By CCN.com: According to technical analyst Eric Thies, a key technical indicator may signal strong long-term momentum for bitcoin for the first time since 2015.
The last time the 1-month moving average convergence divergence (MACD) achieved a signal cross, the bitcoin price increased from $400 to ultimately $20,000 within a three-year span.
As the bitcoin price spiked from $3,900 to $8,000 in less than three months by outperforming most assets and every major stock index, technical analysts generally anticipated a large pullback to hit the market.
One cryptocurrency trader stated that major assets have been unable to break out of key resistance levels as of late, which may potentially indicate the formation of a short term top and could increase the likelihood of a hard reset or a big pullback.
The trader said:
We’ve seen no major break out above a significant horizontal resistance level with accompanying volume. LTC / BTC appears to have topped out, and I believe #litecoin was a major catalyst in the past week’s ‘rally.’ We may still see a hard reset yet.
My bias still leans bullish as it has been, but there is no confirmation or guarantee in my eyes we continue up from here before knocking down a bit. It’s been more than a few days of ‘green’ but there is still every reason to be cautious until we get clarity we can count on.
However, despite the warnings of a possible correction in recent weeks, the crypto market has continued to demonstrate strong momentum led by the rally of litecoin.
Investors anticipating the block reward halving of litecoin that occurs every four years led the price of litecoin to spike substantially against both bitcoin and the U.S. dollar.
Year-to-date, litecoin is up about 345 percent against the U.S. dollar as the best performing crypto asset alongside Binance Coin and Huobi Token.
Some investors expect the momentum of litecoin to prevent a major pullback from occurring in the crypto market as it may renew the sentiment around the market in the near term.
Scott Melker, a crypto trader at TexasWest Capital stated that the bitcoin price surged by nearly three-fold since achieving its bottom at $3,150 in December of last year and individuals attempting to buy the asset at a lower price is “disbelief.”
“BTC did nearly a 3x from the bottom, and people are still waiting to ‘buy lower.’ They call this phase ‘disbelief’ for a reason. If you have not bought and are still waiting to reenter the market, you should seriously evaluate if you should be trading,” said Melker.
Although every major upside movement is followed with a steep pullback, some technical analysts believe that the structure of the crypto market is strikingly different to that in 2017 and years prior to that.
Hence, bitcoin’s minor correction to $9,000 to $7,600 could be sufficient to maintain a healthy trend for the dominant cryptocurrency even if pullbacks to the tune of 30 to 40 percent do not take place.
Thomas Lee, the co-founder of Fundstrat, also noted that the rise in bitcoin futures volume reflects an increase in the inflow of institutional money, which could serve as a positive factor for the medium to long term trend of the market.
Click here for a real-time bitcoin price chart.
Last modified: July 2, 2020 7:25 PM UTC