2 must-know charts to follow the evolution of the market

The cryptocurrency market has had one of the best starts to the year in the last 14 years, with a 28% increase in the price of bitcoin and a 31% increase in Ether (ETH). This bullish first part of January is fueling the debate over whether or not the bear market that has existed since November 2021 is over. There are two graphs you need to know to participate in this debate.

The relative strength between Bitcoin and the Wall Street stock market

It’s an almost unexpected start to the year for the cryptocurrency market, with confidence being held captive by the outcome of the FTX case. While the stock market has rallied strongly and the US dollar has fallen more than 11% since last October, the total capitalization of the cryptocurrency market has fallen amid capital outflows from centralized platforms.

A strong bullish start to the year for cryptocurrencies (+28% for bitcoin price and +31% for ETH/USD exchange rate) therefore allows holding other risky assets in the stock market. and to wipe out the low effects of the enemy at the beginning of last November.

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But is this enough to argue for the end of the bear market from November 2021? Note that for some bear market In the spring of 2021, it started with the first increase in interest rates in the credit market.

The market’s move from $16,000 to $21,000 allowed us to note the first resistance breach in over 15 months, accompanied by bullish swings in various measures of volume, commitment and participation (such as bullish). managed asset the world’s first cryptocurrency ETF, BITO).

Given the very high fundamental uncertainty, this is certainly not a new bull runbut on the other hand, it seems fair to me to say that the bear market neutralized itself. The challenge now is to demonstrate that the $19,000 / $20,000 price zone has regained its support status, as breaking this zone again would be evidence that the market has only experienced a reversal. dead cat jump.

On the side of the arguments in favor of the end of the bear market, there are many bullish divergences active in the weekly data, as in the case of the Bitcoin/S&P500 ratio.

Chart showing the relative strength of the US stock market and the price of bitcoin (the US stock market is represented by the S&P 500 stock market index)

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Decline percentage curve of Bitcoin against past ATH

Let’s focus on the “price/momentum” type of technical methodology because over the past few weeks there have been many bullish technical divergences between the price action and its first derivative. If you watch my videos every Tuesday, I use the RSI technical indicator to represent the momentum of the market, i.e. its fundamental momentum. These bullish divergences therefore created their own technical rebound effect, which I present to you in the chart below, which is very relevant.

The latter exposes a weekly curve (points are updated every weekend, so this chart has a medium/long-term range) of the percentage decline in the price of bitcoin since the old historical high (ATH for All Time High). In this curve, you can observe the presence of an excellent bullish divergence with the RSI technical indicator, where BTC perfectly showed the bullish effect with a 28% rebound.

To further substantiate these discrepancies, now we should see BTC break the resistance at $21,500this is the price level before the FTX case falls.

Chart showing the percentage decline of bitcoin price from its all-time high

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