Bitcoin (BTC) value rallied towards $24,200 on July 28 after a near-10.5% surge that started a day earlier.

The beneficial properties appeared after Federal Reserve Chairman Jerome Powell signaled intentions to decelerate the Fed’s prevailing tightening spree. This prompted some Bitcoin analysts to predict short-term upside continuation, with pseudonymous analyst CryptoHamster seeing BTC at $26,000 subsequent.

It appears that the draw back breakout was a false one, and the bullish flag has been validated. Let’s see how briskly $BTC can attain these targets. #bitcoin $BTCUSD $ETH $ETHUSD #ビットコイン #биткойн #比特币

— CryptoHamster (@CryptoHamsterIO) July 28, 2022

But BTC’s potential to get better solely from its ongoing bearish slumber seems low for not less than three key causes.

Bitcoin bulls have been duped earlier than

Bitcoin established its file excessive of $69,000 in November 2022. Since then, the cryptocurrency has declined by greater than 60% whereas present process a number of mini pumps on its manner down. 

On the day by day chart, Bitcoin has rebounded not less than 5 instances since November 2021, securing 23%-to-40% beneficial properties on every restoration. Nonetheless, it has continued its correction each time after forming a native value prime round its exponential shifting averages (EMA) after which falling to new yearly lows.

BTC/USD day by day value chart that includes ‘fakeouts.’ Source: TradingView

This time seems to be no totally different, with Bitcoin dealing with a bullish rejection in June and recovering almost 17% a month later. Notably, BTC value faces interim resistance in its 50-day EMA (the crimson wave) at round $23,150, with a breakout clearing its manner towards $27,000, coinciding with the 100-day EMA (black).

At $27,000, the value would nonetheless kind a decrease excessive in contrast to the earlier native tops. So, that technically raises the potential for one other bearish continuation transfer.

High promoting, low shopping for quantity

Interestingly, the amount habits throughout the ongoing Bitcoin correction exhibits a better curiosity in promoting the coin at native tops.

The day by day chart beneath illustrates this by highlighting the amount readings throughout downtrends and uptrends since November 2021. For occasion, the final two large value declines in May and June coincided with a sharp enhance in promoting volumes.

BTC/USD day by day value chart. Source: TradingView

In comparability, the follow-up rebounds to these value declines accompanied modest to decrease trading volumes. The ongoing quantity habits seems to be the identical, peaking throughout the downtrend and dropping as the value recovers.

This suggests a weakening upside momentum, which can lead to one other value correction.

BTC to equities correlation flips again to optimistic

Bitcoin is as soon as once more tailing inventory market traits regardless of briefly decoupling from them in early July.

For occasion, on July 28, the day-to-day correlation coefficient between Bitcoin and the tech-heavy Nasdaq Composite stood close to 0.66. That contains declines in each markets after the U.S. gross home product (GDP) plunged for a second consecutive quarter.

BTC/USD and NDAQ day by day correlation coefficient. Source: TradingView

That formally confirms that the U.S. has entered a “technical recession,” which may weigh negatively on the inventory market. Therefore, Bitcoin’s draw back prospects seem excessive if its optimistic correlation with the inventory market continues.

The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Every funding and trading transfer entails danger, it’s best to conduct your individual analysis when making a choice.


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