Bearish Divergence? Bitcoin Price Rises, But Network Growth Sends Warning Signals

Ronaldo Marquez

1 year ago

3 mins read

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The recent Bitcoin (BTC) price surge has ignited renewed interest and confidence among investors, leading many to believe that the BTC bull run is accelerating.

According to trader and crypto analyst Adrian Zduńczyk, Bitcoin has reached a new 52-week closing high and has maintained a close above the previous high of $32,000 for three consecutive weeks.

This sustained upward momentum indicates a strong bullish trend sentiment and signals the beginning of the third wave of the Bitcoin bull run.

Analyst Highlights Key Trends

Zduńczyk points out several dominant trends that contribute to the positive outlook for Bitcoin. The rising 200-week and 50-week moving averages (MAs) highlight the long-term uptrend strength, with key support levels at $28,800 and $26,600.

Additionally, there is a growing correlation with the S&P 500, as evidenced by the 7-week correlation coefficient of 0.34. This alignment with traditional markets suggests that Bitcoin increasingly trades similarly to the Nasdaq.

Fundamental drivers also play a significant role in Bitcoin’s upward trajectory. Traders eagerly anticipate the approval of spot Bitcoin exchange-traded funds (ETFs) and the upcoming fourth halving event.

Furthermore, according to Zduńczyk, the historical pattern of previous halvings indicates that Bitcoin has rallied significantly after each halving and has never retraced to pre-halving prices.

Examining the daily trend, Zduńczyk highlights the technical strength demonstrated by Bitcoin’s reliable breakout above $32,000. Breakouts often lead to new trend formations that persist over time.

Despite occasional volatility, the 50-day average true range (ATR) trend and the 50-day relative strength index (RSI) momentum trend are rising, indicating ongoing positive momentum.

Bitcoin’s future appears promising, supported by positive market trends, fundamental drivers, and technical indicators. However, warning signs cast doubt on Bitcoin’s favorable outlook, as renowned crypto analyst Ali Martinez pointed out.

Bitcoin Bullish Momentum At Risk?

Martinez draws attention to the bearish divergence between Bitcoin’s price and network growth, indicating a potential lack of sustained momentum in the ongoing uptrend.

The chart above shows a notable disparity between the exponential rise in Bitcoin’s price and the dramatic decline in new addresses over recent days.

This bearish divergence raises concerns about the overall strength of the current uptrend. While Bitcoin’s value has experienced significant gains, the number of new addresses created has decreased significantly.

According to Martinez, this bearish divergence between Bitcoin’s price and network growth serves as an on-chain sell signal that traders should be aware of. The slowdown in network growth despite the price surge suggests that the current upward momentum may not have enough strength to sustain.

At the time of writing, BTC is trading at $36,200, down 1.6% over the past 24 hours. However, it is still up a substantial 4.6% over the past 7 days.

It remains to be seen if a surge in new addresses will be able to support BTC’s bullish momentum and break the current consolidation phase. Alternatively, the cryptocurrency could retest support levels in the coming days.

Featured image from Shutterstock, chart from TradingView.com

Ronaldo Marquez

Ronaldo is an experienced crypto enthusiast dedicated to the nascent and ever-evolving industry. With over five years of extensive research and unwavering dedication, he has cultivated a profound interest in the world of cryptocurrencies.

Ronaldo's journey began with a spark of curiosity, which soon transformed into a deep passion for understanding the intricacies of this groundbreaking technology.

Driven by an insatiable thirst for knowledge, Ronaldo has delved into the depths of the crypto space, exploring its various facets, from blockchain fundamentals to market trends and investment strategies. His tireless exploration and commitment to staying up-to-date with the latest developments have granted him a unique perspective on the industry.

One of Ronaldo's defining areas of expertise lies in technical analysis. He firmly believes that studying charts and deciphering price movements provides valuable insights into the market. Ronaldo recognizes that patterns exist within the chaos of crypto charts, and by utilizing technical analysis tools and indicators, he can unlock hidden opportunities and make informed investment decisions. His dedication to mastering this analytical approach has allowed him to navigate the volatile crypto market with confidence and precision.

Ronaldo's commitment to his craft goes beyond personal gain. He is passionate about sharing his knowledge and insights with others, empowering them to make well-informed decisions in the crypto space. Ronaldo's writing is a testament to his dedication, providing readers with meaningful analysis and up-to-date news. He strives to offer a comprehensive understanding of the crypto industry, helping readers navigate its complexities and seize opportunities.

Outside of the crypto realm, Ronaldo enjoys indulging in other passions. As an avid sports fan, he finds joy in watching exhilarating sporting events, witnessing the triumphs and challenges of athletes pushing their limits. Furthermore, His passion for languages extends beyond mere communication; he aspires to master German, French, Italian, and Portuguese, in addition to his native Spanish. Recognizing the value of linguistic proficiency, Ronaldo aims to enhance his work prospects, personal relationships, and overall growth.

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With a genuine desire to become the best version of himself, Ronaldo is committed to continuous improvement. He sets personal goals, embraces challenges, and seeks opportunities for growth and self-reflection. Ultimately, combining his passion for cryptocurrencies, dedication to learning, and commitment to personal development, Ronaldo aims to go hand-in-hand with the exciting new era that the emerging crypto technology is bringing to the world and societies.

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