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BTC has broken out of the

range! What to look out for?
What a great move by BTC! For a long period of time, we have been
moving sideways in the $34-44.5k range, but we finally broke out. A very
strong move on high volume and with lots of short liquidations. This is
exactly what we needed, to bring confidence back into the market. Now,
of course, the question is whether this movement will last or not.

What is remarkable is that BTC broke out while DXY was showing
strength. Normally when the DXY is strong, risk-on assets struggle. This
was not the case for BTC last night, so we can speak of a strong move.

What we see in the chart below is that BTC began to pump while DXY was
still consolidating. Shortly after BTC's pump, DXY began to show strength.
While one would normally expect BTC to correct as a result, BTC
continued to consolidate strongly. The relationship between DXY and BTC
is something I will be watching closely in the coming period. Indeed, the
return of the correlation can give signals.

BTC/USDT
In this newsletter, I would like to discuss BTC in detail, due to its strong
weekly candle. Last week I indicated that there was a lot of resistance
around $44-46k and that it would probably be difficult to break through
this resistance. A heavy resistance like this is preferably broken out in a
powerful way instead of being broken out slowly. Luckily, we did have this
powerful breakout, with which the weekly resistance, the Yearly Open and
the range high have been successfully broken through.

I also insisted on the fact that BTC formed a compression structure. This
compression was formed by the price making lower highs and higher
lows. This led to the price to have less and less room to move. This
compression structure almost always ends in a volatile movement up or
down. As the chart shows, the key resistance has been broken and BTC
has made a higher high. We may now speak of a trend switch from
downtrend to potential uptrend as we have higher lows and now also a
higher high. From here on altcoins will become more attractive again.

What has led to BTC's strong movement?

Many traders use the same stop-loss strategy. When trading short, they
often place their stop-loss above the most recent high. Conversely, when
traders go long, they often place their stop-loss above the most recent
low. This results in a clustering of stop-losses. In the chart above we see
two highs that are close to each other. As the price has moved sharply
downwards after these highs were made, we can assume that many
shorts have been opened, and have most likely placed their stop-losses
above the most recent high (indicated on the chart).

Once the price rises above the level of the stop-losses, the short positions
are closed. We call this liquidation, as the positions are liquidated when
the price rises above the liquidation price of the short positions. When a
stop-loss is hit, the underlying contract (in this case BTC) is bought back.
Logically, this results in buying power.

In the graph above we can see that during BTC's strong movement many
liquidations have taken place, as a result of hitting the stop-losses of short
positions. As mentioned earlier, this creates buying pressure as BTC is
bought back. Since whales know where traders' stop-losses are placed,
they will often push the price in the direction of the stop-losses to trigger
them. We also call the movement of BTC a short-squeeze.

I missed BTC's move, now what!?

Don't worry if you missed out. As we know, the market moves in waves.
Nothing goes up in a straight line, so it is especially important not to get
FOMO. BTC has put up a very strong candle, but it has also left an
inefficiency behind. If BTC retraces, it can happen quite fast as there is
little support up to $44.5-45k. In case you missed BTC's move, it would be
wise to wait for a corrective move of BTC, after which $44.5-45k would be
a great place to enter. However, losing this zone would be less positive as
it would mean that BTC would fall back into the range.

ETH/USDT

We have discussed BTC extensively, so we will keep ETH a little shorter.

ETH has been showing strength for weeks and has broken through the
downtrend nicely. Additionally, the crucial resistance zone that we
indicated last week has been broken through, as a result of which we are
heading for the resistance of $3390. Above this resistance, there is an
inefficiency zone. So should ETH manage to break through $3390, the
chance is very big that we will see a fast movement towards $3750-3850.

ETH/BTC
ETH/BTC is still consolidating under the resistance of 71000-71500 sats.
Breaking through this resistance will probably ensure that altcoins will get
a nice rebound. Important resistance for ETH to keep an eye on, also for
the image of the general market.

BTC.D

As long as BTC.D stays below range EQ I expect altcoins to have room to

grow. Breaking through range EQ will most likely cause altcoins to
perform poorly, and BTC.D to move towards the top of the range.

TOTAL (total market capitalization of the

top-125 cryptocurrencies)
TOTAL is currently trading against the strong resistance of $2.1T.
Breaking this resistance would be a very big step for TOTAL, and would be
good for the growth of the top 125 cryptocurrencies.

TOTAL2 (total market capitalization of the

top-125 cryptocurrencies, excluding BTC)

TOTAL2 has managed to break nicely through the trend line, and also the
previous high around $1.16T. For now, the road seems clear for TOTAL2,
with the next resistance only to be found around ~$1.25T. So a lot of
potential for the market to grow.

All in all, things are looking very positive for BTC and the crypto market.
There will be many new opportunities in the market if BTC manages to
continue its strength.

Also important to mention is that still $1bln is left in LUNA Foundation's
Ether wallet with the last transaction only 9 hours ago ($120mln to
Binance). If they are going to empty the wallet, we are good for 8 more
days.

Hopefully, this update will keep you up to date with the current state of
the market!

Have a nice week!


written by Luuk Koolen

Beursplein 5, 1012 JW, Amsterdam

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