Market Analysis

Beyond the volatility: Finding opportunities in a rangebound market

Updated: Aug 31, 2024

Published: Apr 29, 2024

We have a huge week with the Fed and the QRA on Wednesday. Both will be important to outlining liquidity conditions going forward.

We expect more time where the market remains rangebound, but this should be seen as an opportunity to rebalance portfolios and get exposure in areas you're under-exposed.

We're remaining patient and will consider adding to favoured positions if we continue to see these attractive prices.

I'm (Tom) using Q2 to add to my favourites and rebalance whilst focusing on economic data and liquidity. I still see the second half of 2024 as a positive liquidity environment where risk assets (and crypto) can perform really well.

Use the current period as an opportunity.

Stay disciplined and focused, and get this right.

Let's go!!!

TLDR

Key events (Fed meeting, QRA) this week to guide liquidity conditions and crypto market outlook
Bitcoin and Ethereum display healthy leverage setups, increasing chances of upside potential.
Solana and WIF present attractive buying opportunities at current price levels.
POPCAT's performance hinges on broader market recovery and the ability to hold key support.
We recommend using this rangebound period to accumulate your favourite coins and stay patient in spot positions.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. "One Glance" by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. These are not signals, and they are not financial advice.

BTC

This week, there will be a Fed meeting and a Quarterly Refunding Announcement (QRA)from the Treasury. Both events, particularly the QRA, will be key for forward-looking guidance on likely liquidity conditions in the upcoming months—this is key to tracking risk assets' (crypto) performance.

Bitcoin's leverage setup is a healthy one. Open Interest is at $28.83b, well below the $36.0b we saw at the highs, which was an over-levered market.
Alongside this, the Funding Rate is at 0.005%, between the 0.000% and 0.01% levels, indicating healthy positioning between Longs and Shorts.
The leverage flush-out a few weeks back has left the leverage setup far healthier, which is better for prices going higher again in the future.

Technical analysis

There are no changes, and price is playing out exactly as we have expected.
Price has rejected from the top border of the larger bull flag pattern around the $67,500 mark, and price has pulled back to the local support area of $63,400, although this level looks like it won't hold for price.
Price can use the 50% line of the bull flag as potential support (where price currently is).
Alongside this, price can also find liquidity and, therefore, find support between $59,200 and $62,000.
It's possible that price does drop lower than $59k and potentially into the $55k-$57k level, although we don't believe this is most likely.
A major breakout would come above $69k for BTC.
The RSI has been reset on all major timeframes except the weekly timeframe.

Cryptonary's take

Price has played out relatively perfectly with what we outlined when price made a local top at $71k.

Price has pulled right back into the larger bull flag and filled the main Yellow Buy Box between $59,200 and $60,700. It has bounced and pulled back slightly again. As we expected and called for weeks ago, this is a rangebound price action.

We still believe that price can break out of the bull flag to the upside, irrespective of whether there is another pullback to the $60k/$61k level or even deeper to the $56k level in the shorter term. We would suggest remaining in Spot positions and being patient here.

So far, we've called price action correctly. We do not expect a breakout of the bull flag in the coming week or two, but we think it could take another month. Hence, §we remain patient.

ETH

ETH's leverage setup, like BTC's, looks healthy. Open Interest has risen slightly over the last few days, although it's still 25% below recent highs, meaning there is far less excess leverage – this is good.
The funding rate is close to 0.01%, showing a relatively even positioning between longs and shorts, which is a healthy setup.

Technical analysis

Following the bear flag breakdown, price filled the Yellow Buy Box and rebounded slightly. However, it could be argued that price is forming another bear flag.
The Yellow Buy Box between $2,900 and $3,090 should act as a relatively strong area of support.
Beneath this, the strongest horizontal support will be at $2,639.
To the upside, $3,525 and then $3,670 will be the meaningful levels needed to be cleared for a more major breakout, along with a breakout of the red downtrend line.
The RSI has reset on all major timeframes.

Cryptonary's take

Whilst it's possible ETH revisits the $2,900 to $3,090 area, we'd be surprised if ETH were to go substantially lower than this level. If ETH were to go down to sub $2,900, we think that that would be due to a more systemic risk playing out, which we currently do not forecast. Therefore, we'd remain in Spot positions and continue to stay patient.

As we've said for a while, we expect Q2 of this year to be boring and more rangebound for price action. Therefore, don't get chopped out, and remain patient.

SOL

Open Interest has declined, while positioning remains relatively flat between Longs and Shorts. This is a far healthier leverage setup than what we have seen in prior weeks. We believe it's important for the market to have flushed out the unnecessary excesses, and now we have a healthier base to build from again when it comes to the leverage setup. This is positive.

Technical analysis

Unfortunately, the $150 horizontal level could not be turned into new support, with price swiftly breaking back below it, having broken above it just before.
We're now seeing the bear flag breakdown begin, although SOL is using the red downtrend line as support.
Alongside this, there is a significant horizontal support at $131, with this area of support extending down to $126.
To the upside, price would need to get above the $151 and $169 levels, for us to see further sustained upside.
One thing we're watching closely is whether SOL closes a Daily candle with a new low. If so, and it is around the $126-$131 level, that may have created a second bullish divergence. This would be a clean setup for a Long: higher lows on the RSI while lower lows in price.

Cryptonary's take

Even though we're entering a big week with Yellen (the Treasury), the QRA, Powell, and the Fed, we believe SOL is at an attractive price point for the long term. We would exercise patience while we think prices can remain rangebound for another month or so.

If you have USDT spare, we'd suggest continuing to lightly average into SOL sub $140, particularly if your exposure is light. We would suggest this should be a long-term buying opportunity and then holding for another 6 to 12 months.

WIF

As we called in our last update, WIF's price looked as if it was in a bear flag whilst also forming a larger Head & Shoulders pattern. Both of these are bearish setups.
The head-and-shoulders pattern has expanded, and we're seeing the formation of that right shoulder and, now, the possible breakdown. If this continues, it would also mean the breakdown of the bear flag.
The target for both patterns would be a retest of the Yellow Buy Box between $2.04 and $2.33.
The major support is at $2.00 to $2.20. We very ideally want this zone to hold up price and for price to not fall below it.
If price can hold the low $ 2's, then this does actually set up a majorly bullish setup. Price would essentially form a base at $2.00 while squeezing into the red downtrend line. A breakout of this area would be bullish, and we would likely see a price target of $3.41 at minimum.

Cryptonary's take

We're big supporters of WIF for the bull cycle, and therefore, we'd view big retracements for price as buying opportunities, particularly if your exposure to WIF is 0 or very low. The area we'd target for dip buys is sub $2.20 down to $2.00. The green box is the technical bear flag target area, although we don't see this as likely to play out. Hence, we favour further accumulation in the Yellow Buy Box.

POPCAT

After a really strong move higher from $0.09, POPCAT pushed right into $0.40 and formed a bull flag at that level.
Unfortunately, as of yet, price hasn't been able to break higher substantially and is now retesting the top border of the bull flag and the horizontal level of $0.40 as support. Ideally, we would want to see price hold this level or risk price falling back into the larger range between $0.16 and $0.40.
Price hasn't formed any bearish divergences in the daily timeframe, so we should still take positivity from this.

Cryptonary's take

If the general market had held up, we think POPCAT would likely have seen a more substantial move higher. However, if the $0.40 area can hold as support and the general market recovers, we think that'll be enough to see POPCAT make a move higher.

For those with little to no exposure, current prices and lower likely present attractive longer-term buying opportunities.

However, we should be aware that if there is a market puke out, POPCAT is unlikely to be immune to it (especially with the thinner liquidity and, therefore, orderbooks), and we could, therefore, see retests of the $0.32 to $0.34 area.