The Bitcoin price suffered a severe drop over the past few months. This has resulted in the lowest quarterly close since 2011. This bearish trend has caused severe contagion to spread throughout the crypto market.
Bulls have the first chance to capitalise in a while as bearish momentum has started to wane on weekly timeframes.
Bitcoin Bearish Weekly Momentum Starts To Weaken. Bulls Can Capitalize
The measure of mass and velocity in real life is momentum. In finance, the term describes the rate of speed at which an asset’s price changes. The bearish momentum that saw Bitcoin prices plummet from over $60,000 to $20,000. This is something to take into consideration.
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On a weekly basis, however, signs of weakening bearish momentum were evident.
According to LMACD histogram, bearish momentum is decreasing. Source: TradingView.com.| Source: BTCUSD on TradingView.com
The MACD histogram shows that bearish momentum has slowed, as shown by the change in color from pink to red.
This isn’t a clear signal. If the histogram moves beyond the zero line and becomes green, momentum can only be considered bullish.
The green signal doesn't always make it worthwhile to buy. Source: TradingView.com.| Source: BTCUSD on TradingView.com
As the chart above demonstates, turning green doesn’t always confirm significant upside. Hence, bulls might want to look at the current situation. As the saying goes, “when in doubt, zoom out.”
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If you zoom out, it becomes clear that bearish weekly momentum is waning. This shift in momentum happens at a higher level. The MACD weekly reading is at -0.20. The previous bear market bottoms were a fraction below the current reading of -0.20.
Source: BTCUSD on TradingView.com| Source: BTCUSD on TradingView.com
However, this is not a guarantee that the bulls will win. But, is a third bottom possible at this level that could be what crypto owners were expecting? Bulls will need to capitalize on the potential momentum shift, and follow through – pushing the histogram into the green.
Although $29,000 might be a solid first step in a recovery plan, the possibility of recession means that investors will need to see more evidence for an increase to at least $50,000.
Bulls may forget about an upcoming rally if bearish momentum is back before the week ends and pushes the histogram to the red.
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Featured Image from iStockPhoto. Charts by TradingView.com