• BTC/USD may extend the downside correction after a failed attempt to settle above $11,000.
  • The decreasing exchange deposits imply that the long-term trend remains bullish.

As we reported in our previous analysis, the TD Sequential indicator created a sell signal, which is now confirmed by the ninth bar and a developing bearish harami pattern. This candlestick formation consists of a long bullish candle followed by the second candle in the body of the first one. Once confirmed, this pattern will increase the probability of Bitcoin's downside reversal with the first target at $10,700 (the middle line of the daily Bollinger Band), and $10,500, the barrier that served as a strong resistance during the first and the second weeks of September. 

The daily close above $11,000 (the daily high of September 16) will invalidate the bearish signal and bring more bulls to the market. Meanwhile, on the upside, the critical local resistance is created by the daily SMA50 on approach to $11,300. This area also served as strong support in August, making it a challenging barrier for the bulls. 

BTC/USD daily chart

Intotheblock stats on the market positioning also implies that BTC bulls may face resistance on approach to $11,300. However, the ultimate barrier sits in the area $11,500-$11,800 as 1.28 million addresses holding nearly 1 million coins have a breakeven price within that price range. From the technical point of view, it is reinforced by the upper line of the daily Bollinger Band (as shown on the chart above). It will be hard to absorb the supply, though, once it happens, the way to the new highs of 2020 will be free. 

The way to the downside is a bit more cluttered with the barriers, meaning that the way to the North is a path of least resistance for now. A wall of 1.28 addresses with over 700k coins protects $10,500 area. A similar supply is registered below $10,000. 

Bitcoin's market positioning data

Source: Intotheblock

Bitcoin's on-chain metrics

The on-chain data sends alarming signals. Age consumed indicator used to predict the periods of sharp volatility has had the sharpest spike in a month, signaling that BTC may be ready to ride a roller-coaster. As shown in the graph below, the three previous spikes of the indicator led to increased market volatility in the direction opposite to the prevailing market movement. 

Bitcoin's Age consumed

Source: Santiment

The data on holders distribution confirms the bearish setup as it shows that the large BTC owners are selling their coins. The number of whales with over 1,000 BTC in their wallets decreased from 2018 on September 11 to 2010 by the time of writing, meaning that big players leaving the network. Whales are notorious for their market impact as their transactions can trigger large price movements often intensified by cascade liquidation of leveraged speculative positions. As we have previously discussed, long-term BTC holders always win, while short-term traders are left to the mercy of their ups and downs. 

Bitcoin's holders' distribution

Source: Santiment

BTC deposits at the exchanges near 2-year low

Meanwhile, the Arcane Research noticed that Bitcoin deposits at the cryptocurrency exchanges have been declining steadily and reached the lowest levels since November 2018. This is a potentially bullish signal as it means that traders are less inclined to sell and move their coins from the hot wallets for long-term storage. 

 

To conclude, bitcoin's on-chain and technical indicators imply that the coin may resume the decline after a short-lived recovery on Thursday. The bearish harami pattern and TD Sequential sell signal are the most significant suggest that the market may not be ready for a decisive breakthrough just yet, and BTC/USD may retreat at least to $10,500. On the other hand, the decreasing deposits are typically a bullish signal, which makes us cautious. A sustainable move above $11,300 will invalidate the immediate bearish scenario and open up the way to the next barrier of $11,700.
 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Cryptos feed

Latest Crypto News


Latest Crypto News & Analysis

Editors’ Picks

Ethereum price breaks $600 in anticipation of ETH 2.0’s launch in December

Ethereum is currently trading at $601 after finally breaking the psychological barrier at $600 for the first time in two years. At the time of writing, around 305,920 ETH has been staked in the Eth2 deposit contract, representing 58% of what's needed for the contract to launch. 

More Ethereum News

Overhyped Linkswap launch sends YFI and LINK soaring

Linkswap, a platform for automated market-making, has not been even launched, but its proprietary token YF Link (YFL) jumped by over 30% in the past 24 hours. At the time of writing, YFL is changing hands at $1,030.

More Chainlink News

OKEX withdrawals to trigger a massive volatility spike on the cryptocurrency market

OKEx, one of the world's largest cryptocurrency exchanges, is ready to unlock a cryptocurrency withdrawal functionality on November 27. The trading platform users had to wait over a month until the company settled its legal issues and the Chinese police released one of its co-founders and a private key holder. 

More Cryptocurrencies News

Bitcoin final leg to $20,000 lingers, as crypto bull cycle rockets

Cryptocurrencies across the board had a memorable weekend session, with most of them rallying to new yearly highs. Ethereum, for instance, hit highs of $585 for the first time since 2018. On the other hand, Ripple brushed shoulders with $0.5.

More Bitcoin News

BEST CRYPTO BROKERS/EXCHANGES




Bitcoin Weekly Forecast: BTC makes new yearly highs while its network activity looks worrisome

Bitcoin has lived through the best week since February 2018. The pioneer digital currency price gained over $2,000 in less than seven days. The bullish momentum allowed it to reach a new multi-year high of nearly $18,800, marking November 2020 one of the strongest bullish months ever. 

Read the weekly forecast

BTC

ETH

XRP