Bitcoin price fell towards $9,100 a day after it formed a bullish “Golden Cross” pattern
Bitcoin plunged to $9,100 just a day after it painted a “Golden Cross” – a perceivably bullish indicator.
The declines appeared after the benchmark cryptocurrency failed to close above $10,000, its near-term technical resistance. The price ceiling converged with another long-term resistance level, a Descending Trendline that historically has been capping Bitcoin from continuing its upside trends since December 2017.
But the catalyst that triggered Bitcoin’s latest decline was outside the realm of technical indicators. Some analysts suggested that traders panic-crashed the cryptocurrency after an old and inactive Bitcoin address that allegedly belong to Satoshi Nakamoto debited about 50 BTC for the first time since 2009. As a result, the price fell by $500 in just 15 minutes.
The follow-up recovery lacked the strength to build a sustainable upside momentum. While price retested $9,600 as its interim resistance, it failed to negate the short-term bearish trend. As of this time, bitcoin was trading near $9,050.
These 3 Trends Show There’s Downside Ahead for Bitcoin
1: There Are Many Bitcoin Sellers With ~$10,000 Asks
According to order book data, there is still pronounced sell-side pressure above Bitcoin’s current price, in and around $10,000.
One trader made this clear when he shared the chart below, showing clear ask-side orders in the “10,000 and 10,700 region” on Bitfinex.
A bunch of large orders appeared in the 10000 and 10700 region shortly after MM activity stopped on Bitfinex.
— Livercoin (@livercoin) May 19, 2020
2: On-Chain Metrics Signal a Contracting Network
Three out of seven of IntoTheBlock’s metrics are currently “bearish,” indicating that the underlying Bitcoin network is contracting alongside price. This corroborates the sentiment that there is a downtrend forming.
On-chain data for Bitcoin from blockchain intelligence firm IntoTheBlock. The data shows that the cryptocurrency is “mostly bearish” from an on-chain perspective.
3: Bitcoin Investor Sentiment Is Extremely High
To put a cherry on top of the proverbial crypto cake, analysis has found that Bitcoin investor sentiment is spiking.
Data shared by crypto analytics startup The TIE indicated that their proprietary Bitcoin social media sentiment indicator (30-day average) recently reached the “highest” it has been “since 2017.” 2017, of course, was when the cryptocurrency hit $20,000.
Bitcoin’s sentiment (30 day average) is the highest that we have recorded since 2017.
30 day average tweet volumes on Bitcoin are also at 2020 highs. pic.twitter.com/A1IXRaeIPo
— The TIE (@TheTIEIO) May 18, 2020
As can be seen in The TIE’s chart displayed above, there were a number of occasions in which the growth of The TIE’s sentiment indicator marked the top of rallies. For instance, the last time the indicator was in this range as at the peak of Bitcoin’s false relief rally from $6,000 to ~$9,500 in 2018.
The correlation isn’t perfect per se, but it does show that when Bitcoin investors get too overzealous, the price tends to pull back as smart money sells into the FOMO.
Disclaimer: This is not trading advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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