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Cryptography Technical Report: October

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After two months of consecutive declines in the cryptocurrency market, we finally managed to establish a green candle. In this article, I will review BTC’s monthly close, Bitcoin’s dominance and Crypto’s capitalization chart.

BTC analysis:

BTC/USD in 1M (Tradingview).

After a decline of over 22% in the last two months, we are finally managing to establish a bullish candle body. Last night BTC closed at $20,489, up 5.45% from September. July’s bullish candle has drawn a battle zone between $24666 and $18755, this monthly range is extremely important as this exit will set the long term trend. Having closed at the bottom of the range last month, it was necessary not to break the support and enter to give the price a breather with a nice green candle. We did not manage to pull the price above $20,500, but we did manage to swallow the September candle limiting the disaster.

Now it is really important not to go back to this range low or risk forming an M-Top (Double Top = bearish reversal pattern). Formation of this pattern will lead to a dramatic price drop with a potential umbrella point at $13,000. In fact, from the large decline in the volume profile, we realize that there will be no intermediate resistance. On the other hand, if we validate a bullish scenario, i.e. renewed energy in November, we could quickly return to the top of the sideways channel ($2466). It should be noted that if the range is broken from above, the $30,000 level could be quickly recovered thanks to the few intermediate resistances.

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BTC’s lack of dominance

BTC_D in 1M (Tradingview)

Since January 2021, bitcoin has been steadily losing its dominance in the cryptocurrency market. Although the decline has been halted with a range attempt, we continue to make lower highs and lower lows than previous highs and lows. During a bull rally we usually see a rise in BTC_Dominance, which reflects a large capital infusion into Bitcoin. At the moment, we have no capital inflows for the king of cryptocurrencies, which reduces the likelihood of a bullish rally by the end of the year.

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So to expect a return to new highs we would need to see a rise in BTC_Dominance during November. This would weaken the bearish momentum, but could also take us back to the 48%. In my opinion, a break of 48% will signal a return of massive capital injection into BTC and therefore a long term bullish return, without that, we should expect a sideways or slow decline in the cryptocurrency market.

Flat market cap:

TOTAL Crypto at 1M (Tradingview).

The total cryptocurrency market cap chart repeats what we have previously developed. We are stuck in a range below the $1T market cap, which is causing a slow sideways/downtrend in the entire cryptocurrency market. At the moment, the $0.83T support is holding, but we failed to break above the symbolic $1T level. Our target for November could be to reach that $1T cap in an attempt to revive the market, which would bring a lot of capital into the ecosystem and could have a snowball effect.

Conclusion:

To conclude I would say that we have limited the damage thanks to a small rise in BTC, however everything remains to be done. We have no sign of new capital injections, which may delay a possible bullish rally. November may give us a lot of evidence whether the market can recover or not in the coming months. This analysis is in no way investment advice, I encourage you to DYOR on your own.

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