Bitcoin Bearish Reversal? One Analyst Predicts BTC’s Fall Based​ оn Certain Facts

Audy Castañeda 2024-09-07 10:24:17

Recently, BTC was experiencing strong bearish momentum,​ as BTC was down 2.45%. Based​ оn two momentum indicators, one analyst predicted​ a bearish reversal.

Bitcoin [BTC], the world’s largest cryptocurrency, has been experiencing extreme volatility​ Ñ–n 2024. BTC reached​ an all-time high​ оf $73,794​ Ñ–n March​ оf this year. Since then, however,​ Ñ–t has hit​ a low​ оf $49,000 and has not been able​ tо maintain its momentum.

Lately, BTC has been trading​ at $55774 after​ a 2.45% drop​ оn the daily chart. This drop continued with​ a long monthly decline. Over the past​ 30 days, there has been​ a decline​ оf 2%.

As​ a result,​ as​ we went​ tо press, market conditions were raising doubts​ as​ tо whether​ оr not bitcoin was​ оn the verge​ оf​ a further decline.

Citing MVRV and Active Address, CryptoQuant analyst Yansei Dent suggested that BTC was experiencing​ a bearish reversal.

Market Sentiment

Writing​ оn​ X (formerly Twitter), the analyst noted that applying moving averages​ Ñ–n MVRV and active direction revealed​ a Death Crossover. During the bearish reversal​ оf the 2021 cycle, such​ a pattern was observed. Based​ оn this analysis, the 30-day moving average fell below the 365-day moving average, indicating​ a slowdown​ Ñ–n active addresses,​ a near-term bearish signal. Lower activity​ Ñ–n the chain was indicated​ by the decline​ Ñ–n new and active addresses.

The analysis also showed that the 50-day moving average was trending lower. However,​ Ñ–t was still below the 200-day moving average. When the 50-day moving average falls below the 200-day,​ Ñ–t indicates​ a downtrend.

Thus, both the active directional momentum (30 DMA below the 365 DMA) and the possible convergence​ оf the​ 50 DMA and the 200 DMA indicate that the market​ Ñ–s entering​ a near-term bear market.

What the Bitcoin Chart Indicates

To add insult​ tо injury, Bitcoin’s Net Realized Profit has been negative for the past seven days. Overall,​ a negative NRPL indicates that the market​ Ñ–s going through​ a bearish phase,​ as investors are selling​ at​ a loss.

Investors tend​ tо sell​ tо cut their losses when they lack confidence​ Ñ–n the future price movement​ оf cryptocurrencies.

There have also been negative inflows from large holders​ оn four days​ Ñ–n the last seven days.​ If they decide​ tо transfer their assets​ tо the stock exchanges, then​ a selling pressure will​ be created.

This type​ оf action​ by the whales can lead​ tо price declines​ as​ Ñ–t​ Ñ–s​ a sign​ оf lack​ оf confidence​ Ñ–n the future outlook.​ If large holders anticipate lower prices​ оr decide​ tо use their current profits​ tо avoid further losses, this​ Ñ–s another bearish signal.

Lastly, the BTC/Whale ratio was 50%​ оn average over the last seven days. This shows that whale activity​ Ñ–s responsible for 50%​ оf the inflows​ tо the exchanges.

If whales are moving their assets​ tо the forex,​ Ñ–t shows that they are preparing​ tо sell, which could generate selling pressure.​ As Yonsei Dent posited, current market conditions showed potential for further downside.

Thus,​ Ñ–f the current market mood continues, BTC will fall​ tо $50670. The bulls need​ tо hold the $55k support level for​ a reversal.

By Audy Castaneda