What's next on the market? SHORT-TERM analysis on Crypto
2025-01-14
Category: None

Hello, fellow traders!
This is my analysis on the crypto market. I will mostly be using the Bitcoin chart on the analysis as Bitcoin’s movements pretty much represents the whole market.


This is the daily chart of Bitcoin. There are three distinctive trend channels – green, orange, and white. Green trend channel was the older uptrend channel that persisted from last August to November when Trump was elected as a next POTUS, causing the price to break through the channel. We then see a newer uptrend channel, orange, that rallied Bitcoin above the 100k. This channel, however, has been broken below on Dec 22nd. A lot has happened in December. The Fed has officially said, “Fewer rate cuts in 2025.” – causing negative sentiments throughout the markets. It is also common for people to globally withdraw their assets to spend money during late December and early January for Christmas and New Year spendings. 
However, from a technical analysis perspective, it is true that Bitcoin has lost its initial momentum since then. 

We see two attempts to reenter the channel, only to be pushed back the next day. This shows that the support line of the channel has now become the strong resistance line, with the selling pressure outweighing the bullish momentum. This is where the third trend channel, white, takes place. The resistance of this channel is drawn by two peaks, on Dec 17th and Jan 7th, while the support line is drawn from yesterday’s low. 


Looking at the hourly chart, we see that this trend channel is very accurate as price consistently reacts to its medial line (white dotted line) dating back to Dec 18th. This channel is the most recent one and given that it is being respected by the price movements, we can confidentally use it for future analysis. 
But this is only the technical part of the analysis. There are a lot more to consider when we analyze the price movements.

As I have marked on the chart above, the US Bureau of Labor Statistics is releasing the CPI data for December – more specifically, Core Inflation Rate YoY and Inflation Rate YoY. This data is very important as the alignment between the actual report and the forecast significantly impacts market movement. 
The current forecast for Core Inflation Rate YoY is 3.3% - unchanged from the prior. Forecast for Inflation Rate YoY is 2.8% - 0.1% above the prior. 
If the forecast proves to be accurate, as it usually does, this will remove uncertainty – which would encourage the markets to move upwards. The markes thrive on stability and are heavily influnced by psychology – for instance, the markets suffered from steep decline last month when Fed Chair Powell said that the Fed sees fewer cuts this year. Psychology is a big aspect of the market movements – and with the actual report aligning with the forecast, the market reaffirms that there’s nothing new, encouraging postive sentiment. 
Donald Trump is also entering his office this 20th – a man who has made pro-crypto claims during his election campaign. He has also said that he will set act on crypto on his first day at the office. The positive sentiment is most likely to be continued to the 20th.


This isn’t the whole story, though. The Core Inflation rate is still above the Fed’s 2% target despite the high interest rate policy being effective enough to discourage inflation for last few months – this could mean that the Fed may decide to hold the rate cut this month which aligns with their statement last month. The next Interest rate decision will be made on 29th, end of the month. If the rate is maintained, this could then negatively impact the market. 
Also, the Chinese New Year is from Jan 29th to Feb 12th and people tend to withdraw their assets and spend their time with their families and friends during the holidays which could temporarily discourage the market – but the effect is most likely to be minimal since the Chinese government prohibits the crypto activities (which makes Chinese participants to use p2p rather than withdrawal) and such holidays are only valid in the portion of the global world (East Asia). 



The yellow support line has been proven to be effective as we see in the hourly chart, and we can expect some bullish sentiment for now. 

(For context, the red trendline you see in my charts is a major resistance line drawn by two high points in 2021. The line has been acting as a support line ever since it has been broken through after the recent election. Check below.)



Lastly, looking at the Bitcoin Dominace chart, we see that the Dominance has now touched the resistance line – if the line is to be respected like the last two times, we will see Dominance decreasing once again, with altcoins being the options for many investors. 

This combined information suggests that now might be a good opportunity for long positions, but only in the short term. As I mentioned, the market could face a downtrend in the end of the month. 
What you choose to do with this information is totally up to you – but personally, I’m considering investing in altcoins I’ve recently observed that are close to their heavy support zone – short term. 
I hope this analysis helps you understand the current market. Thank you!

React, don't predict! Stay disciplined and patient. Don't get greedy and be thankful.
God bless :)
 2 Chronicles 7-12
(Solomon admits that God has made him the king of Israel and asks for His wisdom instead of anything else and God was deeply pleased by his humble attitude and request, granting him everything else as well. Same can apply in our life of investing.)