Bitcoin is currently trading at $7,377.38. The movement has lately been on the upside for the cryptocurrency. However, a closer look at the daily charts of the BTCUSD indicates that not everything is fancy about this upward movement.
Before we get into the crux of the situation, it is vital to keep a few things in mind:
- The Dow Jones and S&P 500 went up by more than 7% in a single trading day. This rise was on account of the decrease in the number of new cases of COVID-19 in New York. The BTCUSD also moved up 7%. However, this rise in the equity markets is in no way an indication that the economy is stable. US health officials have warned that it might just get worse in terms of the number of deaths due to the pandemic.
- The halving of the rewards for the Bitcoin miners is going to occur in the next 36 days. That will make Bitcoin mining less rewarding. So, until unless there is some major technological innovation regarding Blockchain, the craze for Bitcoin might not be the same.
Technical Analysis of the BTCUSD
Now that we have a broader background perspective in place let us look at the technicals of Bitcoin.
- The daily chart shows that the Bitcoin is forming higher highs. Similarly, the lows are also forming higher lows. However, the angle of ascent is much steeper for the lows than the highs. This represents a Rising-wedge pattern.
- The line joining the lows are much steeper than the line joining the highs as it is indicative of the fact that the Bears are overpowering the Bulls.
This is the reason why Bitcoin is claimed to be in a Bear market by several analysts. Breaking out of the Bearish rising wedge requires higher volumes to be traded than the quantities with which it entered into the pattern. Although it might seem to be alluring to enter into a trade in the Bitcoin right now, it essential that one puts the stop loss in check. This is because a drop might be sooner than one anticipates.