The pseudonymous Majin isn’t the most popular trader on Crypto Twitter, but even haters must admit that he’s got a knack for reading the market and has been on a hot streak since at least December 2018.
Just to give you an example of how he called the bitcoin bottom, he tweeted a chart on January 28 that shows the leading cryptocurrency bottoming out at $3,200 and pumping above $4,000. As we all know, that came to pass.
Since then and up until recently, Majin has been calling for bitcoin to trade higher. When people were thinking that $6,000 was the end of the rally, the analyst called for a swift move above $7,000. When bitcoin breached $8,000, the trader continued to be bullish. Majin relied on a technical indicator (white dots) showing that bitcoin was trending higher.
In addition to that, Majin also studies buy and sell walls. As a liquidity game-theorist, the understanding of how bulls operated buy bots enabled the trader to make spot-on calls. This put the pseudonymous account a cut above other technical analysts in the community.
Unfortunately, Twitter’s biggest bitcoin bull has now turned bearish. In a series of tweets, Majin explains why he suddenly reversed course on his outlook, and it has to do with a technical indicator called volume-weighted average price (VWAP).
In a nutshell, VWAP is a technical indicator that can reveal the trend of an asset. If the price is below the VWAP, it means that most traders who recently entered positions are losing money. On the other hand, if the price is above the VWAP, traders who just entered positions are in the green.
On July 25th, Majin posted a tweet showing that for the first time since February 2019, we are trading below the VWAP (turquoise line).
This is a bearish signal because it means that traders who recently bought positions are losing money. And, if they’re losing money, they’ll likely cut their losses soon. This can ignite a downward spiral that sends bitcoin to lower levels.
“Demand has leaked away with each failure to break higher resistances or hold higher supports,” Majin wrote.
Majin then posted a chart with numerous green and red lines that come with very little explanation other than the captio: “The bottom-line.”
The chart is quite difficult to read even for the experienced trader. Nevertheless, Majin’s message is simple. Bitcoin is printing lower highs while each layer of support is getting wrecked.
With these insights, the liquidity game theorist predicts that the leading cryptocurrency will slice through support of $9,000. The demand is so weak that even $8,000 won’t offer a decent bounce.
The good news is that there appears to be an end in sight. Majin sees a bounce at $7,000. This is around the same price level where we see bitcoin resuming its uptrend.
If the biggest bull in crypto-land has flipped bearish, then you might want to consider erring on the side of caution. After all, bitcoin has made a fantastic run over the last few months. Thus, it is due for a correction.
Nevertheless, long-term investors and hodlers should not sweat this pullback. As a matter of fact, it can be your opportunity to buy on dips before the market resumes its uptrend. The biggest bull believes that bitcoin will bounce after this round of profit-taking.
Click here for a real-time bitcoin price chart.