Technical analysis

Bitcoin and the S&P 500 index

BTC has officially ended the rally since June 18, reaching the highest price at the 0.618 Fibonacci level (log scale) of the last deep drop. Currently, the price has reached the bottom of the price channel and is supported at 20K.

As mentioned in the previous analysis, there were many foreshadowing signs for the current drop, such as the declining buying power shown by the CVD indicator at the largest exchanges. When the buying power and momentum were exhausted, as shown by the sideways movements and refused at 25K, that was the time when the bulls had to give up the playing field to the bears.
Next week can be a fighting time for the bulls at the nearest resistance at 22K-22K4 (green lines). If this resistance fails, the bears will potentially push the price lower to retest the support at 18K9-19K1 on the daily candlestick chart. (red lines)
We also need to pay attention to the S&P 500 index (a stock index based on the common shares of the 500 largest companies by market capitalization listed on the NYSE or NASDAQ). It is reaching a critical resistance level, evidenced by the overbought RSI and the support of the VIX index (it is an indicator of the overall volatility of the stock market).

Although the Correlation Coefficient (CC) score of the S&P500 and Bitcoin is not as high as it was in the first half of 2022 and remains neutral (0.53). If the S&P500 also ends this rally and returns to the downtrend to retest the old lows, there is no guarantee that the Correlation Coefficient will not return to the highs.
Based on the weekly candlestick chart, we can see that the support level (18K-19K) is equivalent to the old peak of the previous cycle. This level is the most important stronghold for the bulls; if the S&P500 declines to push the Correlation Coefficient score higher, the possibility of this last stronghold will be toppled likely. So in a worst-case scenario, we would need to watch for lower levels than Bitcoin. If the bears dominate, the bulls retreat, the price will completely break out of the cycling channel, and the bulls will get a chance to fight fiercely at the 13K8 – 16K2 area, which will have a high potential for the formation of an absolute bottom in the fourth quarter of this year.

However, I would like to emphasize that this is only a further prediction; depending on the negative changes of the macro-economy, if the macro-economy is less big battered waves, it unlikely will happen.

Onchain analysis

Last week, on-chain continued to prove effective with real-time inflow alerts. The evidence was the total amount of 16K Bitcoin transferred to the Coinbase spot exchange from the significant cohort owning 1K-10K Bitcoin (whales), and then we soon saw a 13% drop in Bitcoin’s price.

Another proof of the defensive mentality of the big players was reflected in the inflow of two major stablecoins (USDC and BUSD) into the derivatives exchange before the Bitcoin price dropped. USDC spiked to 3.8B$, and BUSD spiked to 14.4B$.

As mentioned in last week’s analysis, the Taker Buy/Sell ratio is entirely within the selling pressure area after a sideways range in the neutral zone. The LTH-SOPR index continues to dip below one and represents an adequate warning for the last major test of the cycle (review the previous analysis).

MVRV rate again has fallen below 1. There were two times in history; this index dropped below one after passing over in 2012 and 2015. This is an area where the bottoming process is still going on and may not end soon.