Bitcoin May Soon Reverse
For some reason or another, analysts have begun to believe that Bitcoin (BTC) may be poised for a correction. In a recent Trading View post, Magic Poop Cannon postulated that BTC is currently expressing a number of bearish signals. Firstly, Bitcoin failed to hold above its uptrend channel, all while failing to surmount a “major overhead resistance zone” that begins at $5,777 and ends at $6,200.
What’s more, there are an array of bearish divergences seen in the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and the Stochastic RSI, leading Magic to the conclusion that BTC is “wounded” and not prepared to enter a bull run just yet. He adds that the Network Value to Transactions ratio (NVT) is currently flashing a sell.
Aside from technicals, some evidence is mounting that in the short run, BTC’s price action is tied to traditional assets, namely stocks, which is a bad sign.
On Sunday, Donald Trump revealed that he intends to increase tariffs on Chinese-made goods from 10% to 25% by Friday. Global assets, like stocks and even BTC, flashed red minutes later. As crypto trader “Light” points out, when Asian markets opened on Monday, BTC fell right in lockstep, reacting to the tariff salvo negatively. There is a fleeting chance this is pure coincidence, but Bitcoin lost a very similar percentage to the Hang Sang in the same time frame, implying that BTC remains a “risk-on” asset, as Light explains.
With Trump unlikely to budge, the U.S. stock market and other global indices may continue lower, potentially unwinding Q1’s monumental rally, thus being a short-term detriment to BTC and other cryptocurrencies.
In a related string of potentially negative fundamental factors, Tom Lee, Fundstrat’s head of research, has postulated that the planned $1 billion raise by Bitfinex could actually be a negative price action catalyst for Bitcoin. The prominent commentator explains that $1 billion worth of new Bitfinex tokens will have a negative impact on BTC and other digital assets, as the market needs to “absorb” an influx of the so-called “LEO” tokens. As Lee notes, “Bitcoin miners sell $7mm per day, so a $1 billion IEO is essentially 142 days worth of miner selling taking place in one day.”
The Bull Case
Sure, Magic does note that there are clear reasons to be at least short-term bullish on Bitcoin. But some are sure that the charts are leaning bullish.
According to David Puell, the head of research at Adaptive Capital, Bitcoin’s chart is currently showing an array of bullish signals, both in terms of technical indicators and pure price action.
In a simple chart posted on Friday night, the investor remarked that Bitcoin is currently trading in a broadening ascending wedge, a pattern defined by legendary chartist Bulkowski as a catalyst for bullish continuation. Bitcoin Bravado’s Jack, who noticed this pattern alongside Puell, remarked in his own tweet that such wedges are often never seen in bear markets, and are instead, a reversal pattern that commences a bull run. He then points to the fact that the Relative Strength Index (RSI), Chaikin Money Flow (CMF), and On-Balance Volume (OBV) readings, which measure if an asset is either technically overbought or oversold, are currently breaking to the upside.
- Source: First Appeared Here
- Published Time: 2019-05-07 04:00:32
The views and opinions expressed in the article Bitcoin Poised To Stutter As BTC Aims To Take On “MOTHER of Resistance” do not reflect that of 48coins, nor of its originally published source. Article does not constitute financial advice. Kindly proceed with caution and always do your own research..
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