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BTC well overbought, lower leg likely
After the slight decline on Thursday, the crypto market continued to rise on Friday. At the time of writing this article, Bitcoin (BTC) is trading at $ 5,020, down $ 300 from this week's peak. Nevertheless, Bloomberg says that cryptocurrency is still well overbought.
The point of sale indicates that, according to the global GTI force indicator, a measure of market strength similar to the widely used relative strength index, displays obvious warning signals. In fact, the signal indicates that Bitcoin is the most overbought of its daily record since its rally in the five-digit region, in 2017 and early 2018.
The previous cases of overbought Global Strength preceded the declines of Bitcoin and other encrypted currencies. When the measure overbought in the middle of last year, when BTC traded at $ 8,500, the market collapsed in the following weeks. Although past performance does not prejudge future actions, it has become clear that continuous short-term gains can not be sustained indefinitely, even in the often irrational space of cryptographic badets.
Mike McGlone, an badyst at Bloomberg Intelligence, added to the bearish sentiment, saying that even if Bitcoin cleared out of a "cage," it would likely remain a major sell-off. He writes that with "such a mbadive bubble," there may still be an "excess of people" wanting to liquidate their stack of Bitcoins, paving the way for a slowdown in the long run.
And this downward trend continued, with David Tawil, president of ProChain Capital, chairman of a crypto-friendly fund, telling Bloomberg that badysts in his firm were banking on "a new downward step" . He added that the 20% price increase, which BTC has taken from $ 4,150 to $ 5,000 in the space of a few days, was actually rather detrimental, calling it a "little comforting gesture". Tawil explains that a "very, very fast ramp-up", as what we've just seen, is not as bullish as a gradual progression, which sets levels of much more effective support than a fast rise.
Bitcoin Statistics on the chain Signal drop
This report comes as data from the Bitcoin block chain has signaled the possibility of a decline, especially given historical precedents. David Puell, head of research at Adaptive Capital, Murad Mahmudov's cryptocurrency hedge fund, recently unveiled an updated version of NVT Signal (NVTS), which combines network value and 90-year moving average. days of daily transaction value to try to call Bitcoin. low and high.
The indicator, which uses CoinMetrics data, is currently showing an upward trend (since January), pointing out that the Bitcoin blockchain shows signs of life, even after the dramatic slowdown of 2018. But that's not all. 'history. As Puell describes it, the current action in NVTS is similar to that of early 2015, which had taken place during the recovery of the bear market, but before Bitcoin's final surrender in this cycle.
Thus, if history repeats itself, the continued rise in NVTS could be halted by a spectacular fall in BTC below $ 3,000. As Puell explained in the sub-tweets contained in his initial message, the table above "implies [that there will be] a decline before the transaction finally ends, followed by a confirmed comeback. Adaptive Capital's partner did not mention an explicit price forecast, but given the historical precedent, the final sales pressure. could bring Bitcoin well under $ 3,000.
Photo by Mark Finn on Unsplash
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