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Bitcoin bears in control as upside momentum fades

Christopher Attard

Dec 3, 2018

If the facts in the cryptocurrency universe change, then one’s perspective must also shift to reflect the new reality.

With that in mind, it’s clear that the facts on the cryptocurrency ground are shifting as we speak. Indeed, despite several positive industry developments, namely the reveal of Nasdaq and VanEck-backed “crypto 2.0” futures plan, recent upside transaction volume has left a lot to be desired. In fact, the flagship currency continued its fear-based trajectory on Monday morning, where the market retested $4,000 psychological support and breached it.

In light of my previous post, where I suggested that bears are exhausted, it appears as though bulls are not too keen on jumping back in either. At the same time, if Bitcoin is setting up for a drawn-out recovery as previously alluded to, then price-action might not reach the $5,200 – $5,400 range this year. This is to say that the anticipated bounce could fall short of its target and only hit the 0.382 Fibonacci level at $4,600 given the new reality. Should this play out, this scenario would be indicative of a “dead-cat-bounce” before another $3,510 retest.

Needless to say, the market needs to see some kind of bullish follow-through for the above scenario to become plausible.

Meanwhile, the prospect of an “altcoin season” is still being touted – though more as a distant echo than anything else. As per Bitcoin’s dominance history, the flagship coin would most likely need to fall below the 50% mark for odds to favour an altcoin rally. To this end, Bitcoin is acting quite strangely, in that it hasn’t gained any considerable dominance in this bear cycle when compared to previous downturns.

Market technical outlook

Looking at the 4-hour chart, the breakdown below this bearish pennant – with its characteristic decline in volume – gives more credence to expectations of further downside momentum before another bounce.

btc-usd 03-12-2018 4 hour Malta Blockchain Summit

On a daily timeframe, Bitcoin is in a tightening range, posting two consecutive higher lows at $3,741 and $3,972, and two lower highs at $4,292 and $4,265.

Meanwhile, technical indicators are conflicting. The daily RSI (relative strength index) has marginally recovered from oversold territory but the stochastic RSI is lingering in the overbought region, which suggests an imminent RSI downtick. On the flip side, the MACD (moving-average-convergence-divergence) has just posted a bullish crossover, suggesting more gains to come.

btc-usd 03-12-2018 daily Malta Blockchain Summit

Zooming out to a weekly picture, a bearish overshoot towards the next big support zone at $2,900 is looking more likely. This would represent a yearly decline of 85% – in tandem with previous major corrections.

The new question on everyone’s mind is; will markets see any bounce this year?

This is not investment advice.

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