After flirting with near-10K prices over the past couple of weeks, BTC is again trading near the 9K level. Bitcoin has struggled to surpass every crucial level of resistance on its way back to 10K over the past week and is now struggling to get past the $9200 price mark where it is currently at. Should Bitcoin fail to see prices above that level within the next day or two, a major correction could very well be coming for Bitcoin.
Based on chart data, there are several bearish signals leading investors into defensive positions. One of the primary indicators seen on the charts suggesting short-term bearish case for bitcoin is the fact that prices are currently beneath the 50 day moving average and above the moving average for the previous 10 days. Generally speaking, that is a bearish sign.
Other bearish signals can be seen in places other than the price charts. For example, there has recently been a large outflow of Bitcoins from miner wallets to crypto exchanges. Earlier this week, there were nearly 3000 BTC moved from miner wallets to exchanges in a single day. To put that number into perspective, the previous day saw just over 400 BTC put into the exchanges. Historically, moves like these from miner wallets almost always lead to a major sell off and lower prices for Bitcoin.
That said, things may not be quite as they have been in the past regarding the effects of increased volume at the exchanges on bitcoin’s price. Bitcoin derivative trading is now a thing and is proving to act as a hedge against some of the influencers of the past. One example of an event that may easily counteract trades conducted by miners is the fact that $1 billion in bitcoin options are coming to expiry at the end of this week. That situation alone could very well have its own effect on price both this week and in coming weeks.
Going further into fundamental reasons for a bearish or bullish move for bitcoin there is reason to see it either way. However, it is likely that in the short term but: is looking more bearish than bullish and in the long term the case is flipped.
In the short term, markets of all kinds have been negatively affected by fears of another wave of the coronavirus. While crypto markets can move independently from more traditional asset classes, they have been in line more often than not over the past few months. With that in mind, bitcoin as well as many other cryptocurrencies may follow the stock market along its current bearish move.
However, as bitcoin prices continue to drop, the smart money sees the correction as an opportunity to buy. The longer-term outlook for Bitcoin still remains bullish as there has been no significant changes to the positive fundamentals that have been driving prices so far this year.
We have witnessed unprecedented levels of institutional support and a growing list of Bitcoin-based projects being planned for the summer that are almost certain to drive prices up and strengthen an already well-established digital asset.
As for what to expect moving forward, we are likely to see a lot of volatility in the coming weeks as well as short-term downtrend. However, we are just as likely to see a healthy come back shortly thereafter.