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Bitcoin's Momentum Is Weakening – Watch the Charts

Bitcoin

July 5, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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The past few months have been quite eventful for Bitcoin. Right from trading some its lowest to gaining past the resistance levels. However, it has gained stability to trade between $8,500 and $10,000. Most traders felt the increase was a bull run.

Even though the gains had been massive, some industry experts felt it was all a bull run. 

Is it now the time when the bull run gets to burst? 

According to one of the leading market analysts, Josh Olszewicz, the bullish moment is fast coming to an end. He credits the changes to consolidation. He advises the bullish to consider a cross recross above Cloud w/13k target while the bearish to have an e2e to 7.1. 

The notion is reinforced by the charts showing Bitcoin stuck on resistance levels. Several market indicators fuel the imminent bearish run. 

Market Indicators for a Weakening Bitcoin' Momentum 

Some of the top indicators for the expected bearish Bitcoin price run are; 

•    Selling by Miners 

The activities of the miners are one of the significant indicators of the futures markets. They would not want to lose many coins when expecting a price increase, just like they wouldn't want to be keeping them at an expected price fall.

According to On-chain analyst, Cole Garner, the miners have been withdrawing a large amount of the assets. The need to dispose of the coins is a sign of a future downward spiral. 

•    Increase PlusToken Liquidation 

Other than the miners, crypto assets holders have also been on a liquidation spree. With more than $450 million worth of multiple crypto assets leaving PlusToken to the exchanges for liquidation, the traders are suspecting a price decrease soon.

Some of the affected crypto coins are Bitcoin, Ethereum, XRP, and EOS. 

•    A Declining S&P 500

Bitcoin and S&P 500 have formed some of the most consistent correlations in the recent past. Any fall in the S&P 500 is equally noticeable in Bitcoin. For example, the March price decline in Bitcoin also saw the S&P 500 trade some of its lowest.

The same price change has been noticed in the bullish run. While Bitcoin rose to trade at around $10000, the S&P 500 also hit some of the highest of 3000 points. Both of the assets hit their resistance levels in this period. 

With such correlations, an imminent decline in the leading stock index, the S&P 500, is a sure sign that the value of Bitcoin will also fall. 

Market Predictions by the Experts

The volatility of Bitcoin has heightened the role of the spectators in recent times. With most of the time being correct, most investors rely on the analysts to provide probable future pricing. 

Doug Ramsey, Leuthold Group's chief investment officer, who is one of the leading Wall Street strategists, has sounded a warning on the possible bearish run. He believes investors can still lose much of the assets they gained over the bullish run.

Speaking to Bloomberg, he thinks it is still early to dismiss the proposers of a bear run in early March, now that Bitcoin recovered in time. 

The same thoughts are held by Scott Minerd, the global chief investment officer of Guggenheim Investments. He believes that stocks are overvalued and that there are already warning signs that the S&P 500 could off to 1,600. Any reduction in the asset eventually affects Bitcoin due to their strong correlation. 

Possible Effects of a Falling Bitcoin

Given that most traders already understand bitcoin volatility, every massive change in value comes with corresponding trader action. For example, the traders reacted positively towards the bull run with the coin running up to the $10k mark.

The demand was so high until top brokers like Coinbase experienced an outage due to the increased traffic. 

However, Bitcoin is always working on reducing the traffic spike or changes driven by the value. Like in any market, the more the demand, the less the coin availability hence higher value. In the same case, a reducing value comes with less need, which affects the currency. 

To avoid the risk of dumping, Bitcoin has selling restrictions that mean the coin will still be worthy. Also, the bull run came at a convenient time to help build its reputation. Unlike before, when traders were not sure about the security of the coin, they at the moment understand the currency always bounces back no matter how low it goes.  

Ultimately, even though most coins tend to depend on Bitcoin to determine market prices, most are becoming independent. For example, altcoins have grown against Bitcoin before. It means the possible reduction in the amount of Bitcoin is not a threat to the whole crypto world. 

Bottom Line 

After a sustained period of a bullish run, at last, Bitcoin is on the verge of taking a dip. With the charts showing it failing to beat the resistance for some time, the most probable way to go is down. Still, that is not to spell doom to the crypto world. 

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TAGS: BITCOIN

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