Market Outlook #199 (14th November 2022)
Well… this has been a dark week to say the least. Before I begin anything, I just want to say that I hope that you have been largely unaffected by the FTX insolvency and, if you have been affected, I hope you are doing okay. This space is equally forgiving as it is brutal, and as long as you can survive the chaos, you are often rewarded.
Given the events of the past week, and likely the events of the weeks ahead that are yet to be revealed to us, I want to look at the broader market alongside the regular analysis of recent price-action in specific altcoins, primarily alternatives to centralised trading…
So, hello, and welcome to the 199th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, BNB, Uniswap, PancakeSwap, 1inch, WOO Network and Perpetual Protocol. I will also be looking at Altcoin Market Cap in Dollar denomination and BTC denomination.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $316.803bn
Thoughts: If we begin by looking at BTC/USD, we can see that price is set to close firmly below the $17.5k swing-low following this past week’s events, having sold off into $15.5k and bounced, now sitting around $16.5k. We appear to have bounced just above the 360wMA at $15.1k but given this weekly close below the multi-month range, I would be extremely surprised if the cycle lows are in here. Instead, even if we get some relief next week to trap breakout shorts, I would expect the week to close below $17.5k once again as support turned resistance, leading to another push lower below this week’s low. If we then find significant demand at $15.1k, we can re-assess for signs of a bottom, but I am looking for wicks into the $13.9k region where I am a spot buyer. There is no reason to get bullish short-term unless we see the range support reclaimed.
Turning to the daily, we can see how price rejected after bouncing at $15.5k, rallying into the prior swing-low at $17.5k but turning lower from there back towards the weekly low. I would expect to see the weekly low taken out next week, where if we then see a daily close below it I would be looking to buy the $13.9k level for a bounce, and looking to scale into spot if we start to flatten out around the level. Below that, I have $12.3k marked out. Either way, dial down the leverage this coming week, in my opinion, as more revelations may come to light and we are now approaching prices that appear attractive for spot positions on a 3-5 year time horizon.
Price: $1224.87 (0.07425 BTC)
Market Cap: $150.156bn
Thoughts: Beginning with ETH/USD, we can see on the weekly that price broke below support at $1217 and formed a local low at $1081, then bouncing hard, now set to close this week right around that range support. Despite this bounce, I would be very surprised if this is *the* low, as we also have a double bottom just below it at $1000 that remains untapped. Rather, I would expect any relief into $1330 to be rejected as the 200wMA acts as resistance and price to turn lower again over the coming weeks until that liquidity below $1000 is taken out. If we wick below those lows and find demand above $830, we may well be forming a higher-low from which price can turn higher. If, however, we start to close the weekly below $1000, I would also expect $830 to get taken out into $740 – the 2021 open – where I would look to buy spot. If we look at the daily, we can see that the 200dMA continues to cap price, as does reclaimed resistance following the bounce at $1287. I want to see a wick through that $1000 double bottom before I really consider heavy spot purchases on ETH…
Turning to ETH/BTC, we can see that the pair held up very well this past week, breaking lower below the reclaimed support at 0.072 into the mid-range and trendline resistance turned support but holding above and now bouncing into the weekly close back above that former level. This is promising given the context of the past week, where one might have rightly expected ETH to break lower against BTC and hold below the mid-range. It is key for ETH bulls that this 0.066 weekly low is now protected if we are to continue seeing ETH outperformance; lose this level next week and I think we head back towards the bottom of the range, but hold above it and that support reclaim at 0.072 continues to hold firm, indicating higher prices to follow, which would be very bullish for ETH moving forward.
Price: $276.09 (0.01677 BTC)
Market Cap: $44.186bn
Thoughts: If we begin by looking at the weekly chart for BNB/USD, we can see that price wicked above range resistance into $398 but rejected upon the events of the week then selling off back into range support around $277, where it is likely to close. This does not look like a pretty picture, despite the strength of BNB throughout this recent period, and I would expect to see the bottom of this range now taken out and price return towards June lows at $210, potentially moving as low as the 200wMA at $185 in a deep wick into support to form a bottom. Anywhere in that range seems like a good buy to me if we get it, as long as Binance remains transparent with its reserves and its lack of collateralisation of its own tokens. Given the strength that BNB has shown, I would expect the market to continue favouring it once a bottom is found. If we drop into the daily, we can see that price rejected above the 360dMA and has now lost the 200dMA, with $254 as range support the final stand before that return to June lows. I would be very surprised if this range support can hold here but if it can, bulls want to see consolidation above it following a brief wick below.
If we turn to BNB/BTC, we can see that price wicked to new all-time highs early in the week at 0.0197, before rejecting to close the week back below last week’s high at 0.0173. This very much looks like a blow off top in the context of the macro conditions, and price is now looking ready to move lower in my opinion, with the next support at untested prior resistance at 0.015. If we drop into the daily for more clarity, we can see divergence into this most recent high suggesting exhaustion, which paired with the FTX events suggests a local top is in. I would be looking for 0.0158 to be swept at the very least as the most recent swing-low, where any daily close below it turns structure bearish and opens up that retest of prior resistance at 0.015.
Price: $5.87 (35,499 satoshis)
Market Cap: $4.453bn
Thoughts: Beginning with UNI/USD, on the weekly timeframe we can see that price has rejected at prior support turned resistance at $7.42 and turned lower into reclaimed support at $5.65, above which it currently sits. This is – despite the look of the candle – a pretty strong showing from UNI, given where most altcoins sit following this past week. No doubt this is due to the CEX vs DEX narrative that has re-emerged, and I would like to see UNI hold this range support next week if the rest of the market continues lower to really showcase its strength; in that scenario, I would be re-buying UNI as close to $5.65 as possible with invalidation on a weekly close below $4.75. If we get that weekly close, even better to be honest as I want to be a buyer back at May lows around $3.50 given that UNI is a fee-earning protocol and the biggest DEX by far.
Turning to UNI/BTC, we can see far more bullish structure here, with reclaimed support at 29,400 satoshis continuing to hold and price rallying back above resistance at 34.8k satoshis, if only marginally. But this is set to be the highest close in many weeks, following a retest of key support, and weekly structure is bullish, so I am not looking to fade this strength in the wake of the FTX insolvency. Rather, I want to ride this higher if it starts to push above 37k satoshis, with the next major resistance at 44k; above that level, I think UNI really kicks into gear, but part of me would be extremely surprised to see a bull cycle begins for DEXes given the huge implications on liquidity of the past week, but let’s see… I am a buyer of decentralised strength in any case.
Price: $4.02 (24,420 satoshis)
Market Cap: $591.190mn
Thoughts: If we begin by looking at CAKE/USD, we can see on the weekly that price wicked through range resistance at prior support ~$5.16 and rejected, set to close the week back near $4.00 after bouncing off local support at $3.62. For now, the pair remains range-bound and trendline resistance from the all-time high continues to cap price. If we see continuation lower from here, I would first be looking for a daily close through local support to open up that next leg lower into the May low at $3.11, followed by the June low at $2.50 if that fails to hold. If we drop into the daily, we can see that the 200dMA also caps price for now, with the most recent push above acting as a fake-out. Therefore, if we do drop lower into $3.10, I’d look to buy that area with invalidation below $2.50 and add to my spot position on a weekly close above $5.15. If we lose the June low, it is a very long way down to the next support level at $1.25.
Turning to CAKE/BTC, the pair held fairly well this past week, remaining above reclaimed support at 21.6k satoshis and wicking into resistance at 26k, below which it currently sits. Whilst the pair remains above reclaimed support, structure is still pointing towards upside as opposed to a retrace of this rally off the summer lows. If we can close the week above 26k satoshis, I think we push higher into prior support at 30.5k, where price may stall. Above that level, however, there is basically zero resistance back into 55k satoshis, so if the decentralised trading narrative continues to play out, we could squeeze all the way into that area. Looking lower, if we do see a range breakdown, there is a cluster of support around 1883, with the 360dMA and 200dMA also sat around that level.
Price: $0.516 (3129 satoshis)
Market Cap: $321.183mn
Thoughts: Beginning with 1INCH/USD, we can see that the pair continues to break new lows, having drawn down 94% from all-time highs and spent the majority of its existence in a bear cycle. This past week saw price reject off prior support turned resistance at $0.67 and move below the $0.52 all-time low into a fresh low at $0.49. If we continue to break lower next week from this support, retesting it as resistance, I would not be looking to get involved until the formation of a new tight range, given we are in bearish price discovery. However, if we wick below this week’s low and then reclaim $0.52 and start to consolidate above it, that looks more attractive, and though I will be waiting to see how the coming weeks develop before really getting involved with too much exposure, that is the sort of price-action (especially in the context of this past week) that looks attractive. Dropping into the daily, confirmation of a longer-term reversal would be a break and close above the 200dMA and prior support at $0.74, above which I think it becomes dip-buying season, but that is likely a long way away yet…
Turning to 1INCH/BTC, we can see much more attractive price action here, with the pair having held above prior all-time lows turned support at 2770 satoshis for months now, having deviated below in June to a fresh low at 2360 but immediately reclaimed. This pair has been range-bound above that 2770 area for 196 days now excluding the capitulation below and support turned resistance at 3200 satoshis is currently capping price, along with trendline resistance from the all-time high. Close the weekly above both of these resistance levels and this starts to look much better for a cyclical bottom being in on the pair. Invalidation is obviously very clear on a break below the all-time low.
Price: $0.122 (733 satoshis)
Market Cap: $144.623mn
Thoughts: If we look firstly at WOO/USD, we van see that price has drawn down 94% from the all-time high in November 2021, and continues to be capped by trendline resistance from that high, faking out above it this past week into 200dMA resistance before getting slapped lower and breaking below support at $0.12. We are now just floating above the June low at $0.10 and if we were to close below that, there is another 30% of downside before we come into any support around $0.07, with the next level below that at $0.045. If, however, we wick through the June low then reclaim it as support and then start pushing through that trendline resistance, we have the makings of a longer-term bottom and I would look to be a buyer in that scenario, but again that is likely still several weeks away, so patience is key.
Turning to WOO/BTC, very similar price action here except that we are holding well above the June low for now and are currently just contesting with the 200dMA as support or resistance, with price sat just below it at present but above minor support at 690 satoshis. If we close the daily below that level I think it is likely we drop 20% lower into that 550 area above the June lows. If the June low fell, I would absolutely look to be a buyer back near 250 if we started to form a new range around that level. If we are able to hold above 690 here, I think and break back above 960, reclaiming that level as support, confirms a higher-low and market structure becomes bullish again, so a few possible scenarios to be watching for here…
Price: $0.513 (3113 satoshis)
Market Cap: $47.479mn
Thoughts: Beginning with PERP/USD, the pair has been in a bear cycle since inception, forming an all-time high at $26.26 in August 2021 and having since fallen to fresh lows at $0.31 this past week, where price bounced hard and is now set to close back above the prior ATL and range support at $0.51. If it can now hold above this level, as marked out on the daily timeframe, I would expect a squeeze into the 200dMA followed by further re-accumulation above $0.51, which is the level I would then look to buy with invalidation below $0.30. Pretty clean setup here, particularly for the decentralisation narrative.
Turning to PERP/BTC, we have drawn down 96% from the all-time high and remain capped by long-term trendline resistance, having broken below key cyclical support at 3600 satoshis in June and since being largely range-bound below that level but above support at 2600. Price wicked below that level this past week into fresh lows at 1940 satoshis, but found a bid and is now set to close up near 3200 satoshis. Again, dropping into the daily, we can see how this looks like a deviation below all-time lows followed by a reclaim as support, but I would expect the 200dMA and prior support around 3600-3700 satoshis to cap upside here and price to retest reclaimed support at 2615 before consolidating further and potentially moving higher off that level if it holds.
Altcoin Market Cap:
Market Cap: $471.876bn (28.5mn BTC)
Thoughts: So, looking at the broader market, if we begin with ALT/USD, which is the Altcoin Market Cap in Dollars, we can see that the market has retraced 75% from the all-time highs into the 200wMA, which aligns roughly with the previous cycle highs. This area has supported the altcoin market since May, with the market retesting the 200wMA this past week and wicking below it into the $420bn area, marginally below that prior cycle high. If we lose this 200wMA and prior cycle high, I would expect to see the altcoin market suffer another deep leg lower towards the 360wMA and prior resistance around $260-300bn, which is a ~83% drawdown from the all-time highs. I would expect to see that area then form the new cycle lows, price to spend a long period consolidating above it, and then to emerge from that range for a new cycle. However, if we somehow are able to hold above this $420-480bn region in spite of all the devastation of the past week, that would be quite something, and would confirm this range between the 200wMA and $610bn as resistance as the accumulation range for the next cycle. Given all of that, there is a case to be made for increasing some spot exposure here with an extremely tight invalidation on a weekly close below this past week’s low, where if that gives way we have another ~40% of downside to come, and if it holds we at the very least push another 20-25% higher into that $610bn area to retest the top of the range. In all honesty, I would be very surprised if we don’t see that deeper retracement, but if we do hold above here next week, I am going to allocate some spot exposure the following week with that tight invalidation.
Turning to ALT/BTC, this appears to be the first bear cycle in history where altcoins are holding up much stronger, to the point where the altcoin market priced in BTC is on the verge of new all-time highs, largely driven by ETH and BNB. We are sat right at range resistance below all-time highs, which has capped the market since June 2021, so if we do now see a breakout in the wake of all of this chaos, I would not want to fade a close beyond 18-month resistance, with the expectation that alts continue to outperform BTC for another 20% towards that 1.618 extension. This is certainly the first cycle where this pattern has emerged, in which BTC is unable to take down the rest of the market with it to a greater extent than its own losses. Is this the case for individual altcoins (likely just ETH or BNB) emerging as possible contenders for the top spot in the next cycle? I don’t know, but it is fascinating to see such strength in the face of one of the darkest weeks in crypto history.
And that concludes this week’s Market Outlook.
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