Bitcoin’s key momentum metric just flashed bearish with BTC price pinned under $50K

The run-up within the Bitcoin (BTC) price towards $50,000 final week dangers exhaustion as a result of a mismatch between the cryptocurrency’s price and momentum traits.

So it seems the Bitcoin’s price and relative power index (RSI) have been shifting in the wrong way since late July. In doing so, even a robust push larger within the BTC/USD bids has coincided with decrease peaks in momentum, suggesting that the pair’s upside momentum is weakening out.

Bearish divergence

A traditional RSI momentum tends to tail the price motion. That stated, it rises when the price rises and falls when the price drops. But in some circumstances, the RSI deviates from pursuing the price traits, resulting in a so-called RSI divergence.

Technical analysts contemplate RSI divergence as a strong sign to identify price reversals. For occasion, a bullish divergence, whereby the price falls and RSI rises, prompts merchants to purchase the asset in anticipation of a rebound. Similarly, a bearish divergence—that includes rising costs and falling RSI—prompts merchants to take income on the prime whereas anticipating a pullback.

The Bitcoin day by day chart under reveals the cryptocurrency in bearish divergence.

BTC/USD 1D chart that includes bearish divergence. Source:

The draw back sign seems as Bitcoin struggles to interrupt bullish above $50,000. As of Sunday, the benchmark cryptocurrency was buying and selling at $48,387, or 4.19% decrease from its three-month excessive of $50,505, achieved on Aug. 3, following an analogous 72.36% upside increase.

On the opposite hand, Bitcoin’s day by day RSI initially rallied in sync with costs however topped out on July 30, which was approach forward of price, hitting $50,505. Since July 30, the Bitcoin price shaped a sequence of upper highs whereas RSI printed decrease highs, suggesting a weakening upside momentum.

An analogous bearish divergence between January and April 2021 was instrumental in predicting a Bitcoin price drop, as proven within the chart under.

Bitcoin price-RSI divergence from January-April 2021 interval. Source:

Bullish indicators

The bearish divergence sign comes as Bitcoin holds strongly above $30,000, amidst anticipation that it might develop into a hedge of selection amongst accredited traders towards inflationary pressures.

The notion has led many analysts, together with funding researcher Lyn Alden and Fundstrat CEO Tom Lee, to foretell a $100,000 valuation for the cryptocurrency in 2021.

On Friday, Bitcoin price shot upward by $1,500 in an hour after Federal Reserve Chairman Jerome Powell offered a pro-inflation, dovish coverage outlook at this yr’s Jackson Hole symposium.

As a outcome, the most important bullish indicator for Bitcoin stays the Fed’s aggressive $120 billion a month asset buy program, coupled with its near-zero rate of interest coverage.

Related: Bitcoin price phases a comeback as 3 indicators replicate BTC’s power

The robust basic has prompted technical analysts to examine a long-term uptrend within the Bitcoin market. Namely, impartial market analyst Teddy Cleps presented a bullish outlook for the cryptocurrency, based mostly on key wave assist that acts as an accumulation space for merchants.

Bitcoin 4H chart that includes wave assist. Source: Teddy Cleps,

Similarly, Ryan Clark, one other market analyst, famous that Bitcoin has been merely consolidating under $50,000 just like when it was buying and selling under $24,000 earlier than the December 2020’s bullish breakout.

On the opposite hand, TraderXO noted that Bitcoin may nonetheless fall in direction of the $39,000-40,000 space however remained satisfied that the cryptocurrency would log a sexy rebound from the decrease vary.

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

The views and opinions expressed listed below are solely these of the creator and don’t essentially replicate the views of Every funding and buying and selling transfer entails threat, you need to conduct your personal analysis when making a call.