A range of technical indicators suggest that a wipeout may be running its course in Bitcoin.
Insights from momentum measures and options bets indicate easing selling pressure and a potential trading range of $20,000 to $25,000 – although general warnings apply regarding trading nature cryptocurrency,
The largest digital coin is down almost 70% from November’s record and was little changed at $21,343 as of 8:38 a.m. Monday in London. It declined below $18,000 earlier this month before closely watching the $20,000 level.
Tighter monetary policy, dampening of speculative enthusiasm and the collapse of digital-asset projects have fueled a broader crypto route into 2022. But the mood in global markets is easing on tentative hopes that price pressures driving interest rate hikes may be peaking.
According to Glassnode, the lessons of bitcoin’s past tremors suggest that it is nearing its bear market bottom. “This bear market is now firmly within historical norms and magnitude,” the blockchain analytics firm wrote in a note.
treaty
A widely followed DMark technical indicator known as the TD Sequential suggests that the majority of bitcoin sell-offs are behind us. The study uses a method of counting applied to chart patterns to predict when a market trend has run its course. Bitcoin printed a maximum of 13 downside, which proponents of the study would argue is a reversal. Demark’s studies in the past have identified a change in the prevailing trend of bitcoin.
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abnormal selloff
Another popular charting method is the so-called linear regression channel. This technique seeks to statistically identify abnormal deviations from the line that best fits a range of bitcoin prices. In the analysis here, bitcoin fell three standard deviations below an upward sloping regression line from its December 2018 lows – this is statistically relatively rare and some analysts would argue that the sell-off has therefore reached a nadir.
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relative strength
A momentum indicator known as the relative strength index indicates that the selling of bitcoin is about to halve. On a weekly basis, the index has fallen into “oversold” territory below 30 and is around the lowest level in data compiled by Bloomberg in 2010. The last time the gauge flashed “oversold” in 2018, the token went on a phase of a vigorous rally.
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option signal
Options contracts provide signals about the next trading range for bitcoin. A significant number of outstanding contracts expiring at the end of September are at the $25,000 and $20,000 strikes, data from crypto derivatives platform Deribit shows. There are approximately 9,000 outstanding contracts at each of these levels. On one perspective, it is relatively higher in so-called open interest at $25,000 and $20,000, indicating that traders view the former as the ceiling of bitcoin and the latter as a floor.
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This story has been published without modification in text from a wire agency feed. Only the title has been changed.