term trend. The $30,000, beyond the psychological threshold, marks a strong resistance from a technical analysis point of view.
Profit taking has already been observed at the beginning of the week, marking a bull trap. This event leads me to believe that the $22,000 support is likely to be revisited in the coming days.
As long as the support holds and that of the S&P 500 as well, then a bullish narrative could set in to reach the objectives described above.
The S&P500 on resistance
You’re getting to know me, I’m constantly glancing at the US index. We find him this week on resistance. The objective mentioned in the past weeks has been achieved.
This zone is likely to bring in a majority of sellers and let buyers take profit. If we observe this reaction then, I will have a pessimistic and bearish bias on all markets, including that of cryptos. Watch this level which could lead us to look for lows on the US market.
An ETH 2.0 on everyone’s lips
The event “The Merge” is one of the most important meetings of the year. More than 6 years of work to allow Ethereum to go from Proof-of-Work (PoW) at Proof-of-Stake (PoS). It should considerably improve its scalability and allow the development of more complex applications. Despite the various postponements, it seems that the official launch is imminent.
This narrative could be a catalyst for the entire crypto market, creating strong bullish momentum over the medium term. On the other hand, in the event of disappointment or failure, expectations as well as prices can very quickly come down. We must therefore remain vigilant.
PELOSI and Taiwan: source of volatility for the markets
Speaker of the United States House of Representatives Nancy Pelosi landed late Tuesday afternoon. However, the Chinese authorities have threatened reprisals if the trip takes place. The White House has sought to distance itself from this visit. While the United States stressed that the trip was not a sign of a change in its one-China policy, Beijing warned that its military forces would never stand idle and that “anyone who plays with fire will will burn”.
The last senior US official to visit Taiwan was then-President Newt Gingrich in 1997, which happened in the aftermath of the Third Taiwan Strait Crisis and Taiwan’s first democratic presidential election. the island in 1996. At the time, the Clinton administration responded to China’s military buildup in Fujian Province by funneling all of its most powerful weapons through the Taiwan Strait and staging the biggest show of might American military in Asia since the Vietnam War. China backtracked in response, but much has changed in recent decades with a more powerful Chinese military and a new zeal to “reunite” Taiwan with the mainland under President Xi Jinping.
The rise in risk aversion caused markets in the Asian region to fall by -2% on average.
Best possible scenario : Continuous saber sound and armed responses are limited to military maneuvers. Chinese warplanes could fly close to Taiwan’s air defense identification zone, or naval activity could be carried out near the center line that divides the strait. Retaliatory measures could also be limited to test firings of missiles into the sea, while economic reprisals are considered.
Worst Case Scenario : President Xi cannot afford to look weak amid slowing growth and deflating housing bubble. And it is indeed dangerous that autocrats feel they are beginning to lose power. The People’s Liberation Army could send warplanes over Taiwan, prompting the island to decide whether or not to shoot them down. America and its allies in the region would likely be drawn into the conflict militarily, causing further global turmoil following the US withdrawal from Afghanistan and Russia’s invasion of Ukraine.
Case to follow therefore which was, in part, at the origin of the volatility of this Tuesday on the markets.
Finally, I receive multiple questions asking me on which site I analyze my values. Personally, and for many years, I have been using TradingView, an intuitive interface with a lot of tools and a wide choice of assets. It is clearly the most developed and used interface on the market.
This is the end of this analysis, do not hesitate to give me feedback on my Twitter account @0xakina. Don’t be too greedy, take profits regularly, have a good money management for your trades and rely on your initial plan. Only invest what you can afford to lose as long as it doesn’t affect your morale too much. Have a good week everyone, and I’ll see you next week for a new analysis!
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