Potential relief rally on the cards

26.09.22 06:05 AM By Stormrake

Bitcoin seasonality means we can be in store for a nice move up in October but we need to be mindful of the hostile macro environment when we make investing decisions

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

UPtober to run the liquidations

October has historically been a month of outperformance. This October, Bitcoin maximalists, crypto bulls, and web3 devotees have a glorious opportunity to squeeze the life out of shorts and make some late bears pay. The aggregated leveraged futures liquidations heat map shows us a potential short squeeze can get triggered if we get sustained buying over $24,000 USD. This could cause a sharp move up to the range that was set prior to the 3AS liquidation saga, between $28,000 and $32,000.
To make this liquidation run a possibility won't be easy, as from current prices it will require a 25% rally to get to $24,000. This squeeze will need to be a spot market driven move, so approx. $85 billion USD worth of net bidding needs to occur. It won't be an easy task but anything is possible in UPtober.

Wake me up when September ends

The historic average return for Bitcoin in October is 27.7% and this seasonality combined with the potential short squeeze highlighted above, can generate the relief rally us crypto investors desperately need. Although this shows us the potential, it's important to note how hostile the macro environment is towards self sovereign money. For example, Christine Lagarde, President of the ECB recently came out and said, "we wouldn't want to return to free banking days and certainly not from our vantage point". Shortly after you had US FED chairman, Jerome Powell, come out and explicitly state, "A CBDC will be identity verified, it will not be anonymous".
Return distributions aside, it's becoming increasingly apparent the need for Bitcoin as self sovereign money will be critical in the decade to come.

BTC/USD key levels

Bitcoin finally had a breakout from the tight range it was trading and proceeded to move up 9% and briefly reclaim $20,000 USD. The breakout was ultimately a fake-out as we retraced the entire move up and currently trade around $19,200. Our highlighted resistance level of $20,554 proved to be strong and provided a local top. For any rally to continue we must see a strong move to $20,554, should this occur expect a quick move towards $21,761. To the downside, it remains quite simple, we close below $18,549 then we teleport to $17,647 and then stress test the local lows of this bear market.

ETH/USD key levels

Ethereum has gone to sleep and has fallen out of speculative favour within the crypto trading community. The anemic price action is just a by product of the merge now firmly in the rear view mirror. I hear that Vitalik is working on the next iteration of the Ethereum hype machine called 'The Surge' but until then it will be highly correlated to Bitcoin. $1,333 USD remains the key level to watch, as it operates as a magnet. A break below $1,24 the next key level of support comes in at $1,003. To the upside, we need a break of $1,422 for a shot at $1,620.

Dollar index taps into unlimited power

The US dollar index is currently going parabolic and is completely annihilating the Yen, Euro and Pound. Despite this raging USD strength, it's great to see Bitcoin holding up relatively well. It's important to note that this structural bid for US dollars, amidst a credit crunch is not going away anytime soon. Instead of trying to call the top on the DXY, your efforts are better spent identifying assets that are worth bidding at prices that you deem too attractive to pass up.
A final note on USD strength, it will likely be a telegraphed devaluation through the US printing dollars to support its allies. This can be done in a foreign bond buying program or opening generous swap lines. Should this occur, you will hear it in the Morning note alongside the trades that can be explored.

No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

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