Bitcoin has currently entered a phase where the bulls and bears are battling for absolute control over the price, meaning it could go either way. While sentiment is still largely bullish as of now, there is still the possibility that the bears could win and this side of the coin has prompted crypto analyst FieryTrading to chart what could happen if this were to be the case are.
Identifying Bitcoin’s Bearish Side
In the analysisFieryTrading identified an indicator that could point to a bearish reversal for Bitcoin and this was the Wyckoff distribution pattern. The analyst notes that the Bitcoin price could actually be the current trade within this Wyckoff distribution pattern, which would not be positive for the price.
“As you can see from the map, the BC/UT/UTAD are almost identical to those on the diagram. Three higher highs, with the first two selling off quickly, and the last one (UTAD) taking a while before turning bearish,” Fiery Trading explains.
Furthermore, the analyst explains that the AR and SOW phases identified in the chart above are virtually identical. However, there is a significant difference, namely that the Bitcoin price has already retested the AR low between the UT and UTAD twice.
Source: TradingView.com
In a scenario where this bearish setup plays out, the crypto analyst explains that there will be another retest around the SOW region in the future. If this happens and support does not hold, allowing the price to fall through this SOW area, then I would be very bearish on the price.
The target in such a scenario would be $30,000, which effectively marks the $38,400 level as the local top. “This would also mean that 38.4k is the 2023 high, with a move to $30,000 quite likely,” FieryTrading said.
The analyst reiterates his own optimism about Bitcoin’s price. However, they also indicate that it is important to spot bearish signs when they appear. “The fact that we had three higher highs that all sold is alarming to say the least.”
BTC is starting to slow down
Bitcoin price has already seen a slowdown after an impressive rise above $38,000, which explains why some indicators are starting to turn bearish. An example of this is the drop in trading volume, which indicates that investors are now not as active in the currency as they used to be.
The decline in trading volume coincided with a decline in market sentiment. However, the negative sentiment is still largely drowned out by the positive, as the Crypto Fear & Greed Index still points to greed. This indicates that despite the decline in price and trading volume, investors are not selling much of their holdings.
Bulls hold $38,000 | Source: BTCUSD on Tradingview.com
Featured image from GOBankingRates, chart from Tradingview.com