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AAX Trends

AAX Intelligence: BTC & REEF

AAX Intelligence: BTC & REEF

News & Insights

27 Mar 2021

It is however important to note that the cryptocurrency market has long been seen as overbought ever since BTC was around $15,000 USD. During major bull runs in the past, the cryptocurrency market has appeared overheated for months on end, with BTC ignoring this and continuing a bullish movement.

Bitcoin

Many traders have been suggesting that $43,000 USD looks highly likely, however, analysis suggests that this appears unlikely. These $43,000 USD predictions stem from the cryptocurrency market currently being overbought, a recent major drop off in BTC price from $62K alongside an innate fear that the bull run could be about to end due to major bullish price action since January.

It is however important to note that the cryptocurrency market has long been seen as overbought ever since BTC was around $15,000 USD. During major bull runs in the past, the cryptocurrency market has appeared overheated for months on end, with BTC ignoring this and continuing a bullish movement.

The recent drop

When looking at the recent drops since the start of 2020 there are two important findings, both of which originate from the BTC contract options. In the chart below with the yellow vertical dashed lines we can see the end date for these options (when they expire). The white vertical lines are exactly one week before and show an important correlation. Exactly one week before the contracts expire in Jan, Feb and March, BTC is at almost ATHs. From here just before the options are due to expire, BTC sees a triangle formation with then an almost immediate drop-off.

BTC/USD options

In the table below we can see the size of each drop-off, alongside the price action which occurs until the next white vertical line.

Week before expiry close price Expiry date close price Drop of % % increase to next week before expiry
37.03K 32.50K 12.46% 74.96%
56.05K 47.50K 15.07% 22.07%
58.44K 53.20K 8.9% N/A

Correlation to January

There is a high amount of correlation with BTC in relation to events which occured in January. Like January BTC has seen a symmetrical triangle formation with a negative breakout. There was then a retest before falling within the 0 to - 0.236 Fibonacci levels, with this area being firmly the bottom.

In the chart below we can see the similarities.

BTC/USD

Red hitmaker - retest of symmetrical triangle support

Green hitmaker - relief rally after finding bottom between 0 to - 0.236, small pullback during this marker, testing previous low resistance, flipped into a temporary support

Blue hit marker - top of relief rally testing key resistance level

Pink marker - retest of previous support

From here there was then a break of the previous symmetrical triangle overhead resistance continuation, which was broken in January. This will need to be broken by BTC in order to retain its extremely firm bullish momentum.

When looking at the hitmarkers, BTC looks set to stop between 54,028 - 54,885 USD before a likely retest of the previous short-term bottom of 50,600 USD.

Trajectory and targets

In the chart with the arrow below, there is the predicted trajectory from analysis. This trajectory will be invalidated if BTC breaks and sustains itself below $47,750 USD, in which case further losses could be expected from BTC.

BTC/USD

In the table below we can also see major support and resistance zones for BTC. The strength is determined by the number of times previously acting as support / resistance, Fibonacci levels and psychological effect of the number.

Restsiance zone Strength of resistance
54.0 - 54.8K Very strong
57.4 - 57.6 Strong
60.9 - 62.0 Very strong
65.2 - 65.8 Fairly strong
69.3 Weak
71.3 - 72.0 Extremely strong

If BTC does fulfill the bullish scenario suggested, the end price of the move appears to be 71,300 - 72,000 USD or 65,200 - 66,000 USD. Both of which would create ATHs, something which has been achieved in the previous two months as well.

BTC conclusion

BTC on the whole is still looking bullish. The stock flow model does not yet suggest that BTC is approaching the end of its bullish cycle, while interest in the market is certainly not drying up. Cryptocurrencies are continuing to make it into the news for all the right reasons. Whether it be NFTs with Sophia the Robot / Beeple or Tesla accepting BTC as payment, this bull run is definitely underway - however far from over.

REEF

REEF has recently been listed on AAX, with the popular cryptocurrency now available on AAX through the REEF/USDT trading pair.

REEF/USDT has been hit with substantial losses during the later parts of March, however since the start of the year is still up 200%. REEF is currently trading within a descending parallel channel, as shown below.

REEF/USDT channel

REEF/USD long-term formations

The long-term formation prospects for REEF look somewhat discouraging. Below we can see that there is the potential for REEF to fulfil a double top formation, with shoulders seen at both 1&2. If this formation shown below plays out, then REEF could reduce back to all-time lows.

REEF USDT - bearish prospects

However, the likelihood of this is low.

The reason why this is low originates from BTCs bullish outlook as explained earlier, alongside the high strength of the $0.025 USD support level. Rather than fulfil a head and shoulders formation, REEF/USD looks increasingly likely to bounce right off the support level and create a high volatility sideways trading pattern, looking to create the third bottom.

REEF/USD sideways trading pattern

Bullish breakout of pattern scenario

If BTC heads back to ATHs, there is a good possibility that REEF/USD could attempt to break its ATHs as well. If this were to occur REEFs medium term target is $0.075USD. This level is both the Fibonacci trend based extension level and the 1.618 extension level from previous ATHs.

REEF/USD

In the chart below, other key support and resistance levels have been highlighted in blue, with the while arrow showing the potential trajectory of REEF/USD.

REEF/USD S/R levels

REEF/BTC

The REEF/BTC chart displays that REEF is currently within a descending triangle which is a typically bearish formation. This is accompanied by REEF forming a potential H&S formation as demonstrated with the white curves.

In the short term REEF/BTC is bullish, as REEF has recently broken above the descending wedge within the longer term descending triangle. This should see REEF hit the 0.786 Fibonacci retracement (which originates from the head level peak REEF/BTC price) with REEF then looking to bounce off the descending resistance from the triangle. If this bounce occurred, it would further increase the likelihood of the H&S formation being completed, with a subsequent retest of the blue zone shown below.

If this occurred, REEF would be expected to follow the white line, breaking below the neckline for the H&S therefore also breaking below the support for the descending triangle. The next target after that would be the lower white support line. If this occurred, it would likely see REEF/USD hit the green support zone from the chart above.

REEF/BTC

Reef Conclusion

REEF on the whole is looking short term bearish long term bullish. If BTC can continue its bullish momentum as discussed earlier in this report then REEF/USD is expected to retest ATHs.

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