This is a daily analysis by Coindesk analyst and chartered market engineer Omkar Godbole.
An important technical indicator is to warn of the early end of Bitcoin BTC$110,082.22 Bull market despite traders continuing to position themselves for ongoing rallies at the end of the year.
The indicator under consideration is the relative strength index (RSI). This is a momentum oscillator in the range 0 to 100. This helps you measure the speed and magnitude of recent price movements, typically calculated over a 14-day, 14-week, or 14-month period.
BTC’s 14-month RSI is currently flashing bearish divergence. This is a pattern that occurs when the indicator starts to drop while the price continues to rise. This outbreak of divergence on the monthly chart indicates that the BTC bull market is weakening and could shift towards a bearish trend.
BTC monthly chart. (tradingView/coindesk)
The monthly chart shows that while BTC reaches new highs from July to August and exceeds its December peak, RSI moves in the opposite direction, forming a lower height.
The divergence of bearishness has increased its importance as it coincides with encounters with BTC on key trendlines drawn from previous bull market peaks in December 2017 and November 2021.
To cut off the pursuit, the Bulls must be wary of the potential for reversal of their bearish trends. That said, the latest market trends suggest that traders are anticipating a continuous price increase.
“The block suggests that traders are preparing for further profits with a notable activity in the December BTC call spread ($125K/$160K). Ethereum’s focus is on a $4,800 strike active in September with pressure lifting on the front end, Jake Ostrovskis, OTC Trader said on Thursday.
A block flow is a large transaction that is personally negotiated on the counter and outside the books of the public order. These transactions usually include institutions and the wealthy.
The December call spread mentioned by Ostrovskis is essentially betting on a price that would rise to more than $160,000 by the end of the year. The consensus is the ongoing rally from the end of the year, with prices reaching $190,000. At the time of writing, BTC changed hands to nearly $110,500, representing a 4.6% loss for the month, according to Coindesk data.
Read more: Bitcoin “Short Strang” is preferred as a milder one near market signal: 10x research