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Make or Break. Will Bitcoin Continue its Bullish Trend?

Macro Analysis

Dollar Currency Index (DXY)

Before analyzing Bitcoin’s price action it is important to look at the dollar currency index due to its strong inverse correlation. Last week, I talked about how the DXY was breaking an important resistance and might launch ahead to 95. As can be seen from the chart below, this price action almost took place before reverting. The DXY is now currently testing its former resistance and it is possible that a new support is established in this area. If this were to happen and in addition to the previously mentioned bullish divergence, a case for the DXY going all the way to 95 or even 96 levels is not out of the question. If this were to happen, we could see Bitcoin plummeting sub-10K.

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News Recap: KuCoin gets Hacked, Bitcoin is Decoupling from Traditional Markets, and More!

Not Your Keys, Not Your Crypto

Major Cryptocurrency Exchange, KuCoin, reported a major security breach on September 26th. Despite this news, Bitcoin did not see any correlated price movement. This was the same scenario for Ethereum and other ERC20 tokens. It is estimated that the breach affected around $150 million in user funds. In order to battle potential selloffs; major exchanges, including Bitfinex, froze USDT transactions associated with the hack.

It is important to remember than once you deposit your crypto into a broker, it stops being your crypto. Similar to traditional finance, the crypto represented in your account is only an IOU which establishes that the broker owes you that quantity. If you do not own the private keys of those wallets, then you do not really own that crypto.

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Bitcoin’s Potential Continuation to the Downside

As it has been discussed on previous webinars, Bitcoin is presently showing more and more bearish confluence in terms of potential new resistance. Last time, I discussed how bouncing from the $10,000 level could lead Bitcoin to potential gains if it could break the smaller resistance at $11,000. This and last week, Bitcoin saw a rejection of the $11,000 area alongside a bearish cross from the 20 and 50 EMA on the daily. I have discussed the 20 EMA and its relevancy in terms of Bitcoin’s price action. The 20 EMA has been a strong support through the rally and could potentially serve as a strong resistance now that Bitcoin has broken it to the downside.

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News Recap: Bitcoin Price Predictions, EU Regulatory Framework and more…

CME Futures Gap at $9,600

As it has been discussed previously, there is a CME Futures Gap at $9,600 which has not yet been filled. Even though Bitcoin’s price action corrected within the past two weeks, the price did not fill this gap entirely. A lot of traders seemed to have front-run the price as it dipped close to $9,800 pushing it back above the $10,000 level. Having this into consideration, it is important to see the following levels ahead. Breaking the $11,000 – $11,200 might lead Bitcoin to further level at $12,000. Contrary to this, if the price action went back down to $10,000; the possibility of it revisiting lower support levels below the CME Futures Gap at $9,600 increase.

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Bitcoin in Consolidation

Macro Analysis

BTC/USD

Bitcoin currently finds itself in a consolidation period after its previous downfall. It is important to highlight that some of the daily EMA’s are showing potential sign of becoming a new resistance for Bitcoin. The bearish cross between the 20 and the 50 EMA could potential be an indicator for a continuation to the downside. Even though Bitcoin moved harshly to the downside, some of the indicators are still neutral and have room for further movement to the downside.

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News Recap: What happened in Crypto last week?

Bitcoin Price and CME Futures Gaps

As seen on several news outlets, there was a big potential for correction according to the CME Futures Gap theory. This theory basically establishes that Bitcoin’s price action tends to move in favor of filling these gaps that happened due to the market closing and opening during the weekends.

Even though realistically there is no reason for these gaps to be filled, time and time again this has been the case. My theory is that this is purely psychological as more and more news and traders focus their attention on this. I would say this is what is called a self-fulfilled prophecy, where just the fact of people thinking this might happens makes it so it actually happens.

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