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Will Newer Bitcoin Buyers Get a Rude Awakening to the Markets?

Perhaps, as the cryptocurrency has been slumping since Bitcoin ETFs debuted.
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In my outlook piece for 2024 I wrote, "Many people are anticipating a Bitcoin ETF and this reminds me of the start of U.S futures trading in gold in 1974. Prices rallied right up until the start of trading and then promptly sold off. Buy the rumor and sell the news?" 

Bitcoin ETFs are now a reality as they began trading Jan. 11; meanwhile, after an initial surge, the price of the cryptocurrency itself has slumped over the last two weeks. Let's see if the charts give us new clarity about Bitcoin, which I last wrote about on Jan. 11.

In this daily bar chart of Bitcoin continuation futures, below, I can see how prices have declined sharply since the Securities and Exchange Commission approved trading of spot bitcoin EFTs on Jan. 10. Futures volume has been heavy and the daily On-Balance-Volume (OBV) line has turned lower. Futures have closed below the now-cresting 50-day moving average line. The trend-following Moving Average Convergence Divergence (MACD) oscillator turned lower in early December and is now only slightly above the zero line. 

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In this daily Point and Figure chart of Bitcoin, below, I can see the recent breakdown through the "round number" of $40,000. A downside price target of $33.051 is projected by the software. The volume by price bars on the left scale suggest there may not be all that much support in the $37.500-$35,500 area despite a number of analyst comments in the media. 

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In this weekly Point and Figure chart of Bitcoin, below, I used a five-box reversal filter. Here the software suggests a price target in the $28,501 area. 

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Bottom line strategy: Markets move in the direction to frustrate the greatest number of people. Keep that thought in mind with Bitcoin.

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