Bitcoin’s key momentum indicator has just flashed bearish, and the price of BTC is below $50,000


Bitcoin’s rise (Bitcoin) Due to the mismatch between the price of the cryptocurrency and the momentum trend, the price close to $50,000 last week may be exhausted.

So it looks like the price of Bitcoin and Relative Strength Index (RSI) has been moving in the opposite direction since late July. In doing so, even if the BTC/USD bid is pushed up strongly, it coincides with a lower kinetic energy peak, which indicates that the upward movement of the currency pair is weakening.

Bearish divergence

Normal RSI momentum tends to drag down price movements. That is, it rises when the price rises and falls when the price falls.But in some cases, RSI deviates from the pursuit of price trends, leading to the so-called RSI divergence.

Technical analysts believe that RSI divergence is a strong signal of spot price reversals. For example, a bullish divergence from falling prices and rising RSI prompts traders to buy assets when they expect a rebound. Similarly, the bearish divergence, characterized by rising prices and falling RSI, prompts traders to take profits at the top while anticipating a pullback.

The daily Bitcoin chart below shows cryptocurrencies with bearish divergence.

The one-dimensional BTC/USD chart shows a bearish divergence. Source: TradingView.com

As Bitcoin struggles to break above the $50,000 bullish level, a downside signal appears. As of Sunday, the trading price of the benchmark cryptocurrency was $48,387, which was 4.19% lower. Three-month high of $50,505, Which was realized on August 3 after a similar upsurge of 72.36%.

On the other hand, Bitcoin’s daily RSI initially rose in sync with the price, but reached its peak on July 30, far ahead of the price, reaching $50,505.Since July 30, the price of Bitcoin Formed a series of higher highs The RSI hit a lower high, indicating that the upward movement can be weakened.

As shown in the chart below, a similar bearish divergence between January 2021 and April 2021 helped to predict a decline in the price of Bitcoin.

Bitcoin price-RSI divergence from January to April 2021. Source: TradingView.com

Bullish indicator

When the bearish divergence signal appeared, Bitcoin remained above $30,000, and it is expected that it will become the preferred hedging tool for qualified investors to combat inflationary pressures.

This perception has led many analysts, including investment researcher Lyn Alden and Fundstrat CEO Tom Lee, to predict that the cryptocurrency will be valued at $100,000 in 2021.

On Friday, the price of Bitcoin skyrocketed Up by $1,500 One hour after Fed Chairman Jerome Powell put forward his pro-inflation and dovish policy outlook at this year’s Jackson Hole seminar.

Therefore, Bitcoin’s biggest bullish indicator is still the Fed’s $120 billion monthly asset purchase plan and a near-zero interest rate policy.

related: Bitcoin price rebounded because 3 indicators reflect the strength of BTC

The strong fundamentals prompted technical analysts to envision a long-term upward trend in the Bitcoin market. That is, independent market analyst Teddy Cleps Put forward a bullish outlook For cryptocurrency, it is based on the key wave support as a trader’s accumulation area.

Bitcoin 4H chart with wave support. Source: Teddy Cleps, TradingView.com

Similarly, another market analyst, Ryan Clark, pointed out that Bitcoin is only consolidating below $50,000, just as it was trading below $24,000 before the bullish breakout in December 2020.

On the other hand, TraderXO famous Bitcoin may still fall to the 39,000-40,000 USD area, but it is still believed that cryptocurrencies will record an attractive rebound from a lower range.

The analyst marked Bitcoin’s all-time high of close to $65,000 as its long-term upside target.

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