The price of Bitcoin (BTC) has printed several sell signals, according to both on-chain and technical analysis. As a result, until the situation changes, investors should use prudence and restrain their bullish perspective.

The continued surge depends on the Bitcoin ETF

For a few years now, the Bitcoin spot Exchange-Traded Fund (ETF) has been a speculative event. However, the advancements around ETFs have accelerated recently. After losing a number of lawsuits pertaining to cryptocurrencies, the US Securities and Exchange Commission (SEC), which licences or disapproves ETF products, has been caught off guard.

The SEC’s loss in Grayscale’s lawsuit about the conversion of the GBTC product into a spot ETF offering and other developments pertaining to ETFs were the primary causes of the initial spike in the price of Bitcoin, which began in mid-October. However, Bitcoin has been trending sideways as there have been no updates.

Whatever the case, the next significant deadline for the ETF decision is January 2024, which will see a fresh peak in the speculative Bitcoin trading mania. The crypto industry will be made or broken by this event. Investors should be ready for a regression up until that point, though, given that the price of Bitcoin has been emitting several sell signals.

The price of bitcoin might drop soon

Between October 16 and 24, the price of bitcoin (BTC) increased by 30%, setting a new local high at $35,280. This move had tremendous bullish momentum, which made it spectacular. However, BTC has been trending sideways since the formation of its swing high. The daily candlestick closures have shown an upward trend since October 25, which may appear bullish to the untrained eye. Upon closer inspection, the Relative Strength Index (RSI) exhibits a downward slope. Bearish divergence, which this non-conformity is, frequently signals a retreat or correction.

The first significant sell signal that investors should be aware of is this one.

The Momentum Reversal Indicator (MRI) has flashed two sell signals in addition to the bearish divergence. On October 23, following the daily candlestick closure, the first sell signal was presented as a red downward arrow. The MRI has displayed another red down arrow nine days later. This indicator suggests a falling one to four candlestick pattern.

Therefore, investors should expect a decline in the price of Bitcoin if things continue as they are. Important support levels to keep an eye on are the Fair Value Gap (FVG) region, which spans from $30,248 to $32,832 and has a midpoint at $31,540.

On-chain indicators support the pessimistic outlook

Santiment’s Network Realised Profit/Loss (NPL) indicator displays two significant spikes of 524 million and 542 million on October 24 and 28, respectively, suggesting that investors are booking profits. Similar profit-taking occurrences and bearish divergence in July caused the price of Bitcoin to plummet from about $31,400 to $25,800.

The Whale Transaction statistic, which has been surging since October 23, reflects the same pessimistic sentiment. This indicator, which measures transfers of $100,000 or more, spiked, indicating that whales are shifting their assets to book profits.

Investors who have bought Bitcoin in the last month can gauge their average profit or loss using the 30-day Market Value to Realised Value (MVRV) indictor. The MVRV dropped from 16% on October 23 to roughly 10% at this point. This level indicates that investors who bought Bitcoin within the last month made an average profit of 10%. A sell-off could occur if these holders decide to sell to realise their profits.

In the last year, the 30-day MVRV has often created a local peak of 16% to 22%. Because a correction in the price of Bitcoin follows this period, it can be referred to as the “Danger Zone.”

Finally Thoughts
Overall, both from a technical and an on-chain perspective, the price of Bitcoin appears to be headed towards a bear market. These sale signals can only be ignored in the event of an ETF-related development.

In that scenario, the price of Bitcoin might cross the $35,000 barrier and approach the psychological $40,000 mark. This action would refute the pessimistic theory.

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