beehiiv-import

⚡Bitcoin Bulls Eye $49,000🎯

Croxroad

10 Nov 2023 — 5 min read

☕️ GM Dear Plebs!

Here is Crox Road, your daily dose of orange pill that will turn you into a Bitcoin Maxi.

The menu for today:

👁️‍🗨️ Bitcoin Aims for $49,000

The recent surge in Bitcoin's price toward the anticipated $49,000 mark is intricately tied to the potential approval of spot BTC Exchange Traded Funds (ETFs) by the Securities and Exchange Commission (SEC) in the United States. This surge is largely based on the expectation that the SEC might greenlight the first spot Bitcoin ETF, as reported by Cointelegraph. This event is pivotal, closely monitored by the market participants. The journey toward this imminent ETF approval began with Grayscale's significant win against the SEC in the DC Court of Appeals, effectively restricting the SEC from using past reasons to deny spot Bitcoin ETFs. This win laid a foundation for the potential approval, and although the industry is optimistic, watchers indicate a high 90% probability of the SEC approving the spot Bitcoin ETF by or before the January 10 deadline.

Bitcoin is currently valued at $36,564 on Binance, marking a significant step as it surpasses the $36,400 level, indicating a bullish trend in the current cycle. To launch a spot Bitcoin ETF, Bloomberg's research analyst, James Seyffart, highlighted the crucial steps required for completion. Firstly, the approval of SEC Form 19b-4, which self-regulatory organisations (SROs) use to submit rule changes to the regulator, is essential. Secondly, the Division of Corporate Finance needs to give its approval. Seyffart emphasised in a recent tweet on X that the period between approval and actual launch could span weeks or even months, underscoring the time and processes involved in this significant development.

Today marks the first opportunity for the approval of all 12 spot Bitcoin ETFs, as highlighted in a report by Cointelegraph. The price of BTC has surged beyond the pivotal $36,400 level, signifying a potential bullish market. Bloomberg analysts have identified an eight-day window, running from November 9 to 17, during which all these spot Bitcoin ETFs could potentially gain approval from regulators. In terms of technical analysis, Bitcoin's price surge past $36,400, a crucial level tracked by analysts to confirm a bull market, happened earlier than anticipated. The analyst behind the @crypto_div account notes that in case of a price pullback, the 200-day Exponential Moving Average (EMA) at $34,000 could serve as a supportive level for Bitcoin.

🕜 Marathon's Growth Trajectory

Marathon Digital Holdings, a Bitcoin mining company, has had a fantastic run in the third quarter of 2023, with a staggering 670% increase in revenue compared to the same period last year. Their success stems from a remarkable rise in Bitcoin production, jumping from 6.7 BTC per day in Q3 2022 to a whopping 37.9 BTC per day in Q3 2023. The company’s financial health has notably improved, reporting a net income of $64.1 million for the quarter, highlighting their robust performance. This surge in output is backed by a 467% increase in Bitcoin production and a 403% rise in hashrate. Marathon’s strategic expansion, including a hydro-powered mining facility in Paraguay, has significantly contributed to this boost. CEO Fred Thiel emphasised their strengthened financial position in preparation for the Bitcoin halving event in 2024, a hot topic affecting miner rewards and profitability. Marathon's recent moves, like reducing long-term debt and focusing on capacity enhancement, demonstrate their commitment to sustained growth in the near future.

Marathon Digital Holdings currently operates at a hashrate of 23.1 x hashes per second, with plans to boost it to 26 EH/s and a targeted ambitious 30% increase by 2024.

Despite their significant strides, Marathon Digital faces valuation concerns. MinerMetrics has labelled the company as one of the most overvalued in the crypto mining sector due to its high enterprise value-to-sales (EV/S) ratio, standing at 5.6. While this high valuation is driven by institutional favour and improved access to capital, analyst Jaran Mellerud suggests that investor attention might shift to other mining entities with lower EV/S ratios, potentially offering more appealing investment opportunities.

Even with this assessment, Marathon remains the largest holder of Bitcoin among mining companies, with a reserve of 13,396 BTC valued at approximately $492.3 million. Despite a 6.9% decline in the company's stock (MARA) to $8.55 on November 8, it experienced a 9.4% rebound in after-hours trading following the earnings announcement, as indicated by data from Google Finance.

🍢 Trading a Real Breakout

When considering entering the market following a breakout, caution is key. Placing a pending order, like a Sell Stop just below a support level, might seem straightforward, but it can lead to losses if the price bounces back.

To enhance the chance of success, pay attention to the candle that signifies the breakout. Its length should be notably larger than average, ideally 1.5 to 2 times larger. Look for a full-bodied candle, not a doji or pin bar, closing below the support level. After this breakout candle, wait for a second confirmation candle, smaller than the breakout one, also closing below the breakout level. Based on the confirmation candle's closure in relation to the level, you can decide to enter at the market price or place a Sell Limit closer to the breakout level.

Patterns like head and shoulders often experience a retest of a broken level, so patience is key. Remember, breakout trading involves higher risk, requiring a faster adjustment of stop-loss orders. The risk/reward ratio can be as high as 1:4 or 1:5, and consider scaling out by partially closing the position as the price moves favourably.

Additionally, factor in market sentiment, economic news, and common sense. These elements provide insights into the nature of the price action on the chart.

Regardless of a potential false or real break, seek confirmation through multiple signals before making your move. Confirmation is the key, requiring more than just a single breakout signal for a trade to be deemed as a reality rather than a false breakout.