On May 21, a 9-day low at $ 8800 was set in the BTC market. Despite the bearish nature of yesterday's surge, this movement set a higher low on the daily timeframe.
Now traders are arguing about whether the short-term correction will continue, or whether the bulls will return the initiative to their hands. At least there are 3 reasons why the bearish scenario may come true:
Reason # 1: BTC's key technical support is at risk
As already noted, now all the attention of traders is focused on the 200-day EMA. But there is another important technical line that customers need to protect - this is the middle Bollinger band. Joe McCann commented on the importance of this level:
Closing below $ 9,287 is a bad sign for bulls; it's a 20-MA.
As you can see in the chart above, whenever the BTC rate falls below the 20-day moving average, the correction continues. Vertical red lines mark the cases when trading fell below the middle Bollinger band, a 20-day moving average.
For example, at the end of February, Bitcoin dropped below this technical level, and a week later rebounded from its resistance. This was followed by a crash from $ 9,000 to $ 3,700.
As crypto trader BigChonis noted yesterday, Bitcoin “Risks losing support for the middle Bollinger line for the first time in one month”:
Reason # 2: the bearish nature of BTC blockchain indicators
According to IntoTheBlock, a research company, Bitcoin’s network is weakened, and four of the five key indicators, including network growth, volume of large transactions and profitability / loss ratio of current savings, provide “bearish signals”:
There is no definite correlation between intrachain performance and BTC price, but as a rule, they support the rally.
Reason # 3: Analysts fear stock market reversal
And finally, some analysts believe that the stock market may soon turn around, taking with it the leading cryptocurrency.
According to a recent Bloomberg report, JP Morgan strategists note a strong resistance level of the S&P 500 index of about 2940 points:
A bearish reversal week was recorded on the S&P 500 after deepening resistance levels around 2900 into the cluster. Although the 2-day pullback from this key resistance area is still indicative, it at least notes a slowing trend.
Bitcoin, as the main cryptocurrency, is likely to suffer from a further fall in stock prices.
The Kansas City Federal Reserve said that during periods of economic stress, Bitcoin is trading with a positive correlation with respect to the S&P 500:
BitMEX CEO Arthur Hayes also fears continued correction in the traditional market:
Can the price of BTC test $ 3000? Of course. When SPX [S&P 500] will deploy and test 2000, expect all asset classes to collapse again. No matter how hard the crash in the first quarter was, before that there was an almost 100-year period of imbalance.
