Bitcoin clings to $35K: Is the bull market fatigue setting in?

TLDR

• Bitcoin maintains its stand at $35,000 with the potential to inch towards $37,700.
• Technical analysis says not to open new long positions right now.
• Current RSI levels and futures market data indicate overbought conditions
• Our strategy is to re-accumulate Bitcoin on a dip, with a targeted DCA approach from sub $34,000 down to the $31,000s.

Disclaimer: 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. They are not signals, and they are not financial advice.

Macro

Following Powell steering away from addressing a potential rate hike in December at last week’s FOMC Press Conference, along with the Treasuries Quarterly Refunding Announcement, where the long-end bond issuance was less than expected for the upcoming quarters, we saw assets get a massive bid into the end of the week. The question now this: is this rally finished, or does it have further to go?

We’ve seen the S&P open today and be just 0.13% positive on the day, with the Nasdaq up 0.30%, so there hasn’t been any significant follow-through into the new week. The Dollar Index is also back down to $105, so it may be due for a small relief bounce in the short term, which could provide some headwinds for risk assets in terms of continuing to move higher. 

With this being said, if the S&P can’t sustain further upside and pulls back slightly, then Bitcoin may do the same. 

Let’s now dive into the technicals for BTC. 

Technical analysis

Looking at this on the 3D timeframe, the overhead resistance is at $37,700, while price has held towards its highs at $35,000. The fact that the price has been able to hold at these highs indicates that a further leg higher may be on the cards, despite the S&P and the Dollar’s next moves potentially not being supportive of this. 

We feel BTC can grind higher over the coming week while it continues to catch more upside. If that leg higher does come, it may top out around the $37,000 to $38,000 area. 

If there is a pullback from $37,000 - $38,000 or just from the current price, we expect sub $31,800 to $32,600 to act as strong support. 

Mechanics

The RSI is suggesting caution. It’s phenomenally overbought on all major timeframes, and therefore, a pullback should be expected, even if it means BTC goes slightly higher first. 

“Currently, the funding rate is very positive (the most positive since this move-up began a few weeks ago). Alongside this, open Interest is also very high. This indicates that the futures market is beginning to become overheated here, and this is usually not positive for price.”

The above update still remains true today. The RSI and the market mechanics suggest we should be cautious here. 

BTC 3D

Cryptonary’s take

We wouldn’t, however, look to open fresh longs/buys at current prices. Instead, we would look to de-risk Bitcoin at $37,700 as we feel that might be a good area for BTC to begin a pullback that potentially retests the late $31,800 to $32,600 area. If BTC gets to this range, we’d look to re-accumulate.

We’re 50/50 as to whether Bitcoin can see another small leg higher to the $37,700 area before a more meaningful pullback might occur or a pullback can occur from the current price ($35,000). 

If there is a move higher to $37,700 and then a pullback to the $34,000s, we would be buyers again at this price as we would look to take advantage of the 10% pullback. We would look to DCA aggressively sub $34,000 all the way down to the $31,000’s.