Bitcoin - Relief to be temporary, the selloff to resume soon
Yesterday, Bitcoin plunged as low as 25 401.05 USD. After that, it reversed and moved up along with the stock market. Since its low, BTC has gained approximately 20%. In our opinion, this is another relief rally, which represents an excellent opportunity for (re)entering a short position in Bitcoin. We remain bearish and expect Bitcoin to give up its recent gains in the short-term future. Therefore, our short-price target stays 25 000 USD.
Our views are supported by bearish technical factors detailed lower. However, we also see foes of BTC in the fundamental factors like higher interest rates globally, less money printing, and a deteriorating economy (with which BTC correlates).
Illustration 1.01
On 9th May 2022, we said that an extreme spike in volume marked the beginning of “panic selling mode” in Bitcoin. Just three days later, on 12th May 2022, the volume doubled. This development reflects extreme strength in the selling pressure.
Technical analysis - daily time frame
RSI reversed from the oversold extreme; now, it is bullish as it points to the upside. However, we expect RSI's eventual reversal to the downside. Stochastic also tries to mimic RSI's behavior. Meanwhile, MACD remains bearish, and the same applies to DM+ and DM-. ADX contains a very high value, suggesting either a powerful or peaking trend. Overall, the daily time frame is bearish.
Illustration 1.02
Moving averages confirmed the downtrend on the weekly chart, and volume can be seen rising similarly to the daily chart. These circumstances are bearish by nature.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. ADX continues to increase, which indicates that the bearish trend is gaining momentum. Overall, the weekly time frame is bearish.
Illustration 1.03
The chart above shows BTC exiting the “free-fall area” we hinted at in our previous ideas. However, we expect the exit to be temporary and Bitcoin to revisit the “free-fall area” soon.
Illustration 1.04
Total cryptocurrency market-cap reached new lows as Bitcoin, and other altcoins continue to drop relentlessly.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Our views are supported by bearish technical factors detailed lower. However, we also see foes of BTC in the fundamental factors like higher interest rates globally, less money printing, and a deteriorating economy (with which BTC correlates).
Illustration 1.01
Technical analysis - daily time frame
RSI reversed from the oversold extreme; now, it is bullish as it points to the upside. However, we expect RSI's eventual reversal to the downside. Stochastic also tries to mimic RSI's behavior. Meanwhile, MACD remains bearish, and the same applies to DM+ and DM-. ADX contains a very high value, suggesting either a powerful or peaking trend. Overall, the daily time frame is bearish.
Illustration 1.02
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. ADX continues to increase, which indicates that the bearish trend is gaining momentum. Overall, the weekly time frame is bearish.
Illustration 1.03
Illustration 1.04
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
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