Crypto Market Update 04/12/2023
The S&P500 has reached its resistance point, forming a complex inverse head and shoulders pattern. This is characterized by a series of higher lows and retests of the resistance zone, indicating a potentially bullish pattern. As a rule of thumb, the more times a zone is tested, the more likely it is to be broken. It is advisable to monitor the next few weeks closely to determine if the resistance zone will finally be broken.
Following the breakout of the main ascending channel and the bull flag mentioned in our last market update, BTC has now reached one of the major levels indicated months ago. Although there appears to be a bit more momentum at this point, there is a likelihood of potential consolidation in the zone. In the most bullish scenario, this consolidation would allow for the continuation of the upward trend that has persisted over the last few months. However, if the consolidation fails to occur or BTC fails to break through this key level, it could signal the end of the current bullish cycle. As always, market predictions are never certain, and it is important to monitor BTC's behavior over the coming weeks to gain a better understanding of where the market is headed.
In order to analyze BTC's movement, we can zoom in on the 4-hour chart. It's evident that movement 1, which formed the bull flag and was supported by the main ascending channel, generated the momentum for the impulse that resulted in movement 2. We have now arrived at the inner 161 of this movement, which confluences with the beginning of the main level (the big orange box). We believe that it's likely that consolidation around this zone will occur, as this level tends to attract an accumulation of selling orders that the bullish momentum will have to overcome in order to continue upwards.
It's important to note that consolidation is not necessarily a bearish signal, but rather a natural part of market movement.
Currently, BTC dominance is sitting at its highest level since July 2021. If BTC maintains its upward momentum, this dominance is likely to be broken. However, if BTC consolidates into the zone mentioned above, it is possible that the dominance will start to decline. This could result in altcoins gaining upward momentum and seeing price increases.
ETH is currently not performing as well as BTC and is stuck in the upper range of the ascending channel, without having reached the main level yet. For ETH to begin to outperform BTC, there will need to be a drop in BTC dominance.
In technical terms, it appears that most markets are currently showing bullish characteristics. Metals are hitting all-time highs, with both gold and silver breaking through old resistance levels. SPY is also at a resistance zone, with a bullish momentum indicating a potential breakout.
Digital assets, on the other hand, are displaying a slow upwards movement that is still within the bullish trend cycle that began in the first semester of 2023. Based on current trends, it is possible that we will reach the top of this cycle during May or June. However, it is important to note that this is purely speculative and there are no guarantees. Therefore, the best course of action for investors at this point is to remain patient and observant, waiting for more definitive signs of market direction before taking any significant actions.