Get up to date on the latest analysis and trading tips with our Crypto update week 42
- Bitcoin BB Squeeze Setting Up for a Breakout
- Last 2 Times SHIBA Inu Showed This Signal, It Rallied Over 40%
- Ethereum Supply Turns Deflationary Falling by 6,117 ETH
Bitcoin’s (BTC) price may be set up for a significant move as the digital currency remains squeezed in a narrow range. Since the beginning of the month, Bitcoin’s Bollinger Bands have started to squeeze the price into a narrow range that calls for a notable move ahead.
Bollinger Bands Squeeze
The squeeze is a key trade signal of the Bollinger Bands indicator, which is usually followed by a strong directional movement in the breakout direction. The BB squeeze occurs when the Bollinger bands narrow, which happens when volatility falls at lower levels.
As seen on the daily chart, the tightening of the BB bands offers an easy way to visualize Bitcoin’s price range. The upper BB resistance and lower BB support levels come at $20,000 and $18,700, respectively.
One of the core principles in technical analysis states that small ranges are always followed by large price breakouts. In this regard, when the BTC price breaks on either side of the BB bands, we can expect a sustained move.
To avoid false breakouts, we need to wait for the BB bands to diverge, meaning the upper BB must point up while the lower BB must point down.
Looking forward: A break to the upside will open the door for a retest of the September 13 high of $22,800, while a breakout to the downside will challenge the mid-June low of $17,700.
Shiba Inu (SHIB) flashed a bullish signal that could trigger a rally of over 40%. That’s a signal from a popular technical indicator called the MACD, which is a trend-following momentum indicator.
MACD Bullish Signal
On the daily chart, the two moving averages have turned flat, almost horizontal even. The last two times this signal showed up, SHIBA Inu’s price rallied over 40%. The first time the MACD’s moving averages turned flat was in mid-June, while the second time it happened was in mid-August.
When we have sideways price activity, the two moving averages have a harder time moving away from each other.
In both instances, the subsequent rally was short-lived, so this signal tends to produce only short-term price reactions. We can see that it’s irrelevant whether the moving averages are above or below the zero line. The mid-June signal was below the zero line, and yet the signal triggered a powerful reaction higher.
Looking forward: As long as the support at $0.0000093 holds the downside, we can expect a potential rally. On the flip side, any rally can face difficulty at the $.0000140 resistance level, which represents exactly a 40% gain from the current price.
Ethereum (ETH) supply has turned deflationary for the first time since the Ethereum blockchain transitioned to a Proof-of-Stake (POS) consensus algorithm. The Merge software upgrade was delivered on September 15, but the ETH supply was only picked on October 8, and it then dropped by 6,117 digital tokens — as of October 15, 2022.
Ethereum Supply Post-Merge
The number of ETH tokens fell from 120,534,227 to 120,528,110 as more ether was burned verifying transactions than was created — live data from ultrasound.modey showed. This led to a reduction of -0.13% in ETH supply over the previous week.
By comparison, if the proof-of-work (POW) model was still running, the ETH supply would have increased by 3.66%, equivalent to about 363,461 digital tokens. In other words, there is a lot less ETH created than what miners produced on the old proof-of-work (POW) consensus algorithm.
The low inflation of Ethereum implies that the value of your ETH tokens is not diluted, which in the long run, supports the ETH price.
ETH Transaction Fees
Another key factor that impacts the tokenomics of Ethereum is the ETH transaction fee. Because some of the ETH transaction fees are burned or permanently destroyed, this will affect the network’s issuance inflation rate.
While the burning rate of ETH transaction fees depends on the network’s activity, in theory, this adds to the deflationary pressures, which is good for ETH holders.