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While it’s easy to get caught up in the parabolic bitcoin rally, four bearish factors could impact prices in the coming months

Bitcoin has seen a meteoric rise in 2021, doubling from last year’s final price of $ 29,112 to the current all-time high of $ 58,332 One of the main catalysts for this surge has been a noticeable surge in institutional interest and investment, including Tesla announcing that it has purchased more than $ 1.5 billion in bitcoins under a new L investment policy. The recent emergence of two Bitcoin ETFs has also given a major boost to general sentiment, as more investors will be able to gain exposure to the main crypto asset

While these fundamentals hold incredible promise for bitcoin’s long-term outlook, a number of indicators are likely weighing on the current uptrend. This doesn’t mean the price will necessarily drop, but these are signs that a cooling off period is overdue

On the weekly BTC / USD Coinbase chart, we can see that the trading volume has declined from an earlier price peak of $ 42,000 in January 4, even though the price of bitcoin has increased by an additional $ 16,000, roughly this gap between volume and price is known as volume divergence and typically indicates that fresh capital entering the market is drying up and that the purchasing dynamic decreases

Volume divergences sometimes involve bulls turning to holders or waiting for more certainty in the market before buying more bitcoin In these cases prices tend to push sideways and volatility decreases

Volume isn’t the only indicator showing strong divergence on the Bitcoin trading chart right now There is also a noticeable spread on the Weekly Relative Strength Index (RSI) – a leading momentum indicator which shows when an asset is overbought (likely to collapse) and oversold (likely to rise) by calculating average gains and losses over a 14-day period end point Indicator line oscillates from zero to one hundred As a rule, an item is considered overbought when it is greater than 70 and oversold when it is less than 30

Right now, the indicator line shows 73 on the weekly chart, which suggests the asset is overbought and needs to be corrected Again, while RSI divergences are generally more reliable than volume divergences in highlighting possible trend reversals, they are sometimes wrong – especially in greed-driven markets when investors enter a frenzy of trading. ‘purchase

Bitcoin CME Gaps are openings that appear on the Bitcoin CME futures chart (symbol: BTC1!) whenever the traditional market closes and reopens during times of high market volatility in the market This happens because the crypto markets are open 24/7 while the US Stock Exchange closes on weekends and stops trading at 4 p.m. Eastern Time, Monday through Friday

The prices on the CME Bitcoin Futures chart are fixed during the closing hours, so if the price of bitcoin is $ 50,000 at the CME close, this is where the price will stay until the reopening of the exchange However, as bitcoin futures follow the price of bitcoin, which is constantly traded on crypto exchanges, the price suddenly catches up with the market value of the crypto when the CME reopens. If the price has changed significantly over the weekend, it creates big spreads on the CME chart

On December 25, 2020, the US Exchange closed for Christmas and reopened the following Monday in December 28.During this festive period, the price of bitcoin climbed from $ 23,795 to $ 26,353, creating a gap of $ 2,740 on CME Bitcoin Futures Charts So far, this gap has not been filled

Why are these gaps so important? Gaps in the CME, for no proven reason, act like magnets to the price action and have a statistically high tendency to fill – meaning that the market price usually reverts to its point of origin, which in this case would be $ 23,795 A 2019 study found that CME gaps fill more than 95% of the time

While this suggests that prices could drop to $ 20,000, it should be noted that there are three other gaps below in Bitcoin’s chart that have still not been filled, including one at 9665 $

March has always been the worst performing month for Bitcoin, with an average loss of 14,725% since 2017 when the market started to gain ground.The second worst month, on average, is September, with a average loss of 905% over the same period

While past performance is no guarantee of future results, history strongly suggests that there is seasonality in bitcoin market sentiment This behavior could be attributed to the upcoming tax year of April 15 in the US and traders selling bitcoin to cover their tax bills

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World news – US – 4 Bitcoin bear signals to be aware of – CoinDesk