Market Direction

Bitcoin is stuck in a bear hug, for now

Updated: Aug 5, 2024

Published: Jan 19, 2024

A few days ago, we identified that BTC will likely continue to be range-bound between $40,900 and $44,000 in the short term - this seems to be what we're seeing.

However, we did notice yesterday and then pointed out in the ⁠market update that Bitcoin has formed a bear flag of $40,240 to $40,740 (Target 1) and another low between $38,175 and 38,675 (Target 2). Price is now battling at that first bear flag target.

From a mechanics point of view, everything is relatively clean; the Funding Rate is flat, while the Open Interest is down 10% from its highs.

There is no large leverage build-up here, and neither Longs nor Shorts are too overweight. This is a healthy setup from this perspective.

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.

Technical analysis

Price was between $40,900 (the main horizontal support) and $44,000 (the main horizontal resistance).
Price was forming a bear flag, which has now broken down and reached Target 1. This also has convergence with the horizontal support of $40,900.
The RSI has reset on all timeframes, with the 3D timeframe no longer in or close to overbought territory and the Weekly timeframe not being overbought anymore. This is the pullback we've been waiting for in this metric. It may pull back further over the coming weeks, particularly on the Weekly.

Cryptonary's take

With the Grayscale selling likely to continue and possibly at a heavy pace, it'll be increasingly difficult for the other ETFs to pick up this supply, particularly as the first dollars in is given a discounted (or even waved fee) for some other ETFs.

There is an incentive to be the first dollars in. However, inflows may likely slow down when that incentive isn't there, meaning it'll be even harder to sustainably ease off the Grayscale selling.

It's likely that, at best, we see BTC be range-bound between $40,900 and $43,200 in the coming weeks. However, it's very possible that we get further downside, a break below $40,900, with Target 2 ($38,175 to $38,675) being a target.

Anything below $38k is most likely a good buying opportunity for the long term. Anything sub $35k is probably a very good buying opportunity for the long term.