Bitcoin - A word of caution and possibility of freefall

Like the rest of the market, Bitcoin also enjoys a relief rally after the prolonged period of selling pressure. Meanwhile, we again started to notice a revival in bullish sentiment accompanied by calls for BTC bottom, trend reversal, and new sky-high prices. However, we resist these calls and remain bearish on Bitcoin, although we acknowledge that the rally might get prolonged for a little longer. Despite that, we watch ominous developments on the chart of Bitcoin. First, several indicators retraced from an oversold condition (on the daily time frame); however, at the same time, BTC failed to make new highs. Second, we start to worry about the absence of any significant support below the 28 600 USD price level. Indeed, we speculate that if this level is penetrated to the downside, then extreme selling pressure is due to follow. Therefore, we voice a word of caution to the investors.

Illustration 1.01

The chart above shows the market cap of BTC. It can be observed that BTCs dominance started to increase early this year as other altcoins started to manifest losses. We expect this trend to continue and even strengthen over the coming months.

Illustration 1.02

The picture above confirms our statement about the BTC dominance.

Technical analysis - daily time frame
Despite that RSI reversed to the upside from the oversold zone and started to grow, BTC is choppy and does not continue to make new highs. MACD and Stochastic remain bearish, although, Stochastic managed to reverse; now, it points to the upside. DM+ and DM- show bearish conditions in the market. ADX increases and indicates a powerful downtrend. Overall, the daily time frame is bearish.

Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish; ADX resumed growth just recently (after the neutrality). Overall, the weekly time frame is bearish.

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.

Trade closed: target reached:

In tandem with our expectations, BTCUSD reached 28 600 USD. Now, Bitcoin reached what we previously named the "free-fall area." We continue to be bearish and expect it to drop even lower.