The situation surrounding Silvergate Bank has now taken a major twist with the Fed putting in a backstop for deposits, setting up a huge week ahead as markets start to price in less aggressive Fed rate hikes.
One of the major questions is whether other larger banks have similar problems, and is this just the start of much larger problems for the banking sector?
A strong U.S. CPI inflation number could make the situation even more complicated, as the Fed is forced into a 50 basis point hike and the expectations flip, yet again.
Price Action Review
Bitcoin
In the first edition of Biyond Weekly I wrote that BTC could be headed to $19,800 due to a rising wedge breakout, and this pretty much played out perfectly.
The bullish price action over the last twenty-four hours cannot be ignored. As BTC corrected from $25,300 it was obvious that $20,000 was a valid target and a potential reversal spot. If we start to see sustained buying interest above $23,600 more gains could quickly follow.
If we stay below $23,600 this week I believe Bitcoin’s price action will remain short-term bearish and the top coin is still doomed to drop toward $17,000.
Ethereum
ETH has looked very uncomfortable above $1,600 over recent weeks and the current price action still suggests to me a much-steeper correction is possible. Much will depend upon the level of genuine buying interest and the price action around $1,600 this week.
Gold
Central bank buying, bullish technicals, an alternative to the U.S dollar, safe haven play. All valid reasons why gold is extremely likely to remain bullish.
Chart Patterns Review
Bitcoin
BTC obviously activated the ascending broadening wedge pattern I mentioned last week and the measured target of the pattern was reached.
We have now seen a bounce back towards the ascending broadening wedge pattern, and the success around the bottom of the wedge will likely determine if we now see a big rejection to $19,700 or a resumption of the bulls trend back towards $25,300.
BTC/USD 12H Chart Tradingview,com
Ethereum
ETH ignited a Diamond pattern last week, and it appears that bulls have test back towards the top of this pattern.
If we see ETH heading above $1,700 then a move to $2,100 seems assured.
On the flip side, if we see a reversal here then we could see a move down could extend towards the $1,200 area before stopping.
ETH/USD Chart: TradingView.com
Gold
Very rarely on a price chart you will see this type of cup and handle reversal pattern.
In short, don’t stand in the way of this gold rally if we start to see strength above $1,890 and then $1,960. Parabolic is a word that comes to mind.
Gold Daily Chart Tradingview.com
On-chain Review
Prior to last week’s drop all the tell-tale signs of a major move sharted to show up. Classic front-running on-chain indicators Dormant Coin Activity and Token Age Consumed chart all spiked,
In terms of gauging the next move, the Price Adjusted DAA indicator suggests that the entire Sunday price move is about to be reversed soon as negative divergence has formed.
It is also that case that bullish Price Adjusted DAA divergence has formed around $23,600. So it is always possible BTC heads up to $23,600, reverses that divergence, and drops.
Of course, the trouble with divergence is that we don’t know exactly when it will be reversed.
BTC PRICE ADJUST DAA Santiment.net
The very troubling part for me is that mid-tier whales have not been that active during this late price rally.
If we see this rally reversing we really also need to start to see small retail holders capitulating. This usually happens before a major market bottom forms. The fact that they are currently not collapsing certainly makes me skeptical of all these counter-rallies.
Sentiment Analysis
The Biyond Trader Sentiment model suggests that a much deeper decline is coming over the next few weeks.
Considering how overbought Bitcoin is, our model suggested that at $25,000 Bitcoin could suffer a 50% correction if we compare the sheer scale of just overbought Bitcoin is and was from previous up cycles.
Long/Short and Order Book Analysis
BTC/USD Long/Short TRDR.IO
The majority of traders have flipped from being extremely Long BTC to short BTC, suggesting that the move higher could still have legs.
The Order Book shows that Buy Orders are at heightened levels around $24,000 and $25,000, while liquidations will start to ramp up below $21,700 and below $20,000.
Summary
If Bitcoin starts to settle above $23,600 this week I feel $26,500 will quickly follow, and a huge buying opportunity probably exists. However, due to the negative price divergences mentioned downside risks also exist for Bitcoin.
If BTC does reverse below $21,700 then the entire Sunday rally coming unstuck becomes very real and $19,700 could be retested.
Also, keep an eye on the price of gold. If Bitcoin does reverse, I feel the price of gold could quickly target new yearly highs.
