Issue #26 | Not Bullish Enough
Bitcoin appears ready to absorb macro finance, while small cap altcoins prepare a $200 billion increase.
Issue #26 of CoinChartist (VIP) overview
Bitcoin price takes a pause after its big breakout. Why continuation is likely
Has Ethereum bottomed against BTC?
Why small cap altcoins are gearing up for a $200 billion move
Oil, bonds, and tech stocks oh my! Bitcoin looks ready to eat macro finance
Confirming the bullish wave count with technicals
The most bullish Bitcoin chart ever: BTC versus M1 Money Supply on the 1-year timeframe. Find out why
A Chart Class on range deviations and why they occur
Remember, a premium subscription comes with access to custom technical indicators like the Raging Bull, Trend Wrangler, and more.
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Bitcoin price continues to hold and show strength above $34,000 and now $35,000. What happens from here will be very telling about if we are truly in a bull market or not and how to know is the basis of this issue.
BTC CME Futures has been driving the recent price action, as noted in the last issue. This chart is especially important because it features gaps that aren’t in the BTCUSD chart. In the chart above, BTC formed a Doji, right at falling window resistance. In Japanese candlestick analysis, gaps are called rising or falling windows, and show areas of potential importance, such as support or resistance. Doji candles appear when there is indecision or a pause in the market. They typically appear right before strong continuation, or a reversal – which one will it be? Continuation here confirms the bull market. Reversal suggests the move in October was a range deviation, which is the subject of Chart Class later in the newsletter.
The 1W Relative Strength Index has pushed above 70 and into overbought territory. Since the inception of BTC CME, this only happened twice before. Each time there was a Doji on the weekly, and they appeared just prior to an epic bullish impulse higher. These Doji appeared at a falling windows each time, some dating back to January 2018. Is the third time the charm?
BTC CME Futures is also above the 1W upper Bollinger Band. This is a buy signal for the breakout-style trading system, contrary to belief. While price at the upper band does suggest Bitcoin is overbought, as a volatility-based tool, any price movements beyond a +2 standard deviation indicates an extraordinarily strong move that typically continues into a trend. If the lower Bollinger Band starts dropping off the chart, you know Bitcoin is crazy bullish.
After last week’s 1W close, Bitcoin triggered a perfected TD9 sell setup. Yes, I said sell setup. When these signals appear, and fail, an exceptionally bullish move results. The TD9 also caused TDST support (green stair-stepping line) to climb for the first time since 2020. This occurred right before Bitcoin set new all-time highs. It also raised the tool’s TDST support from low $10,000s to just under $25,000. Also noteworthy is the fact the green TDST support has never been broken, potentially suggesting that the primary uptrend never ended, regardless of how bearish Bitcoin was for a while.
Altcoins have come alive in a big way, but it has been only a select basket of performers such as Solana, Chainlink, Fetch.ai, each of which were extensively mentioned in past issues. This issue, however, skips over trending coins to speculate on what could pop next.
As much as the “in” thing to do right now is hate on Ether, especially when in the same conversation as Bitcoin or even Solana at the moment, ETHUSD is one of the best technicals out there. When sentiment is at extreme lows for any coin, it’s often the time to buy. I specifically bought Solana at $9 because everyone was slamming it. And now I am buying Ethereum, which now has one of the best risk:reward setups now that the lower trend line of a long-term Ending Diagonal pattern was defended. Momentum is also on the cusp of crossing bullish.
ETHBTC is also beginning to find support at a long-term uptrend line and the Kijun-sen on the Ichimoku. While the chart doesn’t look very bullish at a glance, the Tenkan-sen (blue) is crossed above the Kijun-sen (maroon), which is a bullish long-term signal which first crossed over in September 2022. Below price action is the Fisher Transform, showing the most extreme move ever on the timeframe and a possible bullish divergence. If the Kijun-sen holds as support, ETHBTC will target the Tenkan-sen again.
The Total Crypto Market Cap sans BTC and ETH (TOTAL3) made it above the Tenkan-sen, putting the Kijun-sen in its sights as the next logical target. If TOTAL 3 reaches this span, it represents over $200 billion in value increase in coins outside of Bitcoin and Ethereum. This could potentially lead to a short-term small cap altcoin season.
Chainlink exhibits some of the characteristics of above charts with a massive bullish divergence on the Fisher Transform extending to the most extreme move ever. Chainlink has recovered the Tenkan-sen, and is targeting the Kijun-sen at $26 per LINK.
Most small caps are significantly behind coins front-running the market like LINK or BTC. But they’re starting to break out. SKL, for example, is nowhere near the Tenkan-sen, and the Fisher Transform is only just crossing back bullish after a downtrend most of 2023. The Tenkan-sen alone represents a roughly 500% move to 17 cents from 3 cents. Yet this is nowhere close to the coin’s former all-time high at $1.27. From this level, that represents a 40x return on investment.
Finally, Bitcoin Dominance, which has deceived most analysts with yet one more move up, is now showing the second-most extreme reading on the Fisher Transform ever. BTC.D has also closed back into the Bollinger Bands. It will need to push back above the upper band to remain in favor of Bitcoin. Otherwise, alts are going to outperform from here on out.
Recently, I’ve given less weight to macro charts such as the DXY and S&P 500 because Bitcoin and crypto has been just doing its own thing and not responding to past correlations. But this could be because literally everything in finance is about to pour into Bitcoin for the first time – all at once. This week’s Macro Monitor is perhaps the most bullish take on BTC in a while from a macro perspective.
To start, the 1M DXY looks ready to reverse, as momentum carries it lower. The LMACD looks ready to turn down further, just as the DXY potentially forms another Evening Star pattern. If the November monthly closes below the lower Bollinger Band, the Dollar will be setting the stage for an even bigger Bitcoin bull run.
That’s it for free content. Premium subscribers get the following:
Oil, bonds, and tech stocks oh my! Bitcoin looks ready to eat macro finance
Confirming the bullish wave count with technicals
The most bullish Bitcoin chart ever: BTC versus M1 Money Supply on the 1-year timeframe. Find out why
A Chart Class on range deviations and why they occur
Remember, a premium subscription comes with access to custom technical indicators like the Raging Bull, Trend Wrangler, and more.
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