Chad Rallies, Inflation, & The Policymakers Conundrum

Bitcoin “Chad” Rally Hits Overhead Resistance

Since our last edition of Market Insights, Bitcoin has notched an extremely impressive week, rallying nearly 20% over the last 7 days, and nearly 40% off of its January lows (around $33K). This week’s move was a vicious one, sparked by a reinvigorated spot bid across all major exchanges, as well as a flurry of short liquidations as late sellers were mercilessly squeezed, culminating in a nearly 10% move on February 4th. Since the February 4th ‘chad candle’, price momentum has started to slow for BTC and most other crypto assets.

With the sharp $12K move off of the lows, bitcoin is heading into resistance on multiple timeframes. What we mean by this is BTC is moving into an area of daily, weekly and monthly resistance. This is notable because it is a level that market participants of all kinds will be looking at as a potential price ceiling; this is also known as multiple factor confluence. As we mentioned in our recent Monthly Chartbook, this area is a logical place to expect profit taking/risk reduction activity due to the confluence of resistance zones and the speed and magnitude of the move off recent lows.

The following are key levels on both the upside (if BTC keeps grinding higher) and the downside (in the case of a pullback).

• Resistance at $46-$48K: This is the daily, weekly and monthly supply zones that will likely be a heavy level of resistance. Above this level and we likely see a squeeze towards $50K+
• Support at $40-41K: If the structure is indeed shifting from a downtrend into a more bullish market structure, we would like the first level of support to hold and for buyers to front run our lower levels. This means we want to see $40K hold. We also have confluence with the white VWAP line, which is anchored to the 2022 Yearly Open.
• Support at $38.5K: Should we lose $40K, the next level of market structure is at th