The Bitcoin (BTC) market is showing signs of seller dominance, according to Alex Kuptsikevich, senior market analyst at FxPro.
Bitcoin’s Price Reaches New Heights, but Recovery May be Short-Lived
Just last Monday, Bitcoin’s price plummeted to sub-$50,000 levels, sparking concerns among investors. However, the cryptocurrency has since made a swift recovery, pushing its price above $58,500 and restoring bullish sentiment in the crypto market.
As a result, many analysts are calling for a rally to $90,000 and higher. However, not all experts share this optimism. In an email, Kuptsikevich shared his bearish take on Bitcoin’s short-term prospects.
A Bearish Take on Bitcoin’s Short-Term Prospects
According to Kuptsikevich, "Bitcoin is likely to fall by $5K rather than rise by the same amount." This assessment is based on several key factors:
- Failure to Break Above $60,000: Despite pushing its price above $58,500, Bitcoin has failed to maintain gains above $60,000. This failure to break through this resistance level suggests that seller dominance may be more prevalent than initially thought.
- Death Cross: The death cross is a bearish crossover of the 50- and 200-day simple moving averages (SMA). The fact that Bitcoin has failed to break above $60,000 in the wake of this event only adds weight to Kuptsikevich’s bearish take.
- 14-Day Relative Strength Index (RSI): The 14-day RSI is a momentum oscillator that measures the speed and change of price movements. When this index falls below 30, it indicates oversold conditions, which often presage a pause in the downtrend and price recovery. However, the recent stall in Bitcoin’s recovery suggests that the RSI has lost momentum for further strength.
The Probability of Short-Term BTC Price Weakness
Several factors may contribute to an increase in the probability of short-term BTC price weakness:
- U.S. July Consumer Price Index Data: The release of this data on Wednesday may show sticker inflation, which could dash hopes for Fed rate cuts in the coming months. This could lead to increased selling pressure on Bitcoin.
- Stagnant Recovery: Despite Bitcoin’s recent price gains, its recovery has stalled. This stagnation may indicate that investor sentiment is not yet strongly bullish, increasing the likelihood of short-term losses.
Additional Factors Contributing to Seller Dominance
Several other factors contribute to the prevailing seller dominance in the market:
- Prediction Markets: In prediction markets tied to the outcome of the U.S. elections due Nov. 4, pro-crypto Republican Candidate Donald Trump has conceded ground to rival Kamala Harris. This shift may lead to increased selling pressure on Bitcoin.
- Lack of Momentum for Further Strength: The recent stall in Bitcoin’s recovery and the failure to break above $60,000 have lost momentum for further strength. This lack of momentum may indicate that investor sentiment is not yet strongly bullish.
Conclusion
While some analysts are calling for a rally to $90,000 and higher, others share a more bearish take on Bitcoin’s short-term prospects. The factors contributing to seller dominance in the market, including the failure to break above $60,000, stagnant recovery, and lack of momentum for further strength, suggest that an increase in short-term price weakness is likely.
Investors should closely monitor the release of the U.S. July consumer price index data on Wednesday to gauge its impact on Bitcoin’s price. Additionally, the shift in prediction markets tied to the outcome of the U.S. elections may lead to increased selling pressure on the cryptocurrency.
As always, investors should exercise caution when making investment decisions based on market analysis. It is essential to stay informed and adapt to changing market conditions to make informed decisions.
