Many ominous signs are showing up on Bitcoin’s chart

In the previous article about Bitcoin, we discussed how there was no significant uptick in the number of Bitcoin addresses with large balances (particularly among wallets exceeding 100 BTC and 1,000 BTC), suggesting big speculators might not be interested in buying the dip this time. Nevertheless, despite a further drop in the price (since the last article), the number of Bitcoin addresses with balances exceeding 100 BTC fell almost to the level that preceded the rally’s start in mid-October 2023, which is odd considering how the Bitcoin Spot ETF’s approval was expected (by many, but not us) to cause massive money flow into the biggest cryptocurrency by market cap. Yet, here we are after the approval, and Bitcoin is trading down about 16% from its highs earlier this month. While this does not necessarily mean Bitcoin can not continue higher, it is definitely a cause for concern.

Consequently, we are paying close attention to the 20-day and 50-day SMAs, which are likely to perform a bearish crossover in the following days. In addition to that, we are observing technical indicators like MACD, Stochastic, and RSI on a daily time frame, where they continue to develop bearish structures; on the weekly time frame, these indicators show signs of exhaustion and are starting to move flat (not particularly bullish). On top of these developments, Bitcoin tests the bounds of the upward-sloping channels shown in the previous ideas. With the breakout below the lower bound of the upper channel, our mechanism for setting the price target became triggered. As a result, we are back in the market, and our price target is $39,000 (we will reassess the situation on the go and set a new price target once the current one is reached or stopped out).

Illustration 1.01

Illustration 1.01 portrays the daily graph of BTCUSD and two simple moving averages. The yellow arrow highlights an impending bearish crossover between these two averages; if successful, a crossover will slightly bolster a bearish case going forward.

Illustration 1.02

In the previous article, we outlined how MACD was approaching the midpoint on the daily graph, raising the odds of a bearish crossover through it. Shortly after our warning, MACD broke into the bearish area.

Technical analysis gauge
Daily time frame = Neutral (turning increasingly bearish)
Weekly time frame = Neutral
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of multiple indicators.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.

Comment:

Once $39,000 is taken out, $37,000 is likely the next stop. Tomorrow, we will watch out for the change in the number of wallets with large holdings, trying to get a clue about big players buying the dip (or not).

Trade closed: target reached:

The price target of $39,000 was reached. Our new price target is $37,000.

Comment:

Finally, the number of Bitcoin addresses with balances exceeding 100 BTC and 1,000 BTC rose yesterday (following the dip to nearly $38,500). As it raises the odds of a reversal to the upside, we think it would be proper to stay targeting $37,000 only for as long as the price stays below $40,000.