Bitcoin Chart Displays Conflicting Indicators After Crypto Black Monday
Bitcoin experienced a significant drop in price, reaching a multi-month low of $49,105 on August 5th as the ongoing crypto sell-off continued. At its lowest point, Bitcoin was down by more than 33% from its highest point this year. Although it did bounce back slightly to test the $55,000 level, it is still firmly in a bear market.
The prediction market is divided on what the future holds for Bitcoin. According to Kalshi, a prediction platform supported by Charles Schwab, Sequoia, and Henry Kravis, 76% of poll participants predict that the Bitcoin price will end the year below $50,000. Fifty-four percent of participants believe that the coin will fall below $40,000, while 20% expect it to drop below $30,000.
On the other hand, Polymarket reports that fewer traders anticipate Bitcoin reaching $100,000 this year. In March, 64% of poll participants had high hopes for the coin, but on Monday, that figure had dropped to 22%.
The cryptocurrency industry as a whole is facing challenges, leading to the decline in Bitcoin and other cryptocurrencies. Recent data shows that spot Bitcoin ETFs lost over $65.4 million in assets. Bitcoin’s futures open interest also decreased from over $8.8 billion to over $6.2 billion since last month. Additionally, Bitcoin experienced $444 million in liquidations on Monday, contributing to the industry’s total of over $1.14 billion.
However, there are some positive indicators. Major investment firms like Blackrock, Fidelity, and MicroStrategy are holding onto their coins and, in the case of MicroStrategy, even raising funds to acquire more. Furthermore, the Federal Reserve may consider cutting interest rates earlier than expected, as seen in March 2020. Inflation rates are falling while the unemployment rate has risen to 4.3%.
Analyzing Bitcoin’s technicals, the daily chart reveals that the coin reached a peak of $73,955 before dropping to $49,104 on August 5th. The lowest point coincided with the highest point on January 11th, and Bitcoin also fell below the 200-day moving average, indicating bearish control.
Significantly, Bitcoin has been forming a pattern of lower highs at $73,900, $72,000, and $70,000, as well as lower lows at $60,730, $56,900, and $50,775. Typically, this price action suggests further downward movement.
On the positive side, Bitcoin has also formed a falling broadening wedge pattern, which is considered a bullish sign. Confirmation of further upside movement would occur if Bitcoin rises above the 200-day moving average and the upper side of the descending trendline.
Conversely, if Bitcoin drops below the low point on Monday, it would invalidate the wedge pattern and indicate more downside potential as sellers target the 50% retracement level at $44,840.
