C.R.E.A.M. #22 - Bitcoin breaks 27k - Buy or Die?

Dear Lizards,

What an exhilarating week it has been in the world of cryptocurrency. It appeared that Bitcoin was poised for a retest of the $25,000 mark, but then, a powerful surge of positive momentum swept through the market, reshaping the trajectory of this digital gold.

In a recent turn of events, four distinguished members of the United States Congress have made a resounding call to Securities and Exchange Commission Chair, Gary Gensler. Their message? A clear and urgent plea for the immediate approval of spot Bitcoin exchange-traded funds, or ETFs. This development brings to the forefront the critical issue of ensuring fair access and treatment for spot bitcoin exchange-traded products.

As we close the chapter on September, Bitcoin seems poised to conclude near the $27,000 mark. The question on everyone’s mind is, what lies ahead? Is this a mere feint or the breakout we’ve all been waiting for? Is it a time to seize the opportunity, or tread cautiously? Stay tuned, as we unravel the answers.

Yours, Stockmoney Lizards

Tuesday saw four prominent congressional figures issue a public letter to Gary Gensler, Chair of the U.S. Securities and Exchange Commission, urging him to promptly greenlight spot Bitcoin exchange-traded funds (ETFs).

The representatives, namely Mike Flood, Wiley Nickel, Tom Emmer, and Ritchie Torres, highlighted what they perceive as discrimination against spot bitcoin exchange traded products. They drew attention to the precedent set by Grayscale Investments, which successfully won a review of its ETF offering. The court ruled that the SEC’s rationale was “arbitrary and capricious” in already allowing investment instruments linked to Bitcoin futures.

The lawmakers emphasized that a regulated spot bitcoin ETP (Exchange Traded Product) would significantly enhance investor protection. By providing a safer and more transparent entry point into the world of Bitcoin, it would align with the duty of Congress to ensure SEC approval of investment products that meet the stipulated requirements.

“We urge you to approve the listing of spot-bitcoin ETPs immediately,” they firmly stated in their letter to Gensler.

SEC Chair Gary Gensler reiterated his stance that Bitcoin isn't a security during recent congressional testimony. However, he avoided confirming whether it falls under the category of a commodity. When pressed by Congressman Patrick McHenry, Gensler stated that, according to the Howey Test used to define securities in US law, Bitcoin doesn't qualify. Yet, he remained evasive about its classification as a commodity, asserting that different laws apply.

McHenry expressed dissatisfaction with Gensler's lack of transparency regarding interactions with the collapsed crypto exchange FTX and its founder, Sam Bankman-Fried. Gensler's reluctance to disclose these details was deemed unacceptable. This reticence to address critical questions about the nature of certain crypto assets is consistent with Gensler's previous approach. The SEC continues its rigorous scrutiny of the crypto industry, in contrast to the approaches of some other nations.

To this day, the SEC has not granted approval for the listing of any spot Bitcoin ETF. Despite expectations that the commission would reconsider pending ETF applications following their recent legal tussle with Grayscale, decisions regarding ETFs from seven major firms – BlackRock, WisdomTree, Invesco Galaxy, Valkyrie, Bitwise, VanEck, and Fidelity – have been postponed.

As we delve into the technical analysis of Bitcoin, we embark on a multi-timeframe journey to gain a comprehensive understanding of its price action.

Monthly Timeframe (Long-term Support)

Beginning with the monthly timeframe, we're afforded a panoramic view of Bitcoin's historical performance. Drawing parallels to the period leading up to the 2019/2020 halving, a striking similarity emerges. Just as Bitcoin found substantial support at 6.5k back then, today's 25k support level appears equally formidable. It's important to contextualize this analysis by acknowledging the outlier event of the COVID-19 pandemic, a 'black swan' occurrence, which induced a brief, albeit rapid recovery. Considering this, our confidence in Bitcoin's current 25k support is reinforced, painting an optimistic outlook for the future.

4-Hour Timeframe (Establishing a Breakout)

Zooming in to the 4-hour timeframe, we witness Bitcoin in the midst of a pivotal juncture. The cryptocurrency is currently in the process of solidifying a breakout from a two-month downtrend line. However, to ascertain a definitive confirmation of this shift, surpassing the resistance at 27.3k is of paramount importance. This resistance level has historically played a crucial role in Bitcoin's price dynamics, making it a critical hurdle for the ongoing breakout.

2-Day Timeframe (Bullish Divergence)

Transitioning to the 2-day timeframe, a compelling bullish signal materializes in the form of a bullish divergence. This phenomenon occurs when the price of an asset forms a lower low, while simultaneously, a relevant oscillator (such as RSI or MACD) forms a higher low. In this case, the bullish divergence signals a shift in momentum, hinting at an imminent breakout. This signal carries substantial weight, as such divergences often precede significant price movements.

Symmetrical Triangle Pattern (Anticipating Breakout)

Synthesizing our analyses, our attention gravitates towards the symmetrical triangle pattern, a technical formation characterized by a series of lower highs and higher lows. This pattern signifies a period of consolidation and uncertainty in the market. Importantly, symmetrical triangles can herald either bullish or bearish trends, making them a critical point of interest for traders and analysts. Given the supportive technical indicators and the prevailing market sentiment, the probability leans strongly towards a bullish breakout for Bitcoin.

In this intricate interplay of technical factors across multiple timeframes, we find compelling evidence that suggests Bitcoin is poised for an upward trajectory.

Thanks for reading C.R.E.A.M.

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