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| By Alex Benfield |
The phrase Catch-22 was created to describe a situation that is so ironic and frustrating that it can render you helpless.
Investors are facing a Catch-22 right now in the depths of bearish price action.
We’re at a point where prices are so beaten down … and sentiment and morale so low … that this looks like an optimal time to invest. Yet, those very factors make this a hard time for investors to make that mental leap and risk their money in the markets.
However, two of the most potentially bullish events in crypto history are perhaps only months away.
- The first is the acceptance and rollout of a spot Bitcoin (BTC, “B+”) ETF that could usher in loads of institutional capital.
- Another is Bitcoin’s next halving, whereby the quantity of BTC produced every 10 minutes is reduced by half. That’s set for April 2024, though we expect the run-up to the next bull market to start before that.
Yet, most retail investors are sleeping on Bitcoin right now.
It’s a Frustrating Sight to See
Individual investors have a rare opportunity to buy cryptos before most institutions get the chance. Yet, they seem too squeamish to make a move.
Plus, many newcomers who bought the BTC bump during this week’s Grayscale rally sold their positions almost as quickly as they bought in.
Perhaps rising interest rates, coupled with ongoing concerns about the economy and banking sector, are giving them pause.
The usual speculation that has surrounded the crypto market for so long seems to have settled down over these past few months. However, my expectation is that this quiet won’t last too long.
The Fall Before the Rise
After a failed breakout attempt on Aug. 29, Bitcoin retreated to its current price near $25,500. That’s above its June low of $25,000, and it’s a key level to watch as we move forward.
Bitcoin is a bit overdue for some bullish price action, but we don’t expect it to set new yearly highs before the end of 2023.
The base case for the price action as we finish out the year is a bit of up-and-down neutrality before the next bull market starts in earnest.
Here’s BTC in U.S. dollar terms:
Click here to see full-sized image.
The key support levels to watch for as we close out the year are $25,000 and $20,000.
If BTC can hold onto one of those two levels, it should be able to establish a nice base for the next bull market. Should it slip below $20,000, we may have a longer wait until the next bull market.
Ethereum (ETH, “B”), meanwhile, has been bouncing around its 200-week moving average these past few days. Unlike Bitcoin, it has already slipped below its June lows.
This means ETH is already trading in a more neutral market phase. It’s very unlikely to top its yearly high of $2,100 before the end of the year.
It also means ETH is more oversold and offers a nice risk/reward profile for those looking to stack up a position before the next bull market.
ETH is trading at about $1,625 right now. The next major support level to look out for is the $1,450 level, which represents the March lows.
Here’s ETH in U.S. dollar terms:
Click here to see full-sized image.
What’s Next
It’s often said that it’s always darkest before the dawn. The current atmosphere in the crypto market epitomizes this sentiment.
For many, the prevailing gloomy outlook has become almost palpable. But this, paradoxically, is exactly when new horizons may be closest.
Drawing an analogy from nature, even the densest clouds can’t hold off the sunrise forever. Light eventually pierces through, bringing warmth and optimism.
Despite the tempest of caution clouding the sentiments of many investors today, brighter days are on the horizon.
Cryptocurrency, by its very nature, is volatile and cyclical. After experiencing extreme highs, it’s only natural for the pendulum to swing toward the lows.
As the Cycles Turn
However, it’s crucial to remember that cycles turn. As history has often shown, after a period of lull, the market roars back to life.
While short-term indicators may suggest neutrality or even bearish trends, the underlying fundamentals of the crypto market remain strong.
Plus, with events such as the potential Bitcoin ETF rollout, it’s a question of when the next bull run will commence, not if.
For the steadfast and patient, rewards await just beyond the horizon.
So, stay the course, keep the faith and get ready for the sun to rise on crypto once again.
Best,
Alex
