Can a Soft CPI Offer Crypto a Springboard? | Trading the Markets

**Bijan Maleki** (0:06)
Happy Wednesday, everyone, and welcome back to Trading the Markets. This is the show where we take all your questions, we look at a whole bunch of charts, and try and figure out what is going on in the market and which way we should be trading ourselves. So for those of you that are joining us, just remember you have to be an RV Connect member and above to ask Kris questions directly. Any question about any chart you want to see, any token price action you want to talk about, just ask it and Kris is a wizard live with charts. Kris, happy Wednesday, my man. How are you doing?

**Kris Bullock** (0:47)
Doing great.
Looking forward to the show. I've spent the last little while digging through all the charts and lots to talk about today for sure. So I'm looking forward to this.

**Bijan Maleki** (0:58)
Yeah, so I mean, I guess we should start, as we always do, with the king of the crypto world, Bitcoin, right? So let's see what Bitcoin is doing and what we should take from it.

**Kris Bullock** (1:12)
Indeed. So obviously, there was a lot of excitement last week, kind of right after our show ended.
It was starting to pivot a little bit by that point. But yeah, the end of the week was pretty ugly. And, you know, here we are now. So I remember last week I was talking about, I wanted to see us get back down to this 200 week simple moving average, which is this yellow line, which is basically the bottom of this moving average cloud here. And we hadn't yet gotten to it. And this had been previously the kind of the big line in the sand for Bitcoin, historically, in all of its bear markets. In the last cycle, we did break down below it due to FTX and a few other things. But largely, barring any crazy meltdowns, this has historically held as the big line in the sand and shown to be kind of the Bitcoin bottom reign. So I think you could argue that we're firmly in a bottoming pattern at this point. Now, that doesn't mean that the bottom is in and it's time to buy and it's off to the races from here. I'll get to that in a minute, but I think I can say at this point that we're much closer to the end than the beginning at this point. And we're starting to tick off major checkboxes along the way of what sort of constitutes a bottoming pattern. Now, a bottoming pattern doesn't mean, again, the bottom is in. Bottoming pattern can last months and they often do. And so that's still a good sign. One of the things I'm looking at here that I did call out last week was this bullish divergence here. Noting how in the previous dip back here, let me turn on my highlighter real quick. In the previous dip back here, we had a really low RSI. And then in this last most recent dip over the weekend and week, we have a higher RSI. And the RSI itself, like the moving average line, is pivoted to the upside. And this didn't get as low here as it did back here. So this is bullish. This basically means that even though price got lower, the momentum is still not... The momentum to the downside, I should say, is still not as strong as it was earlier on. So this shows us that we... This also sort of lends weight to the idea of a bottoming pattern. We can look... Like if we look back at other down bottoming patterns, for example, we can see something kind of similar here that I think I called out on the last show too. We had an ultimate low here and then RSI kind of started trickling back up. And even though we had subsequent price lows, the RSI was kind of setting higher lows throughout. And then going back to 2017, same kind of thing here, although price was actually going up here too. But anyway, you get the idea. The idea being this is sort of typical of a bottoming pattern. We see a big initial surge to the downside and then we see the subsequent higher lows in momentum showing us that the selling momentum is waning. And I think we're starting to see that here. So this is all constructive to me.
This is obviously what we need to see. However, in the short term, I'm not convinced that the selling is over yet. We might still see less downside pressure, but I think the selling is not over yet. And so one of the things that I sort of discovered that I want to talk about here is the weekly megatrend. I remember when this flipped green back in April, that I was skeptical at the very least, you know, that this was going to last. I was like, I think this is good. This is bullish. We know we had this big counter trend rally, the longest counter trend rally in the history of Bitcoin bear markets. But I didn't think at that point in time this meant that the bottom was in or that it was going to be blue skies from here on. And so, always in the back of my mind, I was leaning towards probably a better than 50% chance that this wouldn't last. Yes, it would probably hold for a little bit as they do, but that it probably was going to turn back red again. And it did. And so, I got to say, in terms of like me managing the model portfolio reports that I do, kind of kicking myself, it's like I had to go with the technicals because they were what they were. And I wasn't expecting such a big drastic just blow through the floor that we got here to flip this red, which is kind of a bummer because you have to be quick to, quick on the trigger or something like that. So just looking here, we can see that this doesn't, when this flips, whether it flips red or green, it doesn't typically flip quickly. It usually stays for, I mean, we're looking at a minimum of probably a couple of months, if not, if not much, much longer. So, you know, I don't think that this, we're going to flip back bullish here anytime soon. I think that this is going to require a bit of distribution, a bit of consolidation, you know, after such a drastic rundown like this. And so we can see this, if we look at it on the daily timeframe, how it has just been kind of plotting sideways since then. Like we got this big thrust down, and now it's just kind of in no man's land. It's obviously way overextended in terms of deviation from the moving averages here. So usually when you get this kind of a massive run, you tend to get a lot of sideways chop, a lot of sideways price action while it consolidates. It did hit a D Mark 9 here, kind of at the tail end of this. So that's also a good sign that it was overextended and it's gonna chop sideways for a bit. We'll probably see, you know, this RSI on the daily got way oversold. So we'll probably see this kind of consolidate a little bit. So I think we're due for just some kind of meandering sideways chop on the daily and probably on the weekly for that matter too. And then what I'm looking for ultimately in terms of, like I feel like I've seen in the Discord a lot of people like, oh, this is the major flush out. This is gonna be the bottom. It's time to start slowly buying back in. And I don't know if we're there yet. I think I want to caution people in terms of starting to buy back in, particularly with alts, but even with Bitcoin. Like I could say in terms of like a dollar level, this is probably a decent level to be buying Bitcoin. Like certainly if in a year from now, you're saying I bought Bitcoin at 62, nobody would be laughing at that. Everybody would be like, yeah, you did good there. That's not to say it can't go lower, but I think this is a reasonable price to buy it. But from a time perspective, I don't think we're anywhere close to the bottom fully being established. I think, and we kind of touched on this last week, that we've got potentially three to four months, I feel like, where this pattern could continue to plod sideways. So if you look at this and go, well, this is probably a good level to buy at, but also we've got three to four months potentially before we start to see a material shift, upward shift in the weekly trend reversals, that would give me pause. To me, I think, well, if I got to wait three to four months, there's a very real chance that we could see some lower lows. And I still call out the low 50s as a very realistic probability. I'm not saying it can get there or that it will get there, or nothing that it will get there, but it definitely could get there. And so, yeah, if you want to start DCA-ing into Bitcoin, I would say maybe start chipping at it here. Don't go all in, don't go in with any real amount of size yet, but either start like a slow DCA schedule and just start chipping at it here, knowing full well that we could possibly get down into this lower range. But also we might not. Also we might just hover in the low 60s to low 70s for the next three to four months. And really what I'm looking for, it's like when will I know that we're kind of back on again and it's time to really be fully allocated? What I'm looking for obviously is for price to be above this 200 day moving average cloud, which we can see we were up at it back last month, but now we're about as far away from it as can be at this point. And so we're nowhere close. And what I feel like is likely going to happen here, what I feel like is the most likely scenario isn't that we just, here let me draw a line here, isn't that we just go rocketing up through it like this. You know, I think it's more going to be a scenario where we kind of just plod sideways, oops, plod sideways like so, give or take.