Ten Different Bearish Divergences Stack Against Bitcoin, But Drop Has Yet To Arrive

Tony "The Bull" Severino

4 years ago

3 mins read

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Bitcoin has been unstoppable from Q2 2020 on, bringing the asset to a new all-time high and restoring interest and bullish momentum in the cryptocurrency market.

But as the most dominant crypto asset in the space continues to climb with very few corrections in between, ten of the most widely used technical indicators are now giving bearish signals, by way of a divergence between the tool and price action. Here’s why this could bring with it the first major crypto crash since Black Thursday.

Remembering 2020: The Year Of The Pandemic And Bitcoin Emerging As A Store Of Value

The year of 2020 kicked off on a bullish note for crypto, taking Bitcoin from $6,000 to just over $10,000 by the end of February. The stock market had set a new all-time high, and things were looking positive going into the new year.

But then the pandemic struck, causing widespread panic over the impact on the economy, and with it a selloff of epic proportions. Stocks tanked, gold plummeted, and Bitcoin lost more than 60% of its value under month later.

The rest of the crypto space was even more devastated, but from the rubble rose the phoenix once again, and the asset is not only trading higher than then, but from a sharp move to under $4,000 the asset did a 5x and revisited its former peak around $20,000.

Along the way, coinciding with unprecedented fiat currency printing, the store of value narrative has taken hold of the cryptocurrency, and made it attractive for the first time to institutional investors and hedge funds.

But revisiting ATH resistance could bring with it the first major correction since Black Thursday. After such a substantial rise, a correction would be healthy and allow indicators to reset. Currently, ten individual technical indicators are all giving bearish divergence signals, potentially warning of the first real crash for the top crypto.

Ten different technical indicators are issuing warnings with bearish signals | Source: BTCUSD on TradingView.com

Ten Bearish Divergences Could Cut Crypto Valuations In Half, Still Too Late To Contain Bulls

According to a pseudonymous crypto analyst, ten unique technical analysis indicators are issuing a bearish divergence sell signal. Bearish divergences occur when price action moves opposite to the technical indicator in question – or in this case all ten.

The indicators included in the analysis are the MACD, On-Balance Volume, Stochastic, Klinger, Relative Strength Index, Stoch RSI, and more. Even more obscure tools in terms of crypto analysis, including the Elder Force Index, Fisher Transform, Money Flow Index, and TTM Squeeze are also giving the bearish signal.

As depicted above, all of the indicators made a lower high, which price action not only set a higher high but a new all-time high for the cryptocurrency.

The only thing that invalidates a bearish divergence, is a rise higher forming a higher high, and removing the divergence from the chart completely. The alternative is Bitcoin beginning to teeter, and eventually topple down to restest support below.

Featured image from Deposit Photos, Charts from TradingView.com

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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