BTC/USD, Technical Outlook, Edition #64 (28/07/21)

The largest stablecoin in the world, Tether is now being investigated for bank fraud. Markets are euphoric again, whilst Covid continues to grow. Are we seeing the signs of a bull trap?

Bitcoin made short work of the bears who had been very reluctant to sell today compared to yesterday's efforts.

More wick than candle usually doesn’t bode well for bullish sentiment.

Bitcoin, BTC/USD - 1 Day (D1)

Using the D1 BTC/USD chart above, we can see that today’s daily close at 10 AM, AEST, resulted in an impressive full-bodied candle. Bulls now need to push higher and achieve a daily candle close above the USD 40K resistance zone. What concerns us is the resemblance of this price action to the dead cat bounces off USD 6K support in 2018.

Bitcoin, BTC/USD - 1 Day (D1), 2018

Bitcoin, BTC/USD - 1 Day (D1), 2021

This price action looks very trappy and verging on the edge of a liquidity crisis. However, it’s important to note that Tether FUD is becoming a major talking point, with even FED officials talking about how it could heavily damage global markets if it implodes.

With no real idea of what the Tether commercial paper is made of, and Tether officials now being under criminal investigation, the implosion of Tether would deny the Cryptocurrencies markets of its biggest source of liquidity, a very devastating potential black swan event.

Hence, we aren’t exactly bounding with bullish exuberance and may even enter another short-sell position if BTC/USD begins showing signs of weakness here.

Q’s Conclusion

The confirmation of Tether being criminally investigated, followed by a decrease in overall volume and euphoria in the markets, does not make for a great mix. In cases where markets are acting more irrational than logical, it’s best to wait on the sidelines for a safe entry.

See you again for the next update.

- q

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