“We must break the wings of the black swan! » Technical Analysis by Vincent Ganne
FTX black swallow and its offshoots, along with energy costs for mining activity, continue to put downward pressure on Bitcoin and cryptocurrency prices as market shares bounced back after a brief squeeze on Thursday, October. 13. Let’s ignore this difficult context and construct an unfiltered technical diagnosis of the cryptocurrency market.
A confidence issue that will be resolved in the coming weeks
The failure of the FTX platform, the identity of the fraudster Sam Bankman-Fried, the massive withdrawal of money from centralized platforms (CEX) is a black swan, a strong movement of distrust in cryptocurrencies.
For financial markets, a black swan is the worst fundamental event that can happen because its exceptional nature creates systemic riskthat is, the risk of said market collapsing due to lack of preparation to deal with it.
By definition, this is a market risk that was not really included in the list of potential risks at the beginning of the year. In the present case, FTX a month ago was still considered a “high-end and safe” player and its CEO a useful figure for the ecosystem.
gold, this gentleman becomes the black sheep (not related to the swan), ugly trickster which ultimately finds itself on the sidelines for the sake of the future of the crypto ecosystem.
But do not dream, it will take a long time to erase the crisis of confidence caused by this incident. In turn, the downward trend in the price of cryptocurrencies, which has been in place since the fall of 2021, is further developing, making less and less mining farms profitable.
Therefore, it becomes urgent to stabilize the total market capitalization of cryptocurrencies in order to be able to start an upward trend in 2023 on a sound structural basis.
Meanwhile, the balance sheet continues its upward trend, with confidence in the CEX yet to make a big comeback.
Figure 1: A chart that plots the price of Bitcoin against the balances of owners and traders
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At a technical level, volume and participation data are key to evaluating possible acquisition remobilization
Volume, engagement and participation data are most relevant within technical analysis tools of financial markets to gauge the evolution of overall confidence towards cryptocurrency.
Evolution of deposits and withdrawals on centralized platforms (CEX), measurement of Open Interest (OI) on crypto futures contracts, Assets under Management (AUM) on cryptocurrency ETFs, as well as evolution of the share of liquid assets in institutional managers.
The latest data from these metrics do not yet indicate a return to cryptocurrencies from existing liquidity, but despite this, there is a stabilization that suggests that FTX’s post-bankruptcy bleeding has stopped.
I am convinced that the available liquidity (among institutional traders is close to the record since the bursting of the speculative bubble 2.0 at the turn of the century) will be partially reinvested in the cryptocurrency market as soon as confidence turns into income. believe that it primarily requires accounting transparency and the financial solvency of key players in the ecosystem.
To conclude the chart level, Bitcoin (BTC) price needs to break past the old lows of last June to continue the uptrend. resistance at $19,000/$20,000.
Figure 2: Graph showing the evolution of the share of cash among institutional managers
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Sources: Figure 1 – TradingView; Figure 2 – Bank of America monthly survey
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Vincent Ganne is a market strategist, technical analyst, stock trainer and speaker for BFM Business. With extensive experience in analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis to predict trends in financial assets over the medium to long term.
Vincent Gane
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