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Bitcoin (BTC) has retraced to the $28,400 level following a failed breakout above $30,000, resulting in a high rate of liquidations for both long and short positions.
Additionally, the recent fake news surrounding the approval of Blackrock’s spot Bitcoin Exchange-Traded Fund (ETF) by the US Securities and Exchange Commission has disrupted the upward trend and introduced new bearish indicators in the Bitcoin market.
RSI Screams Sell
Renowned trader and crypto analyst Ali Martinez suggests selling BTC based on its 4-hour chart Relative Strength Index (RSI) indicator. His simple trading strategy advises selling BTC when the RSI exceeds 74.21 and buying when the RSI dips below 30.35.
As seen in the chart above, BTC’s RSI stands at the 74 level, which is notably high considering that on October 16, after the spread of the fake news on various platforms, including X (Formerly Twitter), the RSI reached as high as 82.83.
While this indicator may seem straightforward, it has proven effective on BTC’s 4-hour chart. For instance, on October 1st, Bitcoin peaked at $28,500, but after the RSI climbed above 80, the leading cryptocurrency swiftly dropped to $27,150 within hours.
Although the effectiveness of these indicators is not always guaranteed, the combination of the recent false pump, the ongoing retrace evident in all BTC charts, the lack of bullish momentum, and the prevailing market sentiment of fear, doubt, and uncertainty could create the perfect storm for BTC to retest lower support levels before potentially embarking on another upward movement.
Bitcoin Pre-Halving Retracements Sound Alarm Bells
To further support Ali Martinez’s bearish thesis, renowned crypto analyst Rekt Capital recently shed light on Bitcoin’s historical retracements approximately 180 days before halving events.
According to Rekt, in 2015/2016, approximately 180 days before the halving, Bitcoin experienced a retracement of -25%. Similarly, in 2019, around the same timeframe before the halving, Bitcoin retraced by -38%.
While Rekt Capital identifies as a macro bull, he acknowledges that historical data favors bearish trends before halving events.
This observation raises the question of whether history will repeat itself in 2023. Will Bitcoin witness a significant retracement similar to previous cycles, or will the market dynamics 2023 deviate from historical patterns?
What is certain is that as the crypto community eagerly anticipates the 2023 halving, uncertainty looms regarding Bitcoin’s price behavior leading up to the event.
As of the current market conditions, BTC is trading at $28,400, indicating a profitable position across all time frames. In the past 24 hours, Bitcoin has experienced a modest increase of 1%.
Over the seven, fourteen, and thirty-day periods, BTC has recorded profits of 3.7%, 4%, and 7%, respectively, despite the earlier bearish factors. The sustainability of Bitcoin’s current price level remains uncertain, as it remains to be seen whether it will withstand potential retracements soon.
Featured image from Shutterstock, chart from TradingView.com
