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Bearish Bitcoin fractal with 78% success rate flashes as BTC drops below $43.5K

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Last week’s drop in Bitcoin (BTC) that saw BTC price falling from $47,358 to $43,178 has sparked fears of an extended selloff.

Independent market analyst Nunya Bizniz highlighted a bearish fractal on Bitcoin’s weekly charts concerning its 21-week exponential moving average (EMA).

In detail, the cryptocurrency has closed below the said support zone 18 times to date but retained its previous bullish bias only four times out of all—as shown by the dotted vertical lines in the chart below.

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BTC/USD daily price chart featuring its 21-week EMA. Source: Nunya Bizniz, TradingView.com

In the remaining cases, a close below the 21-week EMA led Bitcoin prices extremely lower, barring a fake bearish breakout in August 2015 that soon resulted in a “tremendous bull run,” as the analyst noted.

Similarly, Bitcoin’s recent break below the wave in May 2021 also crashed prices below $30,000 for the first time since Jan 2021. Nevertheless, the crossover did not result in a full-fledged bearish breakdown; traders bought the dip near $30,000 and led the prices back above $50,000.

But overall, the phenomenon of Bitcoin prices breaking below 21-week EMA caused extended selloff almost 78% of all times.

Bitcoin slips below 21-week EMA, again

Bitcoin closed the week ending on Sept. 26 at $43,178, alerting about its 19th historical decline below the 21-week EMA—which was around $43,502 at the weekly close.

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While the fractals envisioned a downside outcome, a close look at the relationship between the 21-week EMA and 50-week simple moving average (SMA)—as shown in the chart below—noted that a potential bearish outlook would need further validation.

That is primarily because of traders’ immediate reaction to the two moving averages, especially when the 20-week EMA (the green wave) closes below the 50-week SMA (the blue wave). The so-called Death Cross indicator has previously coincided with further declines in the Bitcoin market. 

Bitcoin price weekly chart featuring 20-50-MA death cross. Source: TradingView.com

For instance, the BTC/USD exchange rate slipped below its 21-week EMA (~$8,041) in the week ending on Jan. 29, 2018, but retained its upside bias until the green wave closed below the blue one. Later, the pair bottomed out near its 200-week SMA (near $3,187).

Similarly, the 20-50 MA death cross in March 2020 came only a week ahead of the infamous Covid-19 selloff, led by the Covid-19 led global market crash. Again, Bitcoin ended up closing near its 200-week SMA (~$5,512), only to bounce back toward new record highs in the sessions later.

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Therefore, it appears that Bitcoin’s potential death cross between its 20-week EMA and 50-week SMA could trigger the next selloff crisis with the ultimate downside target sitting near the 200-week SMA (around $16,000).

At the same time, the Fibonacci retracement levels near $34,712 and $27,580 could keep the Bitcoin prices from getting toward the 200-week SMA. 

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These Bitcoin, Ethereum and Solana Price Prediction Charts Are Pure Magic, According to Macro Guru Raoul Pal

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Macro guru Raoul Pal says three price prediction charts for Bitcoin, Ethereum and Solana are working like “pure magic.”

In a new Crypto Banter podcast, the co-founder and chief executive officer of Real Vision compares Bitcoin’s current market cycle to that of 2012-13, suggesting a price target of over $250,000 for the end of this bull run.

“I’ve been using this for over a year, and it’s been pure magic…It gives us a pretty clear target, and it’s been magic. It gave me the strength through the bear market to keep adding, thinking ‘we know how this plays out.’”

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Source: Raoul Pal

The former Goldman Sachs executive then pulls up another chart that compares Ethereum’s price trend from 2016 to Bitcoin’s from 2011 to 2019.

“And so here’s Ethereum VS Bitcoin in 2017. It’s been pretty damn good. In fact, I’ve got this as a real-time chart on my Bloomberg and it almost works to the day right now [because] it’s so close.”

Source: Raoul Pal

Lastly, Pal brings up a chart that shows how smart contract platform Solana (SOL) is following the same path Ethereum did in 2016-2017, which if continued would land SOL above $800 in April 2022.

“The Ethereum price now is pretty exactly in line with the Bitcoin price in 2017. And here’s Solana at the price as ETH, growing faster as a network, but the chart is identical again. It’s crazy.”

Source: Raoul Pal

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Barry Silbert on Converting GBTC Into ETF: “Stay Tuned”

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Digital Currency Group CEO Barry Silbert has started teasing Grayscale’s ETF push

Barry Silbert, CEO of Digital Currency Group, urged his followers to “stay tuned” in response to a tweet about potentially converting its Grayscale Bitcoin Trust into a physically-backed exchange-traded fund.

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ProShares’s Bitcoin futures ETF is set to start trading on Monday after it was greenlit by the U.S. Securities and Exchange Commission earlier this week.  

However, the regulator has so far shot down all the proposals to launch an ETF that will not track the price of Bitcoin directly due to concerns about investor protection. Instead, investors will have exposure to the Chicago Mercantile Exchange’s futures contracts.  

Joe Orsini, director of research at Eaglebrook Advisors, has outlined some risks associated with a futures-based ETF in his recent thread, claiming that it will be applicable for intra-day trading instead of long-term investing.

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Last month, Grayscale CEO Michael Sonnenshein opined that approving a futures-based ETF before a spot-based one would be a “short-sighted” decision.

According to a Thursday report by CNBC, the company is very close to filing with the SEC in order to convert GBTC into a spot-based ETF.

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As reported by U.Today, Grayscale hired ex-Alerian CEO David LaValle to work on such a plan this September.

The leading cryptocurrency asset manager confirmed that it was intending to convert its Bitcoin trust into an ETF in early April.

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Bitcoin ETF Approval is a double Edged Sword in Terms of Price Discovery

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Futures based paper products don’t lead to natural price discovery. There’s so much the players can manipulate on these paper products, which will be fixed in a physically-backed ETF.

In response, Caitlin Long expressed:  Yep, but physically backed ETFs also foster spot price manipulation. As I’ve said for yrs, Bitcoin ETF approval is a double-edged sword.  It brings liquidity, but also brings Wall Street style manipulation and price suppression.

Community response:  I don’t see ever any logic here. Crypto is the Wild West, when it comes to manipulation. How does having liquidity in a more regulated market make the manipulation worse?

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Crypto markets are way more manipulated than any other asset class. Adding an ETF would only dilute the manipulation.

Supply is real with bitcoin paper copies won’t bring more real supply, but can’t the paper push around the price like in gold and silver? I think they will try but will soon discover that the underlying asset isn’t as elastic as gold and silver with a significantly lower inflation rate and stock flow.  Also, gold and silver aren’t 100% auditable by everyone on the planet at all times.

How does a spot ETF foster price manipulation? I don’t really understand the logic here. Most likely, the ETF would simply be buying and storing Bitcoin every single day of its existence.

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What do you think the manipulation would look like? With the open source monetary policy and public blockchain ledger, I think any manipulation would have to be very short lived. They can’t create millions of ‘paper’ BTC like the precious metals markets.

Yeah but unlike gold and silver we can completely verify the total supply, and punish manipulation out of these honest markets. If on-chain metrics unanimously say one thing, futures manipulation will be that much easier to rectify, no?

Wall Street can short BTC through the floor. My guess is they want to hammer the BTC price down and drive everyone back to USD. Same way they control all commodities.

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ETF is a double edged sword, and anyway there’s a lot of manipulation. So, ETF is nothing significant to care about? If the ETF would hurt bitcoin price more than it would help it, the US would have approved it several years ago.

Hard manipulation like in gold/silver market not possible: Withdraw your BTC from the exchange, as soon as supply dries up the price explodes.

With an BTC ETF, have you removed legal tender? Been thinking on this one and I’m not so sure an BTC ETF is the best thing for BTC in the long run. There is always two sides of a coin.

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How can spot price with proof of reserve be manipulated? And how can we move past the financial products created out of thin air, and toward the purpose crypto was created for?

We already have manipulation and suppression in BTC – The Futures-ETF will only serve to deepen that manipulation/suppression. So, Qui Bono? This is not about investors folks!

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