Bitcoin: Bull Market Support Band

Summary

In this video, the host provides an update on Bitcoin's price action and the likelihood of it revisiting the bull market support band (20-week SMA/21-week EMA) in September. Historical patterns suggest Bitcoin may experience a pullback to this level, with a potential 5-6% drop, especially if the 10-year yield rises following a Fed rate cut. The altcoin market is expected to face a larger correction, potentially 20-50%, when Bitcoin hits the support band. Despite these risks, the host emphasizes the importance of market timing, with altcoins likely staying strong until September.

Takeaways

• 😀 Bitcoin's current focus is on the bull market support band, which consists of the 20-week SMA and 21-week EMA, with a likely date for a visit in September.
• 😀 Historical trends suggest that Bitcoin has had green months in July and August in prior post-halving years, making it likely that August will remain positive.
• 😀 Bitcoin's correction to the bull market support band in September has been observed in previous years, notably in 2013, 2017, and 2021.
• 😀 Although there is a possibility of Bitcoin dropping to the support band in August, the more likely timing is September based on previous market behavior.
• 😀 The potential rate cut in September could lead to a rally in the 10-year yield, which may negatively impact Bitcoin and altcoins, especially if the yield rises above 5%.
• 😀 Markets tend to price in events like rate cuts before they occur, so even if rate cuts happen, the market may already react beforehand.
• 😀 Bitcoin could still make a new cycle high in August, as seen in 2017 when it saw a mid-August correction before reaching a new high in late August.
• 😀 The 2020 Bitcoin price action is relevant as it mirrors the current situation, where Bitcoin stalled out around a similar price before revisiting the bull market support band in September.
• 😀 If Bitcoin revisits the 20-week SMA in September, it could lead to a 5-6% drop, but the real impact will be on altcoins, with potential drops ranging from 20% to 50%.
• 😀 Altcoins are expected to remain relatively strong against Bitcoin through August, but they may face more significant corrections in their Bitcoin pairs once Bitcoin touches the 20-week SMA in September.

Q & A

What is the bull market support band, and why is it important for Bitcoin's price prediction?

The bull market support band refers to the 20-week Simple Moving Average (SMA) and 21-week Exponential Moving Average (EMA), which are used as key indicators of support during bull market trends. It's important because Bitcoin often finds support around these levels during market corrections, helping to predict future price movements.

Why does the presenter believe Bitcoin will likely hit the bull market support band in September?

The presenter believes Bitcoin is likely to hit the bull market support band in September based on historical data showing that Bitcoin has experienced a green July and August followed by a red September in previous years (2013, 2017, 2021). Additionally, Bitcoin tends to stall in August and then drops towards the support band in September.

How did Bitcoin perform in August during previous years like 2017, 2020, and 2021?

In previous years such as 2017, 2020, and 2021, Bitcoin often stalled or saw a slight correction in August, but then went on to hit new cycle highs or experience a pullback in early September. This pattern suggests Bitcoin often consolidates before making a larger move towards the bull market support band.

What is the relationship between rate cuts and Bitcoin's price movement?

The presenter explains that markets tend to price in rate cuts before they actually happen. Although the Federal Reserve is expected to cut rates in September, the bond market may react negatively, which could lead to an increase in the 10-year yield. A rising yield could result in Bitcoin experiencing a pullback towards the bull market support band.

What could happen if the 10-year yield increases after the Fed cuts rates?

If the 10-year yield increases after the Fed cuts rates, it could signal higher borrowing costs and tighter financial conditions, potentially leading to a drop in risk assets like Bitcoin. This would likely coincide with Bitcoin pulling back to the bull market support band.

Why is the 10-year yield important for Bitcoin's price?

The 10-year yield is an important indicator because it reflects the broader economic environment. If the yield rises, it typically signals higher interest rates, which can reduce demand for riskier assets like Bitcoin, leading to price corrections.

Can Bitcoin still put in a new cycle high in August despite the expectations of a pullback?

Yes, it's still possible for Bitcoin to reach a new cycle high in August, as seen in 2017 when Bitcoin corrected a bit in mid-August but still managed to set a new cycle high. However, the overall trend suggests that a pullback towards the support band in September is more likely.

What was the key similarity between Bitcoin's price action in 2020 and its current movement?

The key similarity is that in both 2020 and now, Bitcoin saw a significant capitulation in Q1, followed by a recovery and a similar price range before hitting the bull market support band in September. In 2020, Bitcoin's price stalled at around $12,470, which is nearly 10 times lower than its current price, suggesting the patterns are somewhat comparable.

How does Bitcoin's correction affect the altcoin market?

When Bitcoin pulls back to the bull market support band, it tends to trigger larger corrections in the altcoin market, especially when Bitcoin stabilizes above key support levels. Altcoins often experience larger drops, with Ethereum potentially seeing a 20-30% drop and other altcoins possibly falling by 30-50%.

Why does the presenter think altcoins will not experience a larger drop until September?

The presenter believes altcoins will remain relatively strong against Bitcoin through the end of August, as Bitcoin is expected to stay elevated. However, once Bitcoin hits the bull market support band in September, altcoins are likely to experience more significant drops in their USD pairs.