deen

12 May 2020

TA Tuesday: Bitcoin scenarios and ETH hardball

Patrick Heusser

Patrick Heusser

Senior Trader at Crypto Broker AG

About the author

BTC$ (4h)

The price is slightly lower now compared to where we were when last week’s report came out. The volatility in between, however, was quite high.

I believe the media hype around the Bitcoin Halving has not helped, and retailers were sucked into the “Crypto Casino” with high leverage on various trading platforms, e.g. Binance, Huobi, and BitMEX. I mention those three names in the ranking order of the liquidation amounts. Over the past seven days, Binance has shown by far the highest liquidation amount, and I consider Binance to be a retail exchange.

As most of you know casinos usually takes your money, and my feeling is that things were not much different at the Crypto Casino. With 10% moves in just under an hour, retail traders (or wanna-be traders) were overwhelmed, hence the large disproportionate amount of liquidations.

Now, back to the charts. The wash-out of leveraged longs did not cause too much damage in my view. In terms of the Ichimoku cloud, we are still above the lower band and currently fighting our way back out of the cloud. The 8.3k level has provided good support, and it spiked three times off of that level over the past few days.

I currently see two scenarios:

1) We consolidate above 8.3k and see another attempt to break the 10.5k level

2) We consolidate further down, but do not go lower than 7.3k, and have another attempt to break the 10.5k level

In both scenarios, I will watch the leveraged shorts situation. I believe we need some extra fuel to push through 10.5k. The “normal” physical spot buying by retail was not enough. We need to see a nice build up of leveraged shorts that then turn into buy liquidations when we push towards 10.5k.

If we see another failure to break to the upside, I am looking for a dramatic move lower towards 6.6k. This has to be in combination with the liquidation of leveraged longs.

ETH$ (4h)

The market played hardball with us. The price went through the cloud in just under 30 minutes. Now, we are consolidating at around the $190 level.

There is not much to add to this. $170 is the next support level and also the first warning sign in combination with the massive margin long position on Bitfinex.

Bitfinex margin long:

Traders started to build up the position at around $165 with roughly 400k ETH (that’s about $70 million worth of ETH). And surprisingly, they added another 150k ETH to their position (that’s another $30 million) when ETH$ dropped from $210 down to $190 ETH. I was thinking about the way these longs were built up: basically in two big trades. This does not look like retail FOMO trading behaviour. It looks like one or a handful of big accounts wanted to accumulate ETH, but have not yet sent the USDT to Bitfinex. It could very well be that those margin longs will simply disappear in one go when those tethers arrive. This is similar to what we see with margin shorts when the short seller just delivers the coins and nothing happens to the price because nothing traded.

ETHBTC (4h)

This trade did not work out. 0.02250 only provided brief support and then the price slipped lower quickly towards 0.02100. I do not see any noteworthy setup right now and intend to stay out of this.

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