Welcome to the Rekt Capital Newsletter!
Monday editions are dedicated to my macro research on Bitcoin and the Crypto market.
I share complex, cutting-edge research insights about the crypto market in a simple, easy to understand format.
Whether that’s insights about Bitcoin’s historically recurring price tendencies or Market Cycle analysis on Ethereum - the goal is to offer you a unique perspective and incredible value.
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Bitcoin - The Current Range
The most important thing to note at this time is the $20000-$23350 range (red-blue) and how the $20K support is showcasing weakness.
Just by comparing the reaction from $20K this month vs the reaction from July for example, there is a notable difference in the buy-side pressure within the $20K support.
In fact, the rebound from the $20K support this month has been so weak that it actually looks like the upside wick reaching into the range is price’s way of suggesting that $20K may be flipping into a resistance (i.e. resisting a return into the range, trapping FOMO buyers in this upside wick.)
Much can still change throughout the month of course, but at the moment the price action is telling a story which suggest that $20K may be flipping into new resistance on the Monthly timeframe, setting up for a confirmed breakdown from the range.
In the instance that $20K indeed sees downside continuation from the $20K support, the next immediate supports are $17165 and ~$13900.
Bitcoin - Historical Death Cross Downside
Historical Death Cross analysis suggests that BTC will form a bottom within this green area.
Of course, price is flipping the 200-week MA into new resistance and doing so with the psychological round level of $20K as well, then we’ll see price go deeper inside the box, where the most extreme scenario for downside could take price to as low as $11500, which would imply tremendous downside wicking below the $13900 Monthly support:
After all, historically post-Death Cross retracements have seen retracements range from -42% to -73%.
The -73% retrace occurred in 2013/2014, which of course raises questions regarding market cap size, liquidity, differences in institutional interest in those times compared to now; that is, could BTC retrace that deeply post-Death Cross just like in 2013?
The point isn’t to answer that question with a definitive yes or no, but rather consider historical scenarios and try to understand how they would impact price should history repeat and they play out again.