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Bitcoin could be coiling up to make a massive bear-favoring movement in the days and weeks ahead.
This weakness could mark a resolution to the multi-week trading range that it has been caught within, potentially causing investors to see intense losses in the weeks ahead as some analysts set downside targets within the $7,000 region.
There are three primary factors that one previously bullish trader is pointing to as reasons for why he believes BTC’s technical strength is currently in a precarious position.
Among other things, he points to the emergence of a “rounded top formation” that has formed, with this pattern suggesting massive downside could be imminent.
A similar pattern emerged in February just weeks before the crypto plummeted from highs of $10,500 to lows of $3,800.
This decline could be triggered by potential selloff in the equities market this week, which is why one economist is also bearish on the benchmark crypto in the near-term.
Bitcoin Sees Quiet Trading Session as Traders Closely Watch Stock Futures
Bitcoin has seen some lackluster price action in recent times, extending its long-held range as it continues trading within the lower-$9,000 region.
This trading range has been holding strong for many months, and the crypto has been unable to garner any sustainable momentum in the time following the multiple rejections it has posted within the lower-$10,000 region.
There is currently a triple top formation that is in play, as BTC has posted three rejections at $10,500 over the past few months.
Analysts do believe that this pattern – should it be confirmed by a drop lower – could spark a far-reaching downtrend.
Alex Krüger – a crypto-focused economist – also explained that how the stock market trends this week should have some heavy influence over Bitcoin.
He believes that a decline in equities will spark a short-term BTC downtrend that potentially leads it down to the lower-$8,000 region. He notes that a break below here could lead it into the $7,000 region.
“Having a look at BTC technicals, I’d favor a move down to 8400-8100, back to the averages, prior to continuation higher. I’d buy that. Could see it early next week as equities push lower. The following area of interest is 7700-7800,” he explained.
Image Courtesy of Alex Krüger. Chart via TradingView
These Three Factors Could Lead BTC Significantly Lower
One respected pseudonymous trader noted that there are three primary factors that suggest further downside is imminent.
This trader – who was previously bullish on Bitcoin – explained that it is forming a rounded top formation, is seeing greater sell volume than buy volume, and is below its local point of control (POC).
“If I’m honest with myself then I have to admit that this looks bearish. Rounded top formation just like in February. Sell volume > buy volume. Below local POC,” he noted.
Image Courtesy of Byzantine General. Chart via TradingView Featured image from Shutterstock. Charts via TradingView.
