Home   >     Original    >     Main body

    4 Bitcoin Bear Signals To Be Aware Of

    Abstract:While these fundamentals are incredibly promising for bitcoin’s long-term prospects, there are a number of indicators likely weighing on the current uptrend. This does not mean the price will necessarily fall, but they are signs that a cooling-off period is overdue.

      Bitcoin has experienced a meteoric rise during 2021, doubling from last years final price of $29,112 to the current all-time high at $58,332. One of the leading catalysts for this surge has been a notable uptick in institutional interest and investment, including Tesla announcing it had purchased over $1.5 billion worth of bitcoin (BTC, -8.42%) as part of a new investment policy. The recent emergence of two Bitcoin ETFs also provided a major boost to overall sentiment, since more investors will be able to gain exposure to the leading crypto asset.

      While these fundamentals are incredibly promising for bitcoins long-term prospects, there are a number of indicators likely weighing on the current uptrend. This does not mean the price will necessarily fall, but they are signs that a cooling-off period is overdue.

      1. Depleting bitcoin trading volume

      BTC/USD chart(Tradingview)

      On the weekly BTC/USD Coinbase chart, we can see that trading volume has decreased since an earlier price peak at $42,000 on Jan. 4, even though the price of bitcoin has risen by a further $16,000, give or take. This discrepancy between volume and price is known as a volume divergence and usually signals that fresh capital entering the market is drying up and buying momentum is waning.

      Volume divergences sometimes imply that bulls are flipping into holders or waiting for more certainty in the market before buying more bitcoin. In these instances, prices tend to push sideways and volatility drops.

      2. RSI divergence

      BTC/USD chart(Tradingview)

      Volume isn‘t the only indicator showing a strong divergence on bitcoin’s trading chart right now. There‘s also a noticeable deviation on the weekly Relative Strength Index (RSI) – a leading momentum indicator that shows when an asset is overbought (likely to crash) and oversold (likely to rise) by calculating the average gains and losses over a 14-day period. The indicator line oscillates from zero to a hundred. As a general rule, an asset is considered overbought whenever it’s above 70 and oversold when its under 30.

      Right now, the indicator line reads 73 on the weekly chart, which suggests the asset is overbought and due for a correction. Again, while RSI divergences are typically more reliable than volume divergences for highlighting possible trend reversals, theyre sometimes wrong – particularly in greed-driven markets when investors enter into a buying frenzy.

      3. $2,740 bitcoin CME gap

      BTC1! chart (Tradingview)

      Bitcoin CME gaps are openings that appear on the CME bitcoin futures chart (ticker: BTC1!) whenever the traditional market closes and reopens during periods of high market volatility in the crypto market. This happens because crypto markets are open 24/7 while the U.S. stock market closes over the weekend and ceases trading at 4 p.m. Eastern Time, Monday to Friday.

      Prices on the CME bitcoin futures chart are fixed during closing hours, so if the price of bitcoin is $50,000 when the CME closes, thats where the price will stay until the exchange reopens. However, because bitcoin futures contracts track the price of bitcoin, which is constantly being traded on crypto exchanges, the price suddenly catches up with the crypto market value when the CME reopens. If the price has changed substantially over the weekend, it creates large gaps on the CME chart.

      On Dec. 25, 2020, the U.S. stock market closed for Christmas and reopened the following Monday on Dec. 28. During that festive period, the price of bitcoin spiked from $23,795 to $26,353, creating a $2,740 gap on the CME bitcoin futures charts. So far, this gap has not been filled.

      Why are these gaps so important? CME gaps, for no proven reason, act like magnets to the price action and have a statistically high tendency of filling – meaning the market price usually returns back to its original point, which in this case would be $23,795. A study conducted in 2019 revealed that CME gaps fill over 95% of the time.

      While this suggests prices could drop to the low $20,000s, it‘s worth noting there are three other gaps below in bitcoin’s chart that still havent been filled, including one at $9,665.

      4. March is approaching

      March has consistently been the worst-performing month for bitcoin, with a mean average loss of 14.725% since 2017 when the market started to gain traction. The second-worst month, on average, is September, with a mean loss of 9.05% over the same timeframe.

      While past performance does not guarantee future results, history strongly suggests theres a seasonality to bitcoin market sentiment. This behavior could be attributed to the upcoming tax year on April 15 in the U.S. and traders selling bitcoin to cover their tax bills.

    Read more

    Bitcoin Bull Mike Novogratz Warns of 'Existential Crisis' if the US Fails to Create Digital Dollar

    Mike Novogratz, the CEO of Galaxy Digital and bitcoin bull has warned that the United States’ failure to have its own digital currency could be an “existential crisis.” However, the CEO says the country’s fate is still in its hands. Novogratz made these comments a few days after former U.S. Secretary of State, Mike Pompeo suggested that the United States is not going to have a digital dollar anytime soon.

    News 1618217643000

    How to Use AI to Generate Free Bitcoins

    When you get on the Bitcoin train you know you are in for a wild ride, with the price dipping and soaring so fast it’s hard to keep up. One thing is certain however, the overall value of Bitcoin is rising year-on-year at an incredible rate. Since the start of the pandemic the price has skyrocketed from just 7,200 USD in January last year, to its current price of near to 60,000 USD, although with some heart-stopping drops and recoveries in price along the way. BTC is clearly a great investment, but there is undoubtedly a high level of risk and uncertainty, so it is critical to mitigate your exposure and the best way to do this is with an automated platform.

    News 1618207992000

    All that mined is not green: Bitcoin’s carbon footprint hard to estimate

    The impact of BTC mining on the environment has turned into a debate — here’s what academics think and if “green Bitcoin” is possible.

    News 1618198734000

    With Banks Turning to Bitcoin, Is It Finally Time to Long the Bankers?

    In the past, much of the Bitcoin community was taken to declaring, “Long bitcoin, short the bankers.” But now that the likes of Goldman Sachs, Morgan Stanley, BNY Mellon, State Street, Deutsche Bank and others are entering the crypto space, is it now to long banks as well as BTC?

    News 1618196175000