The Final Flush: Why Market Frustration Signals Opportunity

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Bitcoin is currently in a frustrating period for many market participants. We previously witnessed Bitcoin rally nearly 40% over three months, only to watch those gains disappear in a matter of weeks whilst creating lower lows.

If you recall our breakdown of the Quarter 2 outlook where we evaluated the Psychology of a Market, we determined that the Bitcoin market was in the Anger phase. This represents the final stage of a bear market where we anticipate one final leg lower, the final flush if you will.

This phase creates deep frustration within the market, which often manifests through negative price action. Firstly, we see bearish Bitcoin price action unfolding whilst watching uncorrelated assets rally to new all time highs, crushing sentiment and testing investor conviction. Short term holders are frequently shaken out during these times as they mistakenly chase highs. Secondly, narratives that should logically be bullish fail to produce any sustained positive effect on price action. Meanwhile, negative narratives are aggressively sustained and push prices lower, such the recent 32 Bitcoin sale by Saylor’s Strategy.

The Current Situation

The market is currently reacting negatively to every single catalyst thrown its way:

Traditional risk on assets move up; Bitcoin moves down.
Traditional risk on assets move down; Bitcoin moves down.
Large entities sell minor portions of Bitcoin; Bitcoin moves down.
Large entities buy hundreds of millions in Bitcoin; Bitcoin moves down.
Potential ceasefire deal; brief bounce before Bitcoin moves down.
Negative news within the Middle East; Bitcoin moves down.
Inflation risks climb; Bitcoin moves down.
Inflation risks fall; Bitcoin moves down.

How to Take Advantage of the Situation

We have regularly referred to the asymmetric window of accumulation, and this is the exact phase in which it opens. When participants begin leaving the space, and bearish sentiment remains potent across charts and headlines, the opportunity presents itself. This window does not last forever. Smart money and long term holders with deep conviction quietly scoop up the coins that short term holders and panicked investors leave behind, ultimately reaping the rewards in the years to come.

Stormrake Spotlight: Pax Gold (PAXG) ($4,310)

Source:https://www.tradingview.com/x/TkTjHjCQ/

It is safe to say we have seen a sustained break below the previous support zone for PAXG as it approaches $4,300 after a bearish day opened the week. We now turn our attention to the key psychological demand zone highlighted above, resting around the $4,000 level.

BTC/USD Key Levels and Price Action:

Source:https://www.tradingview.com/x/pgguJ7ZB/

Following a relatively flat session for Bitcoin yesterday, price action retested key resistance at $63.8k. Bitcoin continues to battle to break above this boundary, but bears are keeping price in check for the time being. The bulls do possess enough very short term momentum to support their current push to break above this level.

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*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis

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