Bitcoin is Bearish, Says Analysts
Despite the huge upsurge in Bitcoin price heading into this year, an analyst thinks it will still decline.
According to options trader known as Dyme, the crypto is approaching a “perfect bearish setup.” He listed three converging negative indicators (Rising Wedge, Bearish Divergence, and Overleveraged Longs) suggesting a steep price correction in the trading sessions ahead.
Based on history, every indicator normally leads to a reduction in price in an otherwise thriving asset. For example, Rising Wedge comes up whenever any asset is moving towards the upside, producing higher highs and higher lows, as well as a conical pattern.
In the history of Bitcoin, the crypto was able to break down from Rising Wedge patterns many times, thereby allowing Dyme to forecast a similar scenario in the crypto uptrend at the moment.
Likewise, Bearish Divergence forecasts a likely retracement in a bull market. It is formed whenever an asset comes up with higher highs while its momentum indicator (like a RSI) comes up with lower highs. The current price chart of Bitcoin fits the description of a likely trend retracement.
According to some trade statistics on Bitcoin, the crypto could be overleveraged currently. Another analyst known as Cantering Clark provided proof of risky long positions in the market, as the cited funding rate, open interest, and futures premium. He wrote as follows:
I think the market is likely due to punish late longs soon.
Market is likely very long right now, as it should be, with the trend.
OI very high (with trend though)
Futs premium +400
— Cantering Clark (@CanteringClark) February 6, 2020
Clark noted that the immediate retracement may bring about a decline to $700 and $1,000 in the price of BTC.
Besides, Alex Krüger, a renowned market analyst noted that a retracement pattern is imminent on BitMEX. The derivatives platform’s funding rate had in recent times attained 0.12% and based on history, such leads to a decline in Bitcoin prices.
Featured image courtesy of Shutterstock. Source: Cryptopress.