For the first time since the first week of November, Bitcoin’s daily chart has produced three consecutive red candles. This coincidence is intriguing, as it occurred during a similar period leading up to Donald Trump’s US election victory in 2020.
A Retest of the 50-Day EMA Level
Another similarity between this instance and the previous occurrence of three or more red candles on the daily chart is that Bitcoin retested the 50-day Exponential Moving Average (EMA) level. This phenomenon is a crucial aspect of technical analysis, as it often serves as a support or resistance level for price action.
BTC’s Price Drop
With Bitcoin’s price plummeting by over 15% since its all-time high, one analyst believes that most of the drawdown is potentially over for the largest cryptocurrency. Captain Faibik, an independent crypto trader, stated that Bitcoin’s correction was approaching a conclusion.
BTC’s Correction: ‘Almost Done’
Captain Faibik highlighted in an X post that BTC’s current decline is due to a massive bearish divergence between its price and relative strength index (RSI) over the past month. Such divergences are usually followed by an 8% to 10% fall, which is considered a "healthy reset."
BTC's daily chart with RSI and Bollinger Bands.
Source: Cointelegraph/TradingView
The trader expected the price to bounce from the $94,000 range, as illustrated in the chart.
Contrasting Views
Cold Blooded Shiller, an anonymous crypto trader, offered a contrasting view. Based on the same divergence pattern, the analyst predicted that if a similar outcome unfolds, BTC’s sell-off may stretch down to as low as $85,000. This prediction suggests that the current correction may not be over yet.
Comparison of Bitcoin price action to January 2024.
Source: X.com
Incessant Selling by Spot Holders
Byzantine General, a futures market analyst, highlighted incessant selling by spot holders. The analyst stated, "We actually got a perp premium at the moment because spot is selling off so much it’s disconnecting from the derivatives market."
Coinbase Selling Activity
Maartunn, a CryptoQuant analyst, noted that this is the most significant Coinbase selling activity since Bitcoin was priced at $66,000. The selling pressure is "relentless," as the Coinbase premium fell to a quarterly low.
Coinbase premium gap chart by Maartunn.
Source: X.com
Related Developments
Bitcoin whale support includes the mid-$60K zone in new BTC price warning. The increasing selling pressure by the hour has led to a rise in realized losses.
Realized Losses Reach $28.9 Million
Axel Adler Jr, a Bitcoin onchain analyst, highlighted that the BTC realized losses over the past 5 days reached $28.9 million, 320% above its weekly average in 2024. The 28 million mark has been crossed only 10 times this year.
Bitcoin realized loss chart by Axel Adler Jr.
Source: X.com
Mid-Term Chart Analysis
Analyzing Bitcoin’s mid-term chart revealed a bearish break of structure (BOS). However, there is a clear invalidation for a reversal if Bitcoin continues to close a daily candle above $95,000.
Bitcoin 4-hour chart.
Source: Cointelegraph/TradingView
The 4-hour candle has established an immediate recovery above $95,000 after dropping to $92,777. For Bitcoin to nullify the bearish sentiment, a daily candle above $95,000 would be ideal.
Disclaimer
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Stay Informed
To stay up-to-date with the latest market trends and insights, subscribe to our newsletter. Get critical insights to spot investment opportunities, mitigate risks, and refine your trading strategies. Delivered every Monday.
Subscribe by clicking on this link: [link to subscription form]
