Bitcoin has been caught within another firm bout of sideways trading in the time following its surge from its recent lows of $6,400 that were set last week. The momentum that was sparked after BTC tapped this price has shown signs of faltering, however, and some analysts are warning against getting too bullish.
In spite of this, one technical indicator is currently showing that Bitcoin is firmly in oversold territory, which may mean that it will soon kick off the start of its next parabolic uptrend.
Bitcoin Clearly Oversold, But Further Losses May Precede Next Parabolic Rally
At the time of writing, Bitcoin is trading down marginally at its current price of $7,185, which is right around where it has been trading at for the past 48 hours.
The firm bout of sideways trading that BTC has experienced over the past couple of days comes close on the heels of its recent rally that sent it from lows of $6,400 to highs of $7,600, before retracing back down to its current price levels.
The lack of follow through on this surge points to some underlying weakness for the embattled cryptocurrency, although bulls still have plenty of opportunities to propel BTC higher after it exits its current consolidatory period.
Josh Rager, a popular cryptocurrency analyst on Twitter, explained in a recent tweet that Bitcoin is still caught within a firm downtrend despite this recent rally, which signals that it may soon see further losses.
“$BTC Feeling bullish after that $1k move? Zoom out and you’ll see price is still very much in a downtrend. Needs to break/hold above $7950/$8k for any talk of a potential reversal. Break previous low and likely head under $6k where $5,300 area is a promising place for buyers,” he explained.
Rager’s assessment of the strength of the ongoing downtrend certainly corroborates Bitcoin’s bear case, but it is important to note that one technical indicator signals that it is currently oversold and may be close to confirming its recent lows as a long-term bottom.
“The 2Y MA Multiplier suggests we’re in oversold territory. Historically these have been good places to accumulate $BTC for long term investing. I still believe we’re going a lil lower, but the bottom’s probably not that far away anymore,” Byzantine General, another cryptocurrency analyst, explained in a recent tweet.
The 2Y MA Multiplier suggests we're in oversold territory.
Historically these have been good places to accumulate $BTC for long term investing.
As Bitcoin’s bulls and bears remain at an impasse, it is highly likely that how it resolves its ongoing bout of sideways trading will offer great insight into where the entire crypto markets are heading next.