9/23 Crypto Faces Gloomy October.

٢٣ سبتمبر

Overview:
The SPY closed higher last week, but Thursday’s candlestick pattern resembles a bearish abandoned baby. What’s more concerning is the weekly chart showing a bearish MACD divergence—while the price keeps hitting all-time highs, both the MACD and signal lines are trending lower. Has this divergence played out already, as seen in the first week of August, or is it still ahead of us?

You may have noticed that we only have two more rate cuts left for the year. Why not three, with three months remaining? The Federal Open Market Committee (FOMC) meets only eight times a year. There’s no meeting in October to give time for economic analysis and to avoid overreacting to short-term fluctuations. Conveniently (for bears), September and October are typically weak months for markets. Remember, FTX collapsed in November 2022, bottoming out the crypto market in November-December.

The next FOMC rate cut is expected on November 7th, leaving BTCUSD bulls on their own for the next 44 days. However, this cut is not guaranteed. If inflation remains high or increases, the cut could be postponed. Rate cuts are a quantitative easing tool used to support a slowing economy—not one that’s running at full speed. This Friday, the FED will release the PCE index, which could influence their decision. The CME FedWatch Tool currently shows a 55.2% chance of a one-basis-point cut and a 44.8% chance of a two-basis-point cut.

In recent letters, we suggested a price increase in late September. Now might be the time to take some profits and wait to see if we can break resistance and establish a new bull trend, or if this is the peak before a downturn.

Weekly:
BTC closed the week with a strong green candle, slightly above the Bollinger Band Moving Average (BB MA) but still below the highs of late August. The trend remains bearish.

Daily:
We’re overdue for a correction back to the BB MA, with targets at 61.4k and 60k. The price is hovering around the major resistance level of 64K, which is also a key monthly level. The last three days have formed three consecutive dojis, indicating market indecision after 15 days of bullish momentum. Breaking this resistance without first testing the 61.4k support is unlikely.

4-Hour:
Weekend price action shows BTC reaching its peak between Thursday and Friday night, pulling back by 2.6% before U.S. bulls prevented further losses. Despite pushing higher on Sunday, Asian bears applied pressure again. Bearish divergence between the price peaks and the MACD-signal line suggests a potential downturn.

1-Hour:
At 10:00 a.m. NYC time, BTC posted a big green candle, supported by strong U.S. buying. However, since Monday midnight, the price has been dropping, while the Cumulative Volume Delta (CVD) line remains green and positive. This indicates that despite strong buying pressure, hidden sell orders are absorbing the demand, suggesting:

• Absorption by Sellers: Large sell orders are preventing the price from moving up.
  
• Distribution Phase: Larger market participants may be offloading positions while smaller traders buy, creating an illusion of demand.
  
• Potential Reversal: This could signal a potential reversal if the selling pressure eases.
  

Altcoins Relative to BTC:
ETH has outperformed BTC, along with NEAR, TAO, APT, AR, RNDR, and AAVE. SUI, BNB, and FTM showed weaker pumps, while SOL appeared the weakest.

Bull Case:
If the Fed’s two-basis-point cut doesn’t lead to higher inflation and jobless claims continue to rise, it could boost speculative assets. Other central banks around the world may follow suit, increasing global M2 money supply.

Bear Case:
Until the next Fed rate cut, there’s little to support BTC’s current price against bearish pressure.

Fear and Greed Index:
Currently at 50.64—neutral sentiment.

Overall, the market remains in a delicate balance, while weekly trend is still bearish.