In the past two weeks, bitcoin has seen consecutive red-colored weeks. Bitcoin closed the previous week with its 7th consecutive weekly candle. Although investors expected a reversal of the trend, it has continued to be in red for another week. Investors in cryptocurrency are now panicking as this is the first week that bitcoin has had eight consecutive weekly closes.
Eight Weeks Red Not Bad?
If a major digital asset like bitcoin closes multiple weeks in red it usually indicates that there is a huge bear market. The crypto market is now in the bear market. This is the main reason why investors have been experiencing negative and low momentum over the past few months. However, bitcoin is predicted to continue falling after closing several weeks in red.
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When bitcoin closed in the red for multiple weeks, one thing has always been constant: the downtrend that usually follows the market. Although some see it as an opportunity to accumulate, those selling at the red closings are more likely to lose their gains. This is what bear markets are all about.
BTC marks eight consecutive red close | Source: BTCUSD on TradingView.com
This is the first time that this has happened in market history. Although it is natural for people to look back at historical contexts when there has been an alarming event, without any reference point we cannot predict where this market may go.
Bitcoin for the Bear
Although there’s no historical context for comparing current market conditions with, it has been the case before. In the last year, eight consecutive weeks had seen bitcoin close green. This was followed by multiple bull rallies, which saw bitcoin’s price finally reach $69,000.
This would be a comparison to the current market conditions. The eight consecutive red closings mean that the digital asset will experience multiple crashes and dips which could send it back to the $20,000 mark. The bottom is probably not what many people believe.
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But there are some indicators that might suggest otherwise, like bitcoin trading above the 5-day moving average. This is a short-term indicator, as long-term indicators are still bearish.
The pace of small investors accumulating BTC is also increasing. A record 844 906 Bitcoin wallets now have more than one BTC in their accounts. This shows that investors are optimistic, but in reality, the smaller investors don’t have enough to move the market. The digital asset will need to move if it is to recover.
Featured Image from Unsplash. Chart by TradingView.com
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