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Analysts' Insights

Analysts' Insights

Unveiling Bitcoin’s Possible -10% Plunge

1) When Blackrock filed for a physical US-listed Bitcoin ETF on June 15, Bitcoin jumped by +20% but the rally ran out of steam after a US District Judge ruled partially in favor of Ripple on July 13. Ripple’s XRP jumped +71%. But the result needed to be clarified and is still confusing to most.

2) On July 26 we warned that XRP token was about to break the $0.70 support level and could decline further. XRP is now trading at $0.62.

3) Similarly Bitcoin Cash (BCH) rallied by +300% within two weeks as the Korean’s were buying after EDX Markets was launched on June 21 and BCH is seen as a commodity (not a security). Still, the rally is fizzling out and important support levels are broken, suggesting a significant retracement of that move. We wrote about the potential retracement and BCH is now -19% lower since that note.

4) Trades (or themes) do not last right now, and this is a big risk for immediate upside expectations for all crypto prices (other trades that didn’t last this year come to mind: Aptos, Bitcoin ordinals, Pepe meme coin etc.)

5) Bitcoin has entered the seasonal summer lull where prices could easily break support levels at 29,000 and gap lower to 26,000. The big support level should be at 25,000 – a level from which prices rallied when Blackrock filed for the Bitcoin ETF.

Bitcoin could retrace back to 26,000/25,000

6) We have noticed that perp futures are trading at juicy premiums for the last couple of days while we have downside pressure in spot prices, this likely means that traders are switching to leveraged futures instead of holding spot. Effectively this means less capital at risk.

7) As we pointed out two weeks ago, Bitcoin’s realized volatility is dropping into multi-year lows, offering traders favorable risk/reward trade implementations. We argued for selling ALL spot exposure, depositing the cash into 5% yielding treasury-backed tokens and then using 3% of the capital monthly for speculative trading. This locks in the YtD gains but still keeps as busy.

8) The September at-the-money Bitcoin call is priced at 31% while the December at 38%. Can Bitcoin move up or down 10% by December 2023? Sounds likely to us and great odds with the cheap option pricing.

9) Last week, we noted that Ethereum’s fundamentals (revenue, etc.) have failed to pick up materially. This is a big risk for crypto markets, so we only see short-term trades that do not last or spill over into a larger bull market. We still expect a sizeable rally into year-end but we think a temporary break lower is now likely.

10) The latest trade/theme is Yield Guild Games (YGG) after their Web3 games summit and press release on July 29. YGG prices have rallied by +290% and reached a market cap of $97m and a daily trading volume of $532 (sounds like speculation…). What are VCs doing that backed the company in February 2023 with $14m? They are selling. Bitkraft Ventures and DWF Labs both sent YGG to exchanges. DWF received $16m from YGG’s Treasury last year. Someone is selling, and so should you.

This is a traders’ market…

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