• 1 day The Gold Rally Has Finally Run Out Of Steam
  • 2 days Citibank Analyst Predicts $300k Bitcoin By End Of 2021
  • 4 days Bitcoin Lives Up To Its Safe Haven Status In A Big Way
  • 5 days 14 Million People Will Lose Unemployment Benefits On December 31st
  • 6 days Why 12 Million American Millionaires Isn’t Good News
  • 7 days Big Oil Is Paying The Price For Investing In Renewables
  • 8 days The Banking Industry’s $35 Billion Gravy Train Could Disappear
  • 9 days Did Amazon Just Democratize Prescription Drugs?
  • 11 days The Private Space Race Just Got Very Real
  • 12 days Short Sellers Are Willing Big In This Turbulent Market
  • 14 days SpaceX Gets Go-Ahead To Send Humans Into Space
  • 15 days Saudi Arabia Lost $27 Billion In Oil Crash
  • 15 days China’s Big Tech Takes A Hit As Regulators Crack Down
  • 16 days Black Friday Could Be Retailers’ Only Hope
  • 17 days Why You Should Not Dump Your Stay At Home Stocks Just Yet
  • 18 days The Real Reason Why Uber And Lyft Stocks Have Soared Nearly 50%
  • 20 days Bitcoin Heads Towards $16,000 And No One’s Cashing In
  • 21 days Elon Musk’s $250 Tesla Tequila Is Already Sold Out
  • 22 days Will The San Francisco Wealth Tax Spark An Exodus Of The Rich?
  • 23 days The Fin-Tech IPO Of The Century Just Got Crushed
Is Bitcoin Actually Worth The Energy It Uses?

Is Bitcoin Actually Worth The Energy It Uses?

Bitcoin’s energy consumption has been…

Citibank Analyst Predicts $300k Bitcoin By End Of 2021

Citibank Analyst Predicts $300k Bitcoin By End Of 2021

Citibank analyst Thomas Fitzpatrick made…

JPMorgan’s Cryptic Change Of Heart

JPMorgan’s Cryptic Change Of Heart

After years of bemoaning bitcoin,…

Mike McAra

Mike McAra

Mike is a quantitative analyst focused on the economic reality, not theoretical models. His investment thinking is grounded on empirical evidence and common sense.

Contact Author

  1. Home
  2. Cryptocurrencies
  3. Bitcoin

Bitcoin Traders Can’t Catch A Break

BTC

There seems to be some respite for Bitcoin traders. It might be tempting to take this breather as a sign of the tide turning. We highlight the reasons why you probably shouldn’t.

In the last couple of days, Bitcoin has gone up a bit. This has brought questions if the current move is only a correction within a decline or already an important sign of a shift in the market. In an article on CoinDesk, we read:

Bitcoin looks primed for a move to $8,000, but low trading volumes point to the risk of a bull trap.

The cryptocurrency broke through a key descending trendline (drawn through the May 6 high to the May 21 high) on Sunday, adding credence to last Tuesday's bullish outside-day candle and signaling a short-term bearish-to-bullish trend change.

However, at the same time, daily trading volume fell 1.77 percent to $4.85 billion, according to CoinMarketCap. Further, rolling 24-hour trading volume currently stands at $4.95 billion – down 22.5 percent from the current quarterly average of $6.38 billion.

Low volume is a cause for concern for the bulls, as it is widely considered a sign that the market is approaching a peak; that is, the rally will be short-lived.

We have a slightly different take on whether Bitcoin is set to move above $8,000 – the currency might shoot up above this level but we haven’t really seen enough signs that this is the case just yet. Other than than, we generally support the conclusions of the cited couple of paragraphs.

Bitcoin is up and it went above the declining resistance line but this line might have just turned out to stop the appreciation. The declining volume seems to be a classic bearish indication. And we might see a daily close below this line today, which would be bearish as well. We still think that a move up can’t be ruled out but the move down we’ve seen today weakens the recent bullish signs.

Any Important Bullish Implications?

(Click to enlarge)

On BitStamp, we see the recent move up and the depreciation of today. The appreciation of the last couple of days brought Bitcoin above the 78.6% Fibonacci retracement level and this is a slightly bullish indication. Only slightly, because this particular level is not an extremely important one.

A more bullish indication is the breakout above the declining resistance line based on recent tops. This indicates that the move up might be stronger than the preceding ones but the fact that Bitcoin turned South today and is now closer to this level weakens the bullish implications slightly. Related: The Stock Market Is Defying A Strong Jobs Report

Have we seen very important bullish indications, though? Not really. Bitcoin is still below the 61.8% Fibonacci retracement level and the action hasn’t really changed the short-term outlook. And this is only for the short term, without really considering the bigger picture into account.

Verification in Disguise

(Click to enlarge)

On the long-term Bitfinex chart, we see the depreciation from $10,000 and the recent appreciation in perspective. In particular, the recent move up does seem like a correction within a larger decline. This is further reinforced by the long-term declining trend line. It might be the case that today’s move down is a bounce back down off this line.

Additionally, we see that in spite of the recent move up, we haven’t really seen a move above the 78.6% retracement level based on the rally to the all-time high around $20,000/ Actually, it rather seems that we might have seen a verification of the breakdown below this level. This is a bearish indication, at least for the longer term.

The current situation is quite curious in terms of the price action. We are seeing a move up on relatively low volume followed by one day of depreciation and the current environment looks like the late stage of a short-term correction within a long-term decline. This means that, in our opinion, the situation is still bearish and we might see a stronger move to the downside in the next couple of weeks.

Summing up, the decline might resume and become even deeper.

By Mike McAra via Sunshineprofits.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment