Bitcoin Price
3 Reasons Why Bitcoin Is Likely Near a Bottom After 25% Retracement
Nick Chong | Sep 08, 2020 | 10:00
- Bitcoin has undergone a strong retracement since the local highs set last week and the year-to-date highs set weeks earlier.
- At the lows earlier today, BTC was around 25% below the year-to-date highs.
- Analysts are worried that Bitcoin has room to fall despite dropping 25% within the span of a few weeks.
- There are a number of reasons, though, why the cryptocurrency might be soon reaching a bottom.
#1: Bitcoin’s Selling Pressure Has Subsided
Bitcoin may be nearing a local bottom because a number of indicators suggest that the selling volume that brought the coin lower has started to subside.
One crypto trader shared the chart below of BTC’s on-balance volume indicator, which attempts to relate price action to volume. The indicator suggests that the “selling pressure [has been] exhausted,” meaning consolidation is likely to follow.
Chart of BTC's on-balance volume over the past few months by crypto analyst IncomeSharks (@Incomesharks on Twitter). Chart from TradingView.com
This is corroborated by data from CryptoQuant, shared by cryptocurrency analyst and commentator “Light.”
The data indicates that Bitcoin miners, who many say triggered the ongoing downtrend, have dramatically slowed their selling of BTC since the recent highs.
#2: Stock Futures Are Trading in the Green
Although the stock-BTC correlation has dropped off over recent weeks, analysts say that Bitcoin undergoing a bear market while stocks push highs is improbable.
As of this article’s writing, the futures for the S&P 500 are in the green, pushing up over 0.5% in the trading session.
Further strength in the price of stocks is likely to bring Bitcoin higher, analysts say.
#3: Bitcoin Fundamentals Remain Strong
The fundamentals of BTC remain strong despite the weakness in its price.
In the August edition of Bloomberg’s Crypto Outlook, analyst Mike McGlone asserted that macroeconomic fundamentals suggest Bitcoin is primed to appreciate over the longer run :
“Primary Bitcoin price companions — addresses used and gold — tell us the benchmark crypto should continue advancing. A top gauge of the macroeconomic forces buoying Bitcoin, the benchmark precious metal sustaining new highs above $1,900 an ounce portends similar for the crypto asset.”
#4: Bitcoin’s On-Chain Trends Are Flipping Bullish
Last but not least, Bitcoin’s on-chain trends are purportedly flipping bullish after a period of bearish trends.
On-chain analyst Willy Woo recently remarked:
“Local on-chain switching bullish (looking at the next few weeks out), not calling this has bottomed, even though it may have. Playing the big swings it’s not a bad time to buy back in.”
This comment comes after he predicted the ongoing correction. In late August, namely, he released a Twitter thread suggest that Bitcoin could fall to the high-$9,000s due to technicals and on-chain trends.
Photo by Steven Roussel on Unsplash Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com 3 Reasons Why Bitcoin Is Likely Near a Bottom After 25% Retracement
