■ Market: Cryptocurrencies

■ Assets: Bitcoin

The massive increase in money supply in Western economies has created unprecedented demand for hard assets. Bitcoin may be the hardest asset in the world, as its supply is strictly limited to 21 million units. This helps explain the Bitcoin surge we’ve seen over the past year.

Now, caution is needed, as the Bitcoin bullish trend is showing signs of exhaustion. While the macro environment remains favorable for digital currencies, we may see a significant short-term correction, especially among altcoins.

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Bitcoin Bullish Trend Showing Signs of Exhaustion

After an extraordinary year that took Bitcoin from $7,000 in April 2020 to $66,000 in April 2021, BTC is now showing clear signs of trend exhaustion. Meanwhile, BTC adoption and network security are at all-time highs. So, what has changed? Here are some reasons explaining Bitcoin’s trend exhaustion:

1. Profit-taking, as Bitcoin has gained over 1,400% since March 2020.

2. In early 2021, Bitcoin’s market cap surpassed the iconic $1 trillion mark for the first time.

3. Bitcoin has had six consecutive profitable (green) months, a first in its history.

4. Bitcoin’s dominance in the crypto market showed signs of weakness, with investors moving to Ethereum, which offered higher upside potential.

5. Many bubbles have formed in the altcoin market, which is not a positive sign for the overall industry.

6. Recently, India and Turkey legislated against Bitcoin use in their countries.

7. The new US capital tax proposal was released just a few hours ago.

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Bitcoin Technical Analysis

The following BTC/USD chart is a daily logarithmic chart with the 200-day SMA and the RSI Precision indicator at the bottom.

Chart: Daily Logarithmic BTC/USD

 

Short-Term Observations:

-The trend on the chart is still showing Higher/Highs and Higher Lows

-Until there is a daily close below $50K, the trend is bullish

-The volume has been diminishing since February, indicating a potential divergence

-RSI Precision indicates a clear divergence

-RSI Precision forms a descending triangle that seems to break down

Mid-Term Observations:

-The Bitcoin market seems to have topped in the short term, but most probably, this market cycle has more room to grow in 2021

-Some institutional investors will probably seize the opportunity to buy a cheap Bitcoin

-There is strong support around $40,000, and most probably, this level will hold

Key Support & Resistance Levels

□ Key Support:

(↓) $50,000 (very strong)

(↓) $45,000 (strong)

(↓) $43,000 (weak)

(↓) $40,000 (very strong+)

□ Key Resistance:

(↑) $58,500 (average)

(↑) $61,800 (average)

(↑) $65,000 (all-time high)

(↑) $75,000 (strong)

 

Introducing the PriceMomentum Chart for the first time

The PriceMomentum chart type is our latest innovation. What characterizes this chart is that it enhances price activity with price momentum. 🔗 Info: PriceMomentum Chart

-Enhances price action with momentum

-Can perfectly monitor volatile price action, like a logarithmic chart

-Can be used in any asset class

-Offers the opportunity for exceptional chart analysis

-Tells the phase of the market at a glance (above/below the 100 SMA)

Chart: Bitcoin/USD PriceMomentum Chart

Notice how closely the BTC PriceMomentum chart follows the 100-day SMA during the uptrend. Also, observe that the PriceMomentum chart formed a higher high back in 2019, well before the all-time high in December 2020.

 

■ Bitcoin Trading Signal April 2021

Giorgos Protonotarios, Financial Analyst

for TradingCenter.org (c)

22nd of April 2021