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January 10, 2022

​​$BTC 24 Hour High $42,663 
​​$BTC 24 Low $41,338    
$BTC -0.18% Past 24 hours; -10.83% Past 7 days

Market oversold, $BTC inches towards “death cross”  

Good morning. Over the weekend, $BTC failed to withstand the selling pressure and saw the lowest weekly close since August 2021. $BTC managed to hold its key support level and has not dived towards its macro low at $39,500 yet. This means we haven’t entered into a macro bear market yet.

$BTC dropped to $40,500, while holding the key support level at $39,600 that we previously identified. A further plunge can be seen as an early signal of the start of a bearish phase though. However, if we start to see prices break the first key resistance at $42,800, it’s clear that $BTC will sail up to the $45,600 area. Keep an eye on the 50D MA cross below the 200D MA towards the end of the week (see the chart). The technical ‘death cross’ is usually followed by a sharp price increase over the coming weeks.  

Compared to $BTC, $ETH also traced lower, but it still held crucial support at $3,000. As long as $BTC continues to hold at the aforementioned support levels, chances of $ETH seeing a further capitulation in price down towards $2,800 will be relatively unlikely. The RSI shows that the $ETH market has been the most oversold since the March 2020 crash. Expect a further price consolidation to take place in the next few days. For long-term holders that anticipate $ETH to outperform in the next six months or so, they may see it as a prime opportunity to add to the longs.

It’s worth noting that the Bitcoin dominance now stands at 40%, which has changed slightly only, suggesting that market participants are buying the dip all round. Unlike what we witnessed in the May crash last year, we have yet to see an aggressive rotation towards $BTC now, which usually happens at the end of a bull run. 

The U.S. Consumer price index (CPI) numbers are released on Wednesday, and will be the first time they are calculated using the 2019-2020 expenditure data. Stay cautious as lower than expected inflation figures would likely boost risk-on sentiment across the digital asset and equities markets. 

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OSL Trader View is contributed by Stefan von Haenisch & Ethan Fu.


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