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Bitcoin’s on-chain indicators are flashing some signs of weakness despite the cryptocurrency’s sharp rebound from its recent lows.
BTC has been subjected to some heavy volatility over the past several days, plunging to lows of $8,900 yesterday before rebounding up to the mid-$9,000 region.
This price action has simply marked an extension of the multi-month bout of consolidation that it has been caught within throughout the past several weeks and months – struggling to garner decisive momentum in either direction.
Although it is showing signs of overt strength due to its recent rally to highs of $10,500, it is important to note that the cryptocurrency is flashing signs of technical weakness due to a few key factors.
It also has shown some signs of weakness from a technical perspective as well.
One trader is noting that he does not believe the momentum seen throughout the past day will be enough to negate its recent weakness, potentially signaling that a movement back down to the lower-$9,000 region is imminent.
Bitcoin Posts Sharp Rebound from Yesterday’s Lows, But Technical Weakness Remains
At the time of writing, Bitcoin is trading up just under 2% at its current price of $9,460. The cryptocurrency has been trading around this level throughout the past several weeks, struggling to break below $9,000 or above $10,000.
These two levels mark the lower and upper boundaries of a long-held trading range that BTC has been trading within over a multi-month period.
The macro-resistance that buyers need to surmount to shift the trend in their favor sits at $10,500. This level has sparked three firm rejections over the past six months, and a failure to shatter it could confirm the triple top formation that is currently in play.
It is important to note that the cryptocurrency still is plagued by some underlying technical weakness.
One trader noted in a recent tweet that he believes there is enough evidence to support the notion that this latest rebound has been a stop-run.
“BTC – I think there’s enough evidence to suggest that that was a run on a previous high that stopped me out. So I’m willing to try this trade again here,” he noted while pointing to the chart seen below, with a target in the lower-$9,000 region.
These Three On-Chain Factors Point to Imminent BTC Downside
There are a few fundamental factors that suggest Bitcoin is poised to see some downwards momentum in the near-term.
Analytics platform IntoTheBlock spoke about these metrics in a recent tweet, explaining that three out of four of BTC’s momentum indicators are bearish.
“3 out of 4 On-chain indicators are showing a Bearish Momentum for Bitcoin… Why? 1)The number of addresses going to zero is higher than the number of new [addresses] created 2)The number of transactions greater than $100k is slowing down 3)The % of addresses in the money is decreasing,” they noted.
Featured image from Shutterstock.
