Bitcoin’s impressive parabolic run may have come to its conclusion. On July 11, we warned investors that the No. 1 cryptocurrency would falter to $9,000 as it flailed overheated signals. At the time, bitcoin was bouncing and market participants were expecting a new 2019 high as the market threatened to breach resistance of $12,000. However, the cryptocurrency lost its bullish steam and it is now trading at approximately $9,700.
As bitcoin continues to show signs of weakness, it could drop by another 20 percent, approximately. The price could even hit $7,400 before resuming its uptrend.
The leading cryptocurrency is not in a good position in the short-term as sellers take control of the market. A quick look at the daily chart shows that bullish momentum has significantly decreased.
For instance, the cryptocurrency printed a bearish lower high setup at $13,200 on July 10. On the same day, the daily candle had a long wick on top of its body to indicate the presence of sellers.
In addition, we can see the daily RSI breaching support of 50 and converting it into support. This is a key development because bulls have been using that level since February 2019 to generate the momentum needed to keep the market trending higher. Now that RSI 50 has been flipped into a resistance level, bulls could have a hard time reclaiming it.
This shift of momentum from hyper bullish to bearish is the primary reason why the range midpoint of $9,000 might not hold. The weakening volume also suggests that buyers are not yet excited to grab positions at current levels.
At the very least, we might see a dead-cat bounce at $9,000, but after that, bitcoin could drop all the way down to monthly support of $7,400.
We have The Crypto Analyst going more into detail as to why bitcoin can tumble down to $7,400.
We are not all gloom and doom. Our expectations for a dive to $7,400 could actually be beneficial for the long-term health of bitcoin’s uptrend. The market could regain its bullish composure once this round of correction is over.
We are long-term bullish on bitcoin because of its robust fundamentals.
For instance, the cryptocurrency’s hash rate has printed a fresh all-time high on July 7 at 65.87 exahash per second (EH/S) to break the previous record of 65.19 EH/S. This tells us that more miners are joining the network because they expect prices to continue rising in the future.
On top of that, bitcoin’s transaction volume has been steadily rising this year. It is actually very close to hitting its all-time high of over 400,000 transactions per day as it closes in on the 350,000 mark. The last time the leading cryptocurrency went above 400,000 transactions per day was in December 2017 when the market was trading at $19,000.
The steady growth of the daily transaction volume can be a sign of maturing adoption rates or an increase in speculation. Regardless of the reason, the rising volume is a signal of demand for the cryptocurrency.
The leading cryptocurrency is flashing several bearish signals and it could drop by another 20 percent to $7,400 levels. Nevertheless, this pullback can only be healthy for bitcoin’s outlook. Long-term investors shouldn’t lose sleep because the cryptocurrency remains strong fundamentally.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.
Last modified: June 23, 2020 2:45 PM UTC