Resistance Holds Strong, But We're Not Alone

Crypto Market Can’t Catch a Break

February has proved to be an extremely volatile month for Bitcoin and the wider range of crypto assets, with prices making large moves to both the upside and downside. The first two weeks of the month saw prices rally off of the January lows at $33K to about $45K. Although moves like this happen more frequently in crypto and crypto natives tend to get jaded by larger percentage moves, this was still a big move for any asset (BTC included), topping out at around 40% from the lows. In last week’s “Markets Insights”, we mentioned a few things that are prudent to revisit given what’s occurred since.

First, we stated, “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 when multiple timeframe levels overlap, you can expect to have a larger amount of market participants willing to get involved in the action. We also explained, “this area, $45K, 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”, and cautioned against adding excessive risk heading into these zones.

• Revisiting the weekly chart, it immediately becomes clear that BTC is still struggling to shake off this multi-month sell pressure. After the initial rally and move off of the lows, price has stalled for the last two weeks, while failing to reclaim any weekly support structure, or the midpoint of the yearly range. In addition, the weekly chart is also leaving wicks to the upside, indicating sellers are still in control.

• Zooming in a bit more, we can see that our cautionary stance last week has proved to be the prudent action as price has pulled back 10% from the identified $45K resistance level to $40.5K at the time of writing.

• The following are key levels that we highlighted to the downside (in the case of a pullback due to all of the factors discussed).

  • Support at $40-41K: A successful shift from a downtrend into a more bullish market structure would be supported by the first level of support holding firm. Ideally, this means that the $40K-$41K support level should hold. We also have confluence with the white VWAP line, which is anchored to the 2022 Yearly Open, adding