On Dec. 18 Bitcoin (BTC) worth thrilled traders by offering a $1,000 transfer from $6,430 to $7,450 after bouncing off the descending channel trendline close to $6,400.
Multiple analysts from Cointelegraph contributor filbfilb to veteran commodities dealer Peter Brandt all pointed to a preferred logarithmic mannequin that careworn the significance of the $6,400 stage.
BTC USD Three-day chart. Source: TradingView
This week’s bounce off $6,400 is supplied some short-term aid from traders believing BTC worth disaster was averted. Nevertheless, Bitcoin is just not totally out of the woods but.
Bitcoin flips again to bearish
Since Thursday’s 10% achieve, the value has settled again under the $7,300 resistance and under the 20-day easy shifting common of the Bollinger Bands indicator.
BTC USD 6-hour chart. Source: TradingView
A drop to the decrease Bollinger Band would place the value under the $6,800 assist and enhance the possibility of revisit to the descending channel assist.
As talked about beforehand, failure at the descending channel assist ($6,345) additionally opens the door once more for a drop to $5,350. Since topping out at $7,452, the value has painted a decrease each day excessive and the 6-hour chart exhibits that momentum is fading as the value vary tightens and strikes nearer to the 20-SMA.
Currently, the value is being held up by assist at $7,100 and if this offers manner, a drop to $6,800 to $6,600 is probably going.
MACD Histogram and RSI present fading momentum
The similar will be noticed on the shifting common convergence divergence (MACD) the place the histogram exhibits momentum slowing.
The MACD has ceased its ascent by flattening and pulling nearer to the sign line. The relative power index (RSI) on the 6-hour timeframe has additionally flattened, mirroring Bitcoin’s sideways worth motion.
Stay above $6.3K to keep away from the fray
BTC USD weekly chart. Source: TradingView
So, from the weekly timeframe, right down to the Four-hour timeframe, Bitcoin worth motion is bearish and wishes to carry $6,685 to $6,274 to keep away from a drop to $5,300 the place the each day chart exhibits traders curiosity.
Anyone aware of Bitcoin and crypto is aware of that the value motion is pushed by extra than simply chart technicals. So let’s take a look at a few of the different components which may be influencing Bitcoin’s worth.
Things to look at with Bitcoin worth
This week Cointelegraph reported that lengthy positions at Bitfinex proceed to steamroll larger and this week BTC/USD Longs have soared to a brand new all-time excessive.
BTC USD Longs weekly chart. Source: TradingView
Some analysts cautioned that Bitcoin is overdue for a powerful squeeze on lengthy positions and others tried to decipher why lengthy positions proceed to rise within the face of more and more bearish worth motion.
A basic idea is that traders consider Bitcoin worth won’t fall far sufficient to liquidate leveraged longs and with the 2020 halving occasion approaching traders consider they’ve extra to achieve from being lengthy somewhat than quick.
Cointelegraph contributor Michael van de Poppe not too long ago tweeted that the expectation lengthy squeeze is overdue is fake. He defined:
“There seems to be a narrative that longs need to be squeezed before we can move upwards. That’s a wrong statement, based on history.”
BTC USD Longs Four-day chart. Source: TradingView
According to de Poppe:
“The ATH’s of longs on Finex was constantly around a low of Bitcoin. They started to drop with a breakout upwards.”
Bitcoin Unrealized Profit vs Unrealized Loss chart. Source: glassnode.com
Another common analyst, The Crypto Dog, additionally posted a chart from blockchain analytics supplier Glassnode, highlighting Bitcoin’s Unrealized Profit vs. Unrealized Losses. The analyst defined that:
“Bitcoin Unrealized Profit is low at the moment & seems to be trending down. At the same time, Unrealized Loss is trending up. Look out for a cross over, historically signaled bottoms.”
Bitcoin Unrealized Profit vs Unrealized Loss chart. Source: glassnode.com
The Crypto Dog instructed that “as traders have less profit to realize, sell pressure could reduce.”
Fear is on the rise!
Despite Thursday’s $1,000 achieve, investor sentiment stays strongly bearish and the Crypto Fear and Greed Index at the moment exhibits a studying of 20, which falls into the ‘Extreme Fear’ class.
Bitcoin’s Fear and Greed Index. Source: various.me
Many analysts counter commerce the indicators supplied by the indicator. In different phrases, deeply bearish readings sign that it’s time to purchase Bitcoin whereas overly bullish readings recommend that it’s time to promote.
Bitcoin’s MVRV Z-Score and the NVT Signal recommend a bit bit extra ache
MVRV Z-Score. Source: lookintobitcoin.com
The MVRV Z-Score additionally gives useful perception into Bitcoin’s present worth motion. According to market analyst Philip Swift, the indicator can be utilized to determine intervals the place Bitcoin is over and undervalued “relative to its fair value”.
Swift additional explains that:
“The MVRV Z-score has historically been very effective in identifying periods where market value is moving unusually high above realized value. These periods are highlighted by the z-score (red line) entering the pink box and indicate the top of market cycles. It has been able to pick the market high of each cycle to within two weeks.”
The indicator additionally indicators when the market is considerably under the realized worth and this may be noticed when the Z-score enters the inexperienced field.
Readers will discover that every sturdy parabolic rally was adopted by the market cap (blue line) dropping under the realized worth (orange line) for a chronic time period. A robust rally sometimes kicks off as soon as the market cap crosses above the realized worth as seen in January 2012, November 2015, and most not too long ago, in April 2019.
Currently, the market cap is drawing nearer to a cross with the realized worth and the Z-score is dropping nearer to zero (the inexperienced field).
Bitcoin NVT-Signal. Source: woodbull.com
Willy Woo’s Bitcoin NVT Signal additionally exhibits Bitcoin’s worth dropping nearer to its realized worth at $5,591 and the NVT sign is at the moment at 64.6 with 45 representing oversold situations.
All of this means that Bitcoin nonetheless has extra bearish days forward however the macro view of the digital asset’s worth motion stays encouraging, or maybe one ought to say “exciting.”
The Four-hour to weekly timeframe exhibits a bearish bias and the bounce of the essential assist at $6,400 failed to provide a development reversal. In truth, at the time of writing, Bitcoin appears prone to once more retest the decrease assist of the long-term descending channel.
Retests of $6,800, $6,400 and $6,300 are solely going to carry so many instances; and with longs growing at every retest, it’s potential that patrons will dry up, giving bears the chance to push the value to the $5,350 to $Four,900 zone.
A drop to those ranges would possible push the market cap under the realized worth and the Z-score and NVT sign into oversold territory. If previous efficiency can in any manner be interpreted as precedent, one would then surmise that this occasion would precede the graduation of a development reversal and a brand new sturdy market rally.
Of course, all of this may be averted and your complete bearish evaluation nullified if Bitcoin can maintain above $7,600 and finally break above the $7,800 to $eight,000 vary to tug off a development reversal.
Only time will inform.
In the meantime, swing merchants and long-term traders might contemplate inserting a purchase order at $5,500 simply in case; and day merchants will proceed to look at for Bitcoin worth to press above $7,300 and take one other shot at the resistance at $7,600.
The views and opinions expressed listed below are solely these of the creator (@HorusHughes) and don’t essentially mirror the views of Cointelegraph. Every funding and buying and selling transfer includes threat. You ought to conduct your individual analysis when making a call.