Crypto Market Update 01/31/2023

It’s been a while since the last market update, so let’s do a short recap.

In the last market update, we were talking about the FUD on some exchanges, and finally, we had the FTX event and all the collateral damage around it.

This black swan event created the capitulation that tends to happen near the end of a bear market. If we look at past cycles, we had one or two capitulations created, but a black swan every time.

So for the moment, we are still repeating same behavior as we had on every cycle of Bitcoin since its inception.

To have a better understanding of Bitcoin cycles, we can summarize it with 3 phases:

1. Bear market.

2. Accumulation.

3. Bull market

We can see those events and phases in the chart below (Note that we are not pointing out the COVID capitulation because that was a worldwide event in the middle of a cycle) :

Now that we saw how phases work, we have to take into consideration that these phases are related to the traditional markets, so let’s see where are we now on the S&P500.

S&P500

First, we will have a look at the monthly chart, we can see that it has been in a downtrend during most of 2022, but it was supported by the MA20W keeping the macro bull trend (that began in 2009) intact for the moment.

Now let’s zoom into the weekly chart to see that, after having the support of the MA20W, the market began to create a possible bottom pattern that could be seen like an inverted head & shoulders with resistance in the diagonal descending trend. 

As we can see, at the moment we are at a resistance point, this can lead to two possible scenarios: 

1. The market is able to break out of the trend and the bear trend ends, to begin the accumulation-bull trend during the next months/years.

2. The market can’t break out of the trend, and we go for lower levels during the next months.
   

BTC

If the traditional markets have bottomed, we can assume that BTC also did, it will be very important to track traditional markets to understand further movements. Looking at the bigger picture of BTC we can see how the main level 161 (Blue Box) has held (even if we went a little bit under due to the capitulation) we are still inside the main ascending channel.

The bullish thing is that we have broken out the MA20W (pink line market pointed with the green arrow) and now we are right at the MA200W which for the moment is giving us some resistance (purple line pointed with red arrow).

We know that the MA20W is a signal for a bull/bear market that has been quite respected along the cycles.

Now let’s take a look at a more detailed chart of BTC that we will use for future market updates.

We have the “main Levels of the cycle” which are the future targets for the next cycle ( 2-3 years) and then we have the inner levels which are the levels that can be achieved with the inner waves inside the main cycle. Which will be in constant change as we are moving through it.

We can see now that we are arriving at the “Capitulation 161” level, which is the target produced for the movement of the capitulation that will act as a resistance together with the MA200W and the 50% of the descending channel or bull flag if we see the bigger picture.

Furthermore, we can see that we have broken out of the falling wedge (yellow triangle) that was created since the last top in 2021. Wedges tend to be retested once they break out, this is anyway a bullish movement for sure.

The next steps can be:

1. We retrace to the support created by the wedge, the inner golden pocket, and the MA20W to continue the bullish movement up to the second orange box “Inner Movement 161”.

2. The momentum keeps pushing the market, and we can break out the resistance up to the “Inner movement 161” and then we cool down to the previous resistance turned support.

BTC Dominance

Dominance has been increasing since September, but we are still inside the range created in 2021. We have different resistance levels (Orange Boxes) and as usually happens, as soon as dominance falls, we will see an altcoin season as a consequence.

ETH

Following the same concept on levels as we have done with BTC, we have the ETH chart. Here we can see that we are still inside the falling wedge, but also the MA20W.

Not too much to say for the moment, besides that it will follow BTC moves as always.

CONCLUSION

Since the beginning of 2023, the market has been in bullish territory. We were expecting a 2022 bear market and the end of it around December 2022.

If that is the case, 2023 could be a consolidation year before the beginning of a bull run in 2024/2025.

But that is very far from here and better to follow the market step by step before assuming that cycles will keep repeating.

It is important to see what traditional markets will do since the markets of digital asset are very sensitive to it.