What a week! BTC short squeeze leading into consolidation into 40-42k region, ONE breaking up from its horizontal, seemingly incoming BTC bridge. As always, in this week I’ll be giving a general update over the last 7 days based on the following:
- Price levels & indicators
- Technical Patterns
- 14 day VaR targets & break even VaR periods
- L1/BTC comparison
- Potential scenarios
- Closing thoughts
Price Levels
ONE:
ONE has generally followed BTC’s price action following the end of week short squeeze. We have broken out of the descending triangle/horizontal with an upside target of $0.2375. During this move we have finally conquered the 10 period and 200 period EMA, and are not challenging the 20 period EMA.
In terms of indicators:
On the daily:
- The Daily RSI is hovering just below 50 so there is definitely some upside room. There is a descending level of resistance (see below) to be mindful of which instantaneously sits at 70-72 at time of posting.
ONE/USDT Daily RSI - showing bullish divergence as prices pump despite lowering RSI.
- Stoch RSI has entered overbought at max level. This doesn’t necessarily mean an immediate dump as we could just entered a consolidation period.
- Daily MACD has just flipped green.
On the weekly:
- RSI is also hovering around the 50 mark and also facing a similar overhead downward sloping resistance. This is in consequence of the shortening wave cycles we’ve been facing.
- Stoch RSI has entered oversold so indicating some room to move up.
- MACD is still in the red but has flipped concave up.
Considering that I’ve been covering the downside fib targets in the last 2-3 weeks, this time I’ll look at the upside fib targets. The fibs will be drawn in the same manner as I laid out last week. For interest, as my fibs are drawn the same, the levels will also be the same.
Immediate key levels to the upside:
- $0.24 based on 1.272 short fib. The 0.382 on the mid fib is also close to this level.
- $0.25 based on 1.414 short fib.
- $0.26 based on 1.618 short fib.
- $0.268 based on the 0.5 mid fib.
BTC
BTC experienced a short squeeze towards the end of the week as price action was squeezing into the triangle pattern we were locked in. The squeeze resulted in a 12% pump where we saw about $200m in short liquidations on the major CEXs. This pump has allowed BTC to finally break above a nasty descending level since Nov-2021 where we couldn’t get above the intra-wave 50% levels, as well as descending wedge.
The true hopium is that since we broke above the wedge, the price target is technically $69k. To balance out the hopium, there is plenty of overhead resistance and levels to watch out for.
Additionally, the short squeeze also allowed BTC to make some major moves against the Nasdaq as the adjusted price action is finally showing some uncorrelated positive movement for BTC.
BTC/NQ1! showing greater uncorrelated returns against tech equities.
In terms of indicators:
On the daily:
- The daily RSI is around 55-57, still plenty of room to the upside.
- We have also broken above a descending RSI level which has historically always been bullish (see Aug and October price action).
- The stoch RSI is in the overbought.
- The MACD is well into the green and not yet flipped concave down.
On the weekly:
- The RSI is around 45. Note that there is an overhead weekly RSI descending resistance which is instantaneously at 60. A break above this would technically allow BTC enough juice to higher levels.
- The stoch RSI is in the oversold as we’ve been systematically going down over the last 3 months.
- The MACD is still in the red but has flipped concave up.
Similar to ONE, I’ll cover the price targets to the upside.
- $42k based on the long fib 1.414.
- $42.5k based on short fib 1.618.
- Close to this is also the 0.5 based on the mid fib.
- $44.8k based on short fib 2.0
- $47.5k based on the mid fib 0.618.
- $47k to $51k based on the bull market support band (respectively 21w EMA & 20w SMA)
In particular the $46k to $52k region is quite important as this is where we consolidated after the massive long squeeze/liquidation in early Dec. Following this is where we got rejected off the bull market support band down to the $40k-$42k region.
Technical Patterns & Scenarios
ONE:
The first and foremost pattern is the descending triangle where we’ve recently broke to the upside (see above), with a target up to $0.24. There will be some resistance on the way there but I think that, at the very least, a few wicks is definitely possible.
Breakout above descending triangle over the last 2 weeks - target around $0.24.
In addition there is a potential for a small cup & handle to form if the above technical pattern plays out. This would have a technical target of $0.273.
BTC:
As mentioned before, the largest pattern to take note of is the 3 month descending wedge that we broke up from (see above charts). This has the technical target all the way up to $69k, although there are plenty of resistance levels to conquer before doing so. As we’ve been locked into it for 3 months, it’s realistic to assume that it would take just as long to form the full impulsive wave up.
On the longer timeframe (weekly), if this pump is a true breakout (I’ll cover my thoughts on this later on), we could be forming an ABC running flat correction. The structure seems plausible as the B wave high consists of a 3 wave cycle (see Aug-Nov period where we took a break in Sep) and the C wave low consists of a 5 wave cycle down (look on the daily and see the first 42k liquidation, then 40k then 33k drop). If this is true then this forms the completion of a long term (~1 year) corrective/sideways phase for BTC and allows for new price discovery.
Momentum divergence also succeeded as the MACD is well into the green and we exceeded the 3 month descending level and moved above the 50% of the wave ((iv)) and ((v) of the B-C correction wave.
Text book running flat correction.
VaR Targets & Breakeven Period
The immediate 14day 1 perc VaR targets are:
- ONE: $0.126 by 21/22 Feb
- BTC: $28.5k by 21/22 feb.
In my VaR post I also covered statistical break-even periods based on the top 90 percentile daily % returns. In laymans, this is the average number of days it takes to recover from a VaR drop.
For ONE, which exceeded the 14d VaR, this is around 18 days. From my previous post, the measured move from the ATH to the swing low (where we exceeded the VaR) is at 28-Jan (-50%).
Let’s assume for a moment that we didn’t take the measured move from the ATH, but at a price level where the close as of 28-Jan was the -40% move. This would give us a price target of ~$0.30. Based on the breakeven metric, 18 days from this period would land us around 11-Feb to get back to around $0.30.
An alternative view is to measure the 18 days from the beginning of the breakout above the descending triangle. This occurs on 3-Feb which would give an 18 day target around 21/22 Feb. As such, based on past data, there is a decent chance of an impulsive move up to around the $0.30 between 11-feb to 22-Feb.
For BTC, which didn’t quite mee t the 14d VaR target, this sits around 31 days. As BTC didn’t meet the VaR target, I will assume the daily close swing low of $35k as the start of the recovery period which would give a “recovery” date of around 22-Feb at a price target up to $50k. This is quite a baked and massaged scenario though so I would take this with a healthy serving of salt.
L1 BTC Valuations
Various L1 to BTC valuations - Weekly bars.
| Coin | H/L% | C/O% | Performance to SMA |
|---|---|---|---|
| LUNA | 19% | 8% | Consolidating above 20w SMA |
| FTM | 12% | -5% | Holding above 10w SMA |
| ONE | 13% | 4% | Consolidating at 20w SMA |
| AVAX | 11% | 4% | Consolidating between 10w and 20w SMA |
| ETH | 12% | 5% | Consolidating close to 20w SMA |
| SOL | 23% | 10% | Consolidating between 20w and 50w SMA |
High/Low has been generally good across the board as many of the L1s consolidated and followed BTC during its pump. The highest performer is SOL as it peaked 23% higher than its low.
Open/Close winners would have to go to SOL as it made decent ground against BTC during the week. In addition the news above Jump covering the lost ETH in the wormhole bridge definitely gave some positive sentiment.
In terms of performance to weekly SMA levels, FTM is still winning overall. It has yet to break below the 10w SMA FTM/BTC level whereas the other L1s are consolidating below the 10w and, in some cases, below 20w. In saying that FTM/BTC has degraded since BTC’s short squeeze pump while the other L1s have kept pace or slightly moved ahead.
In terms of ONE, I’d say we’re performing relatively average in comparison to the other L1s. In saying that the spread of performance wasn’t that wide and simply holding ground while BTC makes upward moves is already pretty good. I am anticipating bigger moves this week as BTC bridge goes live as well as the 20% 1wallet.
Potential Upcoming Scenarios
BTC: In addition to the technical patterns I covered earlier, I am seeing a 1-2week consolidation period around this 40-42k level. I did cover in previous posts that a pump to this price level is the first step to the next greater run up and that consolidation is important to not form a weak move. I maintain this view as there are plenty of major upside targets to challenge and doing so without proper consolidation is important to ensure a healthy run.
My bearish scenario follows from above in that if there are too many people greedily leveraging up the longs from this price point (this is usually inexperienced retail) then I can see a quick rejection because of a long squeeze.
The good thing is that it seems we have formed the ABC running flat correction over most of 2021 and Jan 2022 which gives a green light for a healthy run up.
ONE: As I covered in the L1 BTC valuations, I think ONE is performing averagely, as well as the other L1s. This normally happens during BTC or ETH led rallies as all the profits and liquidity are still locked up as profits have yet to cycle through to large/mid/low cap coins. When this cycle happens expect violent pumps.
In general, the only alpha I can attribute to ONE at this point is either BTC bridge or 1wallet going to mainnet. Aside from these two, from retailers’ perspective who already isn’t in ONE, there is not much incentive to buy in (from a functional point).
As I covered in prior weeks, I believe that a BTC bridge mainnet in confluence with a mini bitcoin pump (what we’re seeing right now) will allow us to get to the ATH. My argument for this is heightened sentiment, good news to convince new money to flow into ONE, and potential retail non-maxi BTC holders bridging into Harmony in order to park their BTC in single staking/lending (think Tranq).
The other smaller alpha event I can see happening is if Uniswap v3 core comes to Harmony. This can come in the form of Hermes licensing or a direct deployment into One.
Closing Thoughts
I think that the end of week BTC short squeeze and price pump was a much needed relief rally. There is, however, a lot of overhead resistance to conquer and would err on the side of caution for bigger buy ins. A 40-42k BTC is great but we were only here ~2 weeks ago. Without proper consolidation we can be pushed back into the low to mid $30k which would actually be peak retail panic as a lot of the retail greed and euphoria would quickly turn to fear.
Despite my lower price targets in the last 2-3 weeks, I am still find waiting for a bigger buy as the risk-to-reward for me doesn’t justify adding to my hold bags at the current price levels. I am generally happy buying in at higher price levels because I took profits at the ATH. This does not include my shorter term plays as I have been quite active in the last 2-3 weeks in both cex and dex markets due to the heightened volatility.
As mentioned earlier, ONE’s performance has been relatively average. Until fundamental things change (BTC bridge, 1 wallet, trustless ETH bridge, Uniswap v3 core), I am hesitant to largely add to my hodl bag and am maintaining my pyramid orders down. If ONE can consolidate around $0.25 for 1-2 weeks or if ONE/BTC can make some ground (perhaps around the 600-650 sats range) then my personal sentiment would turn a bit more bullish and will consider moving my pyramid orders up to the range of $0.15 to $0.23.
Overall, potential for the next leg up for both BTC and ONE but will require significant consolidation to ensure proper support is rebuilt. It’s important to remain vigilant and resist the urge to FOMO and try to buy when the fear comes in or after consolidation occurs.
Good luck all!
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