Historical Significance of Three Consecutive Red Candles
For the first time since the first week of November, Bitcoin’s daily chart has produced three consecutive red candles. This period coincidentally falls during the lead-up to Donald Trump’s US election victory in 2020. Another similarity between the last time three or more red candles were observed on the daily chart is that Bitcoin retested the 50-day EMA level.
BTC Price Drops by More Than 15% Since All-Time High
With the price of BTC dropping by more than 15% since its all-time high, one analyst suggests that most of the drawdown is potentially over for the largest cryptocurrency. The current decline is attributed to a massive bearish divergence between Bitcoin’s price and relative strength index (RSI) over the past month.
Bitcoin Correction ‘Almost Done’, Says Analyst
Captain Faibik, an independent crypto trader, stated that BTC’s correction was approaching a conclusion. In an X post, the trader highlighted that BTC’s current decline is due to a massive bearish divergence between its price and relative strength index (RSI) over the past month.
What’s Next for Bitcoin?
Such divergences are usually followed by an 8% to 10% fall, which is considered a "healthy reset." The trader expected the price to bounce from the $94,000 range, as illustrated in the chart. On the contrary, Cold Blooded Shiller, an anonymous crypto trader, expected a deeper pullback for Bitcoin based on the same divergence pattern.
Comparing BTC’s Current Price Action to January 2024
The traders said that if a similar outcome unfolds, BTC’s sell-off may stretch down to as low as $85,000. This raises concerns about the potential further decline in Bitcoin’s price.
Incessant Selling by Spot Holders and Coinbase Premium Gap
Byzantine General, a futures market analyst, highlighted incessant selling by spot holders. The analyst said that "We actually got a perp premium at the moment because spot is selling off so much it’s disconnecting from the derivatives market."
Coinbase Selling Activity Reaches New Highs
In fact, Maartunn, a CryptoQuant analyst, said that this is the most significant Coinbase selling activity since Bitcoin was priced at $66,000. The selling pressure is "relentless," as the Coinbase premium fell to a quarterly low.
Bitcoin Realized Losses Reach $28.9 Million
With increasing selling pressure by the hour, the volume of realized losses also peaked above its weekly average. Axel Adler Jr, a Bitcoin onchain analyst, highlighted that the BTC realized losses over the past 5 days reached $28.9 million, 320% above its weekly average in 2024.
Analyzing Bitcoin’s Mid-Term Chart
The mid-term chart of Bitcoin revealed a bearish break of structure (BOS). However, there is a clear invalidation for a reversal if Bitcoin continues to close a daily candle above $95,000.
Bitcoin 4-Hour Chart Analysis
As observed in the chart, the 4-hour candle has established an immediate recovery above $95,000 after dropping to $92,777. For Bitcoin to nullify the bearish sentiment, a daily candle above $95,000 would be ideal.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice.
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