Bitcoin (BTC) hasn’t been doing all too hot over the past 24 hours. Volumes have dropped across the board as the price of the leading cryptocurrency has tumbled by 1.5%, approaching the key support level of $8,500, which if lost could spell disaster for bulls in the short term.
Even still, a bull case purportedly remains on the table. Analyst Dyme recently laid out this bull case, issuing the tweet below, providing limited hopium to bulls as bearish sentiment has begun to mount for the umpteenth time in a matter of months.
The bull case is as follows: 1) Bitcoin’s four-hour chart has printed a bullish divergence, with a derivative of the Relative Strength Indicator (RSI) trending higher as prices have collapsed lower; 2) BTC has bounced off a 0.618 Fibonacci Retracement level, dubbed a “golden pocket” of support; and 3) the cryptocurrency is trading in a bullish wedge pattern that could violently break to the upside should the conditions allow it to.
Longing Bitcoin *does* make sense here but I have low confidence in this setup.
While Dyme is seeing some slightly bullish signs for Bitcoin, a notable bearish signal just flashed. And it’s extremely notable, with historical precedence hinting at an impending collapse.
Strong Bitcoin Sell Signal Appears
As pointed out by cryptocurrency commentator Cole Garner, the Hash Ribbons — an indicator tracking the trend of Bitcoin’s hash rate (or how much computing power is being allocated to the maintenance of the network) — has just exhibited a bearish crossover. While this may not mean much in and of itself, the bearish crossover of the Ribbons was last seen “just before Bitcoin broke down from $6,000… TL;DR this is a bearish signal.”
To better illustrate the importance of miners capitulating, here’s a chart from industry podcaster and Bitcoin bull Preston Pysh. As Pysh’s chart below clearly depicts, the mining capitulation was seemingly what catalyzed the now-infamous crash from $6,000 to $3,000 in late-2018.
Other on-chains metrics are harrowing too. Crypto analytics firm ByteTree revealed in a recent newsletter that the network activity levels of Bitcoin aren’t looking too good; Bitcoin Network struggling to retain short term volumes, dropping back to 12 Wks average of $2Bn per day,” they penned.
They went on to state that their proprietary Market Health Signal remains in “bear made”:
“Long term transaction volumes are steadily declining, velocity remains below the critical 600% level and short term NVT continues to signal caution.”