Bitcoin Inches Closer To The Next Big Crash

Bitcoin Inches Closer To The Next Big Crash

Bitcoin made quite an impressive move the upside yesterday but as we can see right here on the 4H chart for BTC/USD the move was erased and the price has declined to back where it was when we posted an analysis about this liquidity hunt. We pointed to the strong probability of the price rallying above $7,400 to shake out more stops.  It finally happened and the price rallied not just above $7,400 but also above the $7,500 level before it started to decline.  We can now see that the liquidity hunt is complete and the price is ready to decline further without most of those retail bears on board. 

 If we take a look at the ETHUSD chart we can see that it has an even more bearish outlook compared to Bitcoin.  The $134.10 level will continue to serve as a strong resistance that the price would find it very hard to break past.  We can also see a series of lower highs and lower lows which means that the price is now primed for a decline to a double-digit price.  It would be very surprising if ETH/USD declines to the previous low of $80 and does not take it out.  The current outlook of the market suggests that the altcoin market is likely to experience a lot more pain in the near future when Bitcoin starts to decline. The BTCUSDLongs/BTCUSDShorts ratio is still hovering around the all-time high and is expected to begin a correction anytime now. 

Meanwhile the EUR/USD forex pair has completed its move to the upside and has now run into a confluence of strong trend line as well as horizontal resistance levels. It will be very hard for EUR/USD to break past the 1.2101 resistance level. The more likely scenario is that the pair will begin its decline and the move past the 200 moving average on the 4H time frame would prove to be a fake out just as we have seen before the last major downtrend. The S&P 500 (SPX) also appears to have topped out and has now declined below the 5-day exponential moving average. The majority of traders are still too optimistic. We can see that the Fear and Greed Index is up three points from yesterday. The longs to shorts ratio is now 64.43% to 35.57% in favor of longs. The ratio is even more insane on the Bitfinex exchange which is 90.25% to 9.75% in favor of longs. The funding history on Bitmex also indicates that traders are still too optimistic which corroborates our view that the bear market is far from over yet. 

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