Well, BTC lost the June lows. Is it "broken" enough to take us to 10-14k? Let's have a look👇🧵
1. BTC weekly outlook:
It seems that the war between CZ and SBF has not helped much for the market. Instead, it caused more harm.
While technical analysis is not resistant to market manipulations, we can still draw some conclusions by looking at the yearly lows breaking down.
2. Of course, there's no way to know for sure what will happen, but it is believed that when the support breaks, for whatever reason, it's more bearish than bullish.
As traders can often cause a positive feedback loop (extreme emotions), the support breaks can be very dangerous.
3. So, the damage is done.
Even if there is an actual strength at 17000 USD, then a self-fulfilling prophecy can still take over, since traders lost faith in the prior support area.
Because we're talking about long-term support here, the break brings long-term implications.
4. Not only does it put the downward breakout objective at 12000 on the horizon, but it also causes more eyes will start to automatically look in the same direction.
This is where re-distribution processes can appear more aggressively.
However, not all is lost...
5. The weekly breakout still requires time confirmation. Only after the weekly session follows through to the downside, can the signal be valid.
Then, there has been a distinct correlation drop vs. stocks.
While BTC tumbles, Dow Jones breaks out above the bear market trend.
6. What does it mean?
Well, it is the first visible sign of traditional market strength this year, so far.
It's a positive day for stocks amid the midterm elections or the CPI prints, which are due this Thursday.
With high energy prices, BTC may face additional headwinds.
7. Reminder: the monetary tightening decisions from the FED work with delay.
Similar to a big truck in the movement which is hard to stop, a sizeable economy can be hard to maneuver.
The relative strength study shows energy trends would continue higher.
Why is that important?
8. The answer is Bitcoin hashrate.
It represents the network engagement on the computational power side, used to mine BTC transactions.
As the hash rate peaks at new all-time highs consequently, as the prices remain low, it can pose real risks of miners' capitulation.
9. While a lot of retail traders are still facing net unrealized losses (people are mostly loss averse and hold on to their losing positions), the low BTC prices put very engaged miners in a very uncomfortable spot, as they're right at the edge of income distress.
This post is based on this twitter thread.