‘Historically, Bitcoin has moved in four-year cycles… and we’re two years into this one’: Coindesk Director of Research


Wall Street is starting to see weaknesses in Bitcoin charts

(Bloomberg) – Bitcoin has not yet recovered from its unexplained weekend swoon, and now the investing public is aware of the notoriously volatile token’s next move. Enter the chart watchers. Virtually first time looking at crypto, Michael Purves of Tallbacken Capital Advisors sent a note Wednesday with a technical analysis of the coin’s trading patterns. Bitcoin’s recent highs have not been confirmed by the relative strength index, among other things, and the upward momentum is weakening. “From a purely technical point of view, the bullish fall here looks very challenging in the short term,” said the latest rally, wrote Purves, the company’s chief executive officer. Purves’ decision to comment is the latest sign that Bitcoin has gotten too big for Wall Street to ignore. As more and more companies allow customers to delve into the asset and more institutional money tied to its performance, chart watchers capitulate and make their expertise available to the growing number of analyzes. Previously, JPMorgan Chase & Co. strategists, led by Nikolaos Panigirtzoglou, found it to be the last few times they saw such negative price movements in Bitcoin, buyers returned in time to prevent deeper drops. This time they are concerned. If the largest cryptocurrency fails to break back above $ 60,000 anytime soon, momentum signals will collapse, the strategists wrote in a note on Tuesday. It is likely that traders such as Commodity Trading Advisers (CTAs) and Crypto Funds have at least partially lagged behind building long Bitcoin futures in the past few weeks and settling them out in the past few days, they said, “In the past few days, the Bitcoin have -Futures markets experienced a steep liquidation similar to mid-February, mid-January or late-November, “said the strategists. “Momentum signals will of course drop from here for several months due to their still elevated level.” In these three previous cases, the overall flow impulse was strong enough to allow Bitcoin to break quickly above the key thresholds, which led to further position building momentum traders , noted JPMorgan, “Whether we will see a repeat of these previous episodes in the current economy remains to be seen,” the strategists said. The likelihood of it happening again appears to be less as the momentum decay seems more advanced and therefore more difficult to reverse, they added. Bitcoin fund inflows also appear weak. Bitcoin rose to $ 64,870 at the time of Coinbase Global Inc.’s Nasdaq listing but has fallen to $ 55,000. The cryptocurrency is still up around 90% since the start of the year. The coin, which has lost five of the last six sessions, is struggling to beat its 50-day moving average of $ 56,810. For many chartists, this is a bearish indicator as it tends to determine price dynamics. Should Bitcoin fail to break its short-term trendline, it could go down and test the $ 50,000 level, which is about a 10% decrease from its current trading level. The next area of ​​support would be the 100-day moving average of $ 49,208. That would represent an 11% decline from Wednesday’s trading levels. Talbacken’s Purves, who says the 2017 coin breakout and subsequent decline is a useful case study, also points to Bitcoin’s daily MACD signal – or the moving average convergence divergence measure – which has turned this into bearish in the medium term. And its performance still correlates with Cathie Wood’s hugely popular ARK Innovation ETF: “Trading Bitcoin on the bullish side doesn’t seem to have a cheap risk return right now, and if you’ve made a profit it seems like a good time to go the sideline for now, “wrote Purves. To be sure, he said, it is difficult to infer how much further it could go. Institutional buyers will be key: “While the upward momentum seems clearly challenged here, it is inconclusive how much downside risk there is,” he wrote. “It is entirely possible that Bitcoin will simply consolidate in one area for some time.” Bitcoin fell 3.2% to $ 54,996 on Wednesday. Smaller and alternative coins that had been depleted in the past few days also saw a decline, with Dogecoin – the flagship for taking crypto risks – falling by around 15% to around 31 cents. According to CoinMarketCap.com, that’s a drop of 42 cents the day before. More articles like this can be found at bloomberg.com. Register now at bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

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