In last month’s article we wrote about Bitcoin being in a prolonged accumulation pattern, in which we expected to see more touches on both the bottom and top of its respective “Bull Flag” channels. Like clockwork, it turned out that our prudent approach of identifying opportunity in a “sea of red” and our pragmatic-patience aligned with the technical understanding of Trend and Price action-based charting was prosperous once again. Shortly after posting our accumulation prediction for Bitcoin in late June, we saw a sell-off which took us to the bottom of our aforementioned Bull Flag’s channel. As mentioned last month too stating that “Bull Flag setups have been an opportune time to buy Bitcoin” combined with short-term irrationality to the downside, keen-eyed traders and I decided to add to our positions. The first week of July saw us “wick” through the bottom of the channel, although there were no definitive closes below the channel – a good sign, ultimately holding the line at $55,800. One textbook rule of trading is that “not everything goes up OR down in a straight line.”; this would and continues to be a key part to our strategy in the coming weeks.
After we held the bottom of the channel, it was only natural we would get some form of a relief rally in the markets. This happened to coincide not only with a technical level of support, but also the shocking events that took place in Bulter Pennsylvania on July 13th where President Trump dodged a bullet in a spectacular display of courage and resilience from an assassination attempt on his life. Such fervor quickly disseminated into the markets over that weekend and sustained momentum over the coming weeks on the bullish prospects that a Trump victory in the upcoming November US Elections could now be a very real possibility. With a strong campaign promoting economic growth and a return-to-form for the States, it’s no wonder that we saw a sea-of-green shortly thereafter, carrying a rally that went from traditional assets such as US Indices like the S&P500, all the way into Cryptocurrency and Bitcoin alike. The aforementioned rally sent BTC price in recent days into a summit, pushing the $70,000 threshold again.
A clearer view of the chart above can be found here: https://www.tradingview.com/x/qld6roEP/
As you can see, this took us right into the resistance at the top of our Bull Flag channel, marking a more than 30% bounce from the very bottom to top of our recent July volatility, a tremendous rally in which we outlined late June that could likely play out as we trade within this accumulation range. Fueled by optimism, patriotism and the ever-improving macro economical climate, such as the US FED’s recent pricing-in of a 25-basis points rate cut coming in September this year, marking the first cut to the Federal Funds rate in approximately 4 years, it’s little wonder that we’re seeing volatility start to creep back into the markets and Cryptocurrency industry as a whole.
In recent developments, like clockwork after hittng the top of the channel, we have now initiated an inevitable pullback, as outlined by our Bull Flag accumulation prediction, it appears this could be the final wave of opportunity on Bitcoin before we start to first locally reverse trend, and finally put an end to the accumulation we’ve seen since March of this year and instead resume a bullish trajectory leading us healthily into the 2025 Bull run. Currently we’re hovering around $51,500 for Bitcoin, with the lowest point coming in today at $51,331.
A clearer view of the chart above can be found here: https://www.tradingview.com/x/Nv7zUYZZ/
Whilst it might look scary now, remember as mentioned above last time we saw a capitulation down to this price range, we quickly reversed trend as seller exhaustion set in and buying resumed rather quickly, sending us on a two-week tear back regaining 30% back in the green.
Given that fundamentally we’re not seeing any major shifts in macro-economic sentiment, and that the US FED feel re-assured enough that a soft-landing is still close to being achieved based on unemployment and inflation data, it seems that this sell-off may simply be a pricing in for the September rate cuts across all markets broad and wide, not just in Cryptocurrency; a good sign that our specific industry remains largely unimpacted by any significant headwinds at this point in time. Perhaps the impact of FED on the market is troublesome and maybe even worry some for some I will say this; for all the faults of monetary and economic policy, if there’s one thing I’ve learnt about the puppet masters pulling the puppet strings in the market is this; Don’t fight the FED. Their uncanny ability to sway market sentiment on a dime is unparalleled and personally I don’t plan on them radically shifting their policies to accommodate prolonged deflation so that the common man can work a 9-5, 5 days a week and pay off their mortgage in 5 years like it’s the 1970’s all over again. The expansion of fiat currency has backed them into a corner between a rock and a hard place, full well knowing that an implosion of the markets, just like the banks during the GFC would be too big to fail; intervention through Keynesian economic trickery may just be inevitable again, much like that we’re seeing with the pricing-in of September rate cuts, ergo; an easing cycle all over again and we all know what inflationary euphoria that caused in the markets post-Covid era.
Of course, we will need to keep an eye on interest rates and how they continue to impact the market, and in future articles we may even look at the Yield Curve and how the timing of recessions are predicted using such contrasting charts in more detail, although for now we see an industry that has managed to survive much stronger headwinds than this, and shake them off each and every single time. If I had a dollar for every time I heard “Bitcoin is dead” I’d have a whole Bitcoin, and probably then-some given I’ve been hearing it since Bitcoin was at ultra-low prices back then, of which people can only dream of today. A sea of red is scary to some, an opportunity to others, and a potential learning lesson for everyone and here at Stormrake we’re here to help you navigate through the noise to the other side. The journey and how we choose to deal with the curveballs along the way is what defines us, relish it and enjoy the ride!
Written by James Ryan
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