After a more than 150% rally from March’s lows, Bitcoin’s upward momentum has petered out over recent weeks. For nearly two months, the cryptocurrency has been caught in a tight range between $8,500-10,000.
This has resulted in a key trend indicator halting its uptrend. According to a trader, if the indicator slides further, there’s a high chance a strong drop will ensue.
Bitcoin Could Drop as Trend Indicator Poises to Roll Over
According to a trader, Bitcoin’s one-week Stochastic RSI reading is about to print a bearish sign: a bearish crossover while the Stochastic is above 70.
Each time this sign has appeared in BTC’s history, a “pretty heavy correction” followed suit. For instance, near the $10,500 highs earlier this year, the indicator saw a bearish crossover prior to the 60% correction.
Long-term Bitcoin Stoch RSI analysis by trader "Coiner-Yadox" (@Yodaskk on Twitter). Chart from TradingView.com
As a pertinent aside, while the Stoch RSI is poised to turn over on the weekly, it’s a different story for other time frames.
As reported by NewsBTC, an analyst observed last week that the Stoch RSI on the 12-hour, one-day, two-day, and three-day is trending bullish:
“12h, 1D, 2D and 3D are over-sold and look like they want to reverse while monthly also is turning bullish!”
Stoch RSI analysis across many of Bitcoin's time frames by analyst "JB" (@blackswan0815 on Twitter). Charts from TradingView.com
The confluence of bullish short-term Stoch RSI readings and a bearish long-term reading may suggest a short-term rally before a medium-term decline.
Buyers Are Still Stepping In
Despite the mixed technical picture, buyers are still stepping in.
As reported by NewsBTC previously, a day trader noted that Bitfinex’s order book showed on Saturday that a big buyer (or buyers) stepped in. The order book data suggested that an entity stacked buy orders between $8,600 and $8,800.
There were so many orders that the trader that shared this information branded the entity a “whale.”
Even institutional players are seemingly accumulating. Technology analyst and content creator Kevin Rooke shared the chart below on June 25th, showing large inflows of Bitcoin into Grayscale’s Bitcoin Trust:
“Unbelievable. Grayscale added 19,879 BTC to their Bitcoin Trust since last week (53,588 BTC since the halving). Bitcoin miners only produced 7,081 BTC since last week (39,544 BTC since halving).”
Documents suggest that the American firm now has nearly 400,000 BTC under management.
Grayscale added 19,879 BTC to their Bitcoin Trust since last week (53,588 BTC since the halving).
Bitcoin miners only produced 7,081 BTC since last week (39,544 BTC since halving).
— Kevin Rooke (@kerooke) June 25, 2020
In a similar vein of news, blockchain analytics firm Glassnode reported that 61% of all BTC in circulation has not moved in a year. This indicates there remain many committed to the long-term vision of Bitcoin.
This statistic is also important as this same metric was extremely high prior to the rally from the hundreds to $20,000.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Last Time This Technical Sign Appeared, BTC Dumped 60%. It's Nearly Back