Bitcoin has completed a local flat and broken out into open space. As we warned, the new leg up began without warning and without any specific major event—the market started buying "digital gold" again as part of another pump. The only precedents for the new rise were two liquidity grabs to the upside on the 4-hour timeframe. On the daily timeframe, the downtrend structure can be considered broken, since the CHOCH line was decisively breached. A correction may begin soon, because the bearish FVG from the previous trend has been filled. At the same time, we draw attention to the sideways channel the price left: despite a fairly strong close above the channel, this can still be a plain deviation.
Meanwhile, Strategy (formerly MicroStrategy) reportedly resumed buying Bitcoin. A few months ago, the company — the de facto corporate treasury — had abandoned a "buy always, with all excess cash, never sell" strategy. The company's fate now literally depends on BTC prices on exchanges: when Bitcoin is low/falling, Strategy's shares fall, free reserves shrink, and investor confidence declines; when Bitcoin rises, shares rise, reserves and free funds grow, and investment capacity increases. Given the explosive Bitcoin rally in recent months, Strategy decided to resume purchases of "digital gold," something Michael Saylor had hinted at several times on social media.
Reports say the company bought about $142 million of Bitcoin, bringing the total number of coins on its balance sheet to 847,666. For now, so long as Bitcoin rises, all is well. However, the company's average purchase price is $75,500, so any pullback in the leading cryptocurrency from current levels would again materially worsen the company's situation and prospects. After six years of investing in the top crypto, these investments are now modestly profitable. The company's thesis relies on continued, sustained explosive growth — an outcome we personally doubt.
On the daily timeframe, the downtrend structure is broken, so "digital gold" has most likely begun forming a new bullish trend. The price has already filled the bearish FVG from the previous trend, so we expect a downward correction. Note that the recent Bitcoin rallies, including the mid-August move, show all the signs of a pump. The breakout from the sideways channel $60,000–82,500 may still be a deviation. Price is currently supported by a bullish FVG in the $81,500–89,000 range, but so far there has been no reaction to that pattern. Bitcoin is increasingly approaching a correction.
On the 4-hour timeframe, Bitcoin left the bounds of the sideways channel. Four deviations formed inside that channel, the last two being bullish. Traders could have worked the recent move from the channel's lower boundary to its upper boundary, and now the flat can be considered complete. From nearby areas of interest, we can only highlight the last bullish FVG, but there has been no reaction to it so far. A bearish FVG also formed and elicited a reaction. We believe the decline will continue. The CHOCH (change of character) line on the 4-hour timeframe is at $75,000.
Bitcoin shows all the signs of a new bullish trend. This trend begins, as usual, with a pump that lacks a clear fundamental reason. The Federal Reserve has not begun cutting rates, and the Clarity Act bill was not passed. In the near term, on the daily timeframe, Bitcoin may decline, since the price reacted to the bearish FVG. Also note that the current breakout above the daily channel could be a deviation — a deep one, but still a deviation. If so, Bitcoin could still fall back toward $57,500. On the 4-hour timeframe, both long and short trades are possible, but the most relevant recent pattern is bearish.
CHOCH – change of trend structure.
Liquidity – liquidity, Stop Losses, pending orders that market-makers use to accumulate positions.
FVG – Fair Value Gap. A price area of inefficiency. Price passes through these areas quickly, indicating the absence of one side in the market. Subsequently, price tends to return and react to such areas in continuation of the main trend.
IFVG – Inverted Fair Value Gap. After returning to such an area, price doesn't react; it impulsively breaks it and then tests it from the other side.
OB – Order block. The candle where a market-maker opened a position aiming to take liquidity to form their own position in the opposite direction.
*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.
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