Tuesday Inferno market update

TL;DR The calm persists...

We’ll start by zooming out to the daily chart, because there’s comparatively little new on the shorter-term timeframes. Looking at the daily, we can see that bitcoin has, essentially, drifted sideways for three months now. After the fall to $3,100, the vast majority of the action has taken place within the band between around $3,500 and $4,000.

Bitcoin is trading in a range. This is characteristic of a post-capitulation market – just like we saw after capitulation in 2015. However, it’s also possible that this is another consolidation before a final move lower, as we saw in October and November. We recently saw another short-term move above $4,000, but bitcoin was unable to maintain that level. That painted a lower high, once again – not a bullish sign. On the other hand, there’s an absence of highly bearish factors too.

Looking at this another way, this could be a fourth wave in an Elliott Wave cycle – a corrective wave up before a final fifth wave lower. Right now, the charts can be read in different ways, and that’s exactly what crypto analysts are doing. There is no clear direction to the market, and the signals are very mixed. For all but the most expert traders, emotion and hope will colour the analyses, which is much what we see on Crypto Twitter. This is a time of potentially huge opportunity, the bottom of the cycle – but it’s time of risk, too, if it turns out we have another fall on the cards.

Playing into the bigger picture, Google Trends searches for bitcoin are not showing the increasing volume that typically pre-figures a price rise. In the past, searches have correlated closely with action. Watch for an uptick in action: it’s a useful indicator.

Lastly, the Lightning Network is growing fast, with well over 1,000 BTC now locked in almost 40,000 payment channels. LN adoption will be massively important in the next bull cycle, since it ensures the ability to make micropayments.

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