Bitcoin (BTC) has failed to defy the multi-year resistance of $ 10,500 since early June 2020. This extended cut-off period will finally result in one of two inevitable results.
Whether it’s a massive green candle to catch the bears off guard or a profit-taking period that will cause the top digital crypto asset to drop below $ 8K in the coming weeks.
But what signs can we take into account to determine in which direction the largest cryptocurrency by market capitalization will go?
Daily performance of the crypto market. Source: Coin360.com
The MACD “weakly”
Using the Moving Average Divergence Convergence (MACD) indicator, which on the weekly chart has historically proven to be an incredibly accurate indicator for buying and selling Bitcoin, you can see that the blue MACD line is starting to point towards the signal line. orange.
Every time the weekly MACD does this, it tells investors and traders to sell or short-sell. In Bitcoin’s early history, bullish MACD crosses (when the blue MACD line crosses through the orange signal line) and bearish MACD crosses (what we are seeing now) were rare: they would occur once a year, such twice.
BTC / USD 1-week chart. Source: TradingView
However, in the last 18 months, they crossed nine times, that is, once every two months on average since the beginning of the 2018 bear market.
The last time Bitcoin crossed lower on the MACD there was a 57% drop in Bitcoin’s price almost immediately after they crossed. So are we in the store for another throwback? Based on Fibonacci levels, this could place targets lower anywhere between $ 7,916 and $ 3,850.
Bitcoin’s Death Valley
BTC / USD 1-day chart. Source: TradingView
On the daily chart, things are not much clearer. It is evident from the table that $ 10,400 is the resistance and $ 8,800 is the support. How long this range continues is unknown.
However, the last time Bitcoin broke above this level, the price shot up an additional 32.2%, at which time $ 10,400 turned into support multiple times before continuing its downtrend.
Right now, Bitcoin is dangerously close to the support level, which turns out to be 236 Fib. Losing this level opens $ 7,900 as the first downside target.
Conversely, if the bulls take control and break the $ 10,400 resistance level, the current price advantage of $ 9,040 is a staggering 56%. The entire exchange can take place, but one that must first wait for confirmation, and this could take not weeks, but months.
Short-term relief for Bitcoin
1 hour BTC / USD RSI chart Source: TradingView
On a more positive note, the 1-hour Relative Strength Index (RSI) indicator shows that buyers stepped in as they approached the oversold territory around 31.40. Keep in mind that anything below 30 is considered a strong buy signal.
However, in the higher time frames between 12pm and monthly charts, the RSI is very much in the middle, which does not provide any clues as to where the market will go. Either the bulls will take over and raise the price of BTC by 50% or the bears will lower the price by an equal percentage.
There is literally nothing on the charts that can give an indication, with the exception of the bearish MACD. However, lateral action can cause the MACD to cross if it lasts long enough.
Large ASIC mining producers are suffering
Market share of ASIC producers. Source: BitMEX
In a recent report published on the Bitmex blog titled “Battle for Asic Supremacy”, you can see that previous leaders in ASIC production like Bitmain are losing their grip. Having occupied a 75% market share, new stars like MicroBT are quickly becoming the new dominant force in this space.
But with mining rewards recently halved, this particular industry looks like a financial black hole. For example, Canaan’s share prices collapsed by almost 50% shortly after a $ 90 million IPO last year, and relative newcomers Ebang are apparently desperate for cash after their Hong Kong IPO Kong was rejected in 2018. These companies are now seeking a cash injection into United States’ soil after recently filing a US-based IPO in April 2020.
The surprising lack of financial interest in these companies will surely play a role in Bitcoin’s current price.
The question that leaves me is this: “if nobody is making money with Bitcoin, what happens next?” Is this a bullish or bearish thing? To me the answer seems obvious, it seems very bearish.
Bullish scenario
1-hour chart BTC / USD Source: TradingView
Using the current Fib levels on the hourly chart, the key levels to claim are 618 at $ 9,420 and 100% at $ 9,800. After $ 9,800, the last high resistance area sits at $ 10,400.
Bearish scenario
Using the same chart and Fib levels, $ 8,800 is where the first level of support will be found. Losing this level at this stage of the game would open 382 on the daily chart, which is around $ 7,600.
The views and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect the views of Cointelegraph. Every investment and commercial movement involves risk. You must do your own research when making a decision.
