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In recent days, the Bitcoin bulls have defended $ 4,000, which is increasingly becoming a level of support for cryptocurrency. Despite this, it has not yet accumulated enough buying pressure to push its price over the low end of $ 4,000.
Now, a widely used technical indicator is signaling that Bitcoin could reach a point of decline that will lead to a massive price movement.
Bitcoin on the edge of a big move
A recent Bloomberg report indicates that Bitcoin is close to making a big price movement based on the widely used GTI VERA Bands indicator, which uses trend data at any time to provide investors with information on what direction an asset is intended to move. This indicator also states that Bitcoin is currently in its longest buying trend since September.
This indicator is now seeing a drastic narrowing of its upper and lower bands, which generally precedes a strong price fluctuation. This, combined with the recent Bitcoin purchase trend, could mean that it will see a significant increase in the volume of purchases in the near future.
Another widely used indicator, called the Directional Movement Index (DMI), has recently shown a purchase signal for Bitcoin, which is based on the strength and momentum of buying and selling trends.
The DMI separates price movements into a category of positive or negative directional movement, which is used by traders to quantify the strength of a particular trend. Earlier this week, the DMI turned out to be positive for Bitcoin for the first time in several months, signaling that Bitcoin's "very strong" selling pressure was largely attenuated, and the volume of purchases gradually increasing.
What do Bitcoin price action analysts think?
Only time will tell if these indicators are correct in the hypothesis that the price of Bitcoin will increase soon, and analysts have conflicting views on these data.
Speaking to Bloomberg of the DMI that gave a positive turn, Mati Greenspan, senior market analyst at eToro, said that to make a truly bullish case for Bitcoin, it is necessary to significantly exceed $ 5,000.
"In technical analysis this makes these levels very strong, but I think only once we see a strong break above 5,000, 6,000, if we exceed 7,500, that's when people start getting really bullish," he noted Greenspan.
Travis Sling, the founder of Ikigai, a cryptocurrency hedge fund, remains cautious about any upward price indicators for cryptocurrency markets, noting that he believes the markets will still see lower lows in the future before moving much higher.
"It is unlikely that the fund will be part of Bitcoin, I am certainly willing to change my mind, but the preponderance of the evidence leads us to believe that we will see lower before going higher".
While traders are waiting patiently to see how Bitcoin responds to trading above $ 4,000, the validity of these historically accurate indicators will remain in question.
Shutterstock foreground image.
