The price of Bitcoin (BTC) exhibits many sell indications on a daily basis. On-chain measurements are also displaying widespread profit-taking, which exacerbates its problems. Although the surge in value of Bitcoin caused by the possible approval of an ETF has helped the cryptocurrency so far, its rejection might potentially cause it to decline.
Bitcoin ETF news cause for the ongoing rally
The approval of a Bitcoin spot ETF has been uncertain for the past few years. However, the advancements in ETFs have accelerated recently. Following the loss of several cryptocurrency lawsuits, the US Securities and Exchange Commission (SEC), which licenses or disapproves the ETF products, has found itself in a precarious position.
The SEC’s loss in Grayscale’s lawsuit about the conversion of the GBTC product into a spot ETF offering and other developments pertaining to ETFs were the primary causes of the initial spike in the price of Bitcoin, which began in mid-October. However, Bitcoin has been trending sideways as there have been no updates.
Notwithstanding, the next significant deadline for the ETF decision is January 2024, which will see a fresh peak in the speculative Bitcoin trading frenzy. The outcome of this event will be pivotal for the crypto industry. Investors should be ready for a regression up until that point, though, given that the price of Bitcoin has been emitting several sell signals.
The bitcoin price could slide soon.
The price of bitcoin (BTC) rose by 30% between October 16 and October 24, hitting a new high at $35,280 locally. This was a stunning rise with a lot of bullish momentum. But ever since its swing high formed, Bitcoin has been moving sideways. Since October 25, the daily candlestick closes have produced an upward slope that, to the untrained eye, would appear bullish. The Relative Strength Index (RSI) shows a decreasing slope when examined more closely. This non-conformity, known as bearish divergence, often heralds a retreat or correction.
The first significant sell signal that investors should be aware of is this one.
The Momentum Reversal Indicator (MRI) has flashed two sell signals in addition to the bearish divergence. On October 23, following the daily candlestick closure, the first sell signal was presented as a red downward arrow. The MRI has displayed another red-down arrow nine days later. This indicator suggests a falling one-to-four candlestick pattern.
Investors may therefore witness a decline in the price of Bitcoin. Important support levels to keep an eye on are the Fair Value Gap (FVG) region, which spans from $30,248 to $32,832 and has a midpoint at $31,540.
On-chain indicators support the pessimistic outlook.
Santiment’s Network Realized Profit/Loss (NPL) indicator displays two significant spikes of $524 million and $542 million on October 24 and 28, respectively, suggesting that investors are booking profits. Similar profit-taking occurrences and bearish divergence in July caused the price of Bitcoin to plummet from about $31,400 to $25,800.
The Whale Transaction statistic, which has been surging since October 23, reflects the same pessimistic sentiment. An increase in this index, which monitors transfers of $100,000 or more, indicates that whales are probably transferring their holdings in order to book profits.
Investors who have bought Bitcoin in the last month can gauge their average profit or loss using the 30-day Market Value to Realized Value (MVRV) indictor. The MVRV dropped from 16% on October 23 to roughly 10% at this point. This level indicates that investors who bought Bitcoin within the last month made an average profit of 10%. A sell-off could occur if these holders decide to sell to realize their profits.
In the last year, the 30-day MVRV has often created a local peak of 16% to 22%. Because a correction in the price of Bitcoin follows this period, it can be referred to as the “Danger Zone.”
Concluding thoughts
Overall, both from a technical and an on-chain perspective, the price of Bitcoin appears to be headed into a bear market. These sale signals can only be ignored in the event of an ETF-related development.
In that scenario, the price of Bitcoin might cross the $35,000 barrier and approach the psychological $40,000 mark. This action would refute the pessimistic theory.
