[ad_1]
Bitcoin was down nearly 3.5% after setting its year-to-date high at $ 15,977 last week. But despite the risks of prolonged looming downward momentum, a key indicator sees the cryptocurrency in a strong buying zone.
The so-called “All Exchange Inflow Mean”, or MA7, measures the average deposits of Bitcoin made on all exchanges over a period of 7 days. When the metric peaks, Bitcoin signals an upward rebound, at least according to the creator of the CryptoQuant indicator, a data aggregation platform.
The depletion of Bitcoin inflows means traders are changing their selling sentiment on “HODL”. They keep minor and minor cryptocurrency units in their exchanges’ wallets leading to minor liquidations. The CryptoQuant chart below illustrates the relationship between the price of Bitcoin and MA7.
Inflow of bitcoins and price correlation. Source: CryptoQuant
The latest cases show that Bitcoin is trending higher on signals of a pullback from the MA7 indicator. More recently, the cryptocurrency rallied over 200 percent after MA7 hit its peak in March 2020. The results were similar in late 2019 and late 2018.
“After the price collapse, there have been successive foreign exchange inflows from whales for two reasons. 1 / In the bull market: sell it at the local high. They sell when retail investors are active on exchanges. 2 / In the bear market: sell it if the unusual sale for fear occurs “, explained Ki-Young Ju, CEO of CryptoQuant.
“The latest MA7 readings show that Bitcoin is still in a strong buying zone,” he added.
Bitcoin Technical Outlook
Analysts far from on-chain fundamentals have predicted a similar bullish outcome for Bitcoin, but based on technical indicators. A daytrader pseudonym noted that the cryptocurrency rises to the top within a range that looked like an ascending triangle.
Bitcoin trading setup, as illustrated by PostXBT. Source: BTCUSD on TradingView.com
In retrospect, an ascending triangle in an uptrend is a bullish continuation pattern. The price rises while staying above the upward slope of the Triangle. Meanwhile, it tests the base of the triangle as resistance for a potential upward breakout move. If this happens, the price increases as much as the maximum triangle length.
“The level I scored for a new test is falling apart,” the analyst said. “Ignore it and focus on [the] high resistance. Ascending triangle formation, which is typically bullish. Redline marks where a break in the market structure would appear. Bullish while we are above. “
Risks
Most of the downside risks Bitcoin faces now are outside the technical realm.
One of the main macro catalysts that could bring the cryptocurrency down is a no-stimulus scenario. Expectations from Republicans who hold the majority in the US Senate could delay President-elect Joe Biden’s plans to introduce a massive coronavirus aid package.
At the same time, the success of Pfizer’s coronavirus vaccine trial expects to diminish investors’ appetite for safe haven assets. This also comes with risks for Bitcoin as it trades close to its three-year high, an attractive selling area.
Meanwhile, trader Koroush AK recalled:
“A 50% retracement is healthy during an uptrend. In fact, we would have to go below $ 14,000 for my bias to move. As long as the trend remains intact, I will prefer the longs and dips of aggressive desire. “
[ad_2]Source link
