Weekly Technical Overview: Bitcoin Shows No Signs of Breaking out of Slump Yet

2021/12/13 11:09:54

The pressure on the Bitcoin market continues for the fourth week in a row. Despite the market having an impressive push from the bulls in October, the market has failed to surpass the previously set all-time highs.

The consolidation at levels of $60,000 proved that the sellers were accumulating to go short. Because the consolidation was to be profit-taking or a regular retracement for the buyers, the market would have continued to push higher to record new highs from the $60k support zone.

As a result of the bears taking charge for a month, the price of BTC trades at around $48,000, which is more than 25% lower than the previous highs.

The fate is no different in the altcoin market as well. Along with Bitcoin, the second-largest cryptocurrency, Ethereum, and other altcoins have slipped in trade in the last few weeks.

The price action is one of the aspects for the drop in price, but the change in trends of on-chain and economic factors is also a cause for the current downtrend to gain momentum.

Fear & Greed Index Flips to Extreme Fear

The Fear and Greed for cryptocurrencies is a sophisticated indicator that measures volatility, trading volume, social sentiment, market domination, and Google Trends.

For the first time in over 5 months, the Bitcoin Fear and Greed index hit the 16 threshold on December 6, 2021. Later, it fluctuated slightly before stabilizing at this mega-low level on Saturday.

As a result, Bitcoin (BTC) has been stuck in "Extreme Fear" territory for the past week. The index dropped from 84, representing "Extreme greed" in just 28 days.

Bitcoin Trading Volume Drops Ahead of Christmas

Bitcoin trading volumes slumped in Nov. posing a lowest month in trading volumes since June 2021, according to bitcoinity statistics. A major cause for the drop in transactional volume is most likely due to Bitcoin's poor market performance. Since last month, Bitcoin has lost over one-fourth of its value.

Financial risks have escalated dramatically due to the rising number of lockdowns throughout the world, which might have impacted Bitcoin's price performance and overall economic conditions.

Transactional engagement in the markets is also reducing as more market participants leave the financial markets, which is not unusual for the market ahead of the Christmas season. Traditional financial markets also record huge volume reductions at the end of the year.

Bitcoin Weekly Perspective

Bitcoin, on the weekly timeframe, is the market of consolidation. Although analysts say the market is bullish, the monthly time frame picture is clearly in the buyer's territory.

On the weekly timeframe, especially after the market failed to continue with the uptrend, it is certain that BTC is in a range-bound market.

Ever since Bitcoin hit the $67,000 mark in the beginning Oct. of 2021, the market hasn’t been able to make an impulsive push to the north. In other words, Bitcoin has been in a correction market for more than 1 month now.

The range-bound level stands between $32,000 and $60,000. The uptrend that Bitcoin witnessed since August was simply the market reacting off from the bottom of the range to the top. And a simple reason for the BTC price to dip from $60,000 is because it was a resistance zone.

Looking at the market's current position, the price is halfway between the range. And on the momentum side of things, the sellers seem to be picking up pace.

That said, the market has also reacted off strongly from the demand level at around $40,000, leaving a wick on the bottom.

Bitcoin Price Chart on the Weekly Timeframe | Source: BTC/USDT

Bitcoin Daily Perspective

On the Daily Timeframe of Bitcoin, the trajectory of the recent price action clearly suggests that the bears are still in the dominance of the market.

Like mentioned earlier, Bitcoin has been plunging week-on-week for the fourth time in a row.

Despite the buyer showing up quite aggressively in October, the sellers at the resistance level (ATH) were certainly not done as of yet. As a result, the immediate support level at $52,500 was taken out with barely any reaction from the buyers.

Bitcoin Price Chart on the Daily Timeframe | Source: BTC/USDT

Technically speaking, on the Daily Timeframe, the market has turned into a seller's market as the price has been making lower lows and lower highs.

Currently, the market is in the retracement phase of the downtrend, with the new low set at almost $40,000. But, a tail in the bottom of the seller’s impulsive move shows that the sellers are slowly losing out of steam.

Considering the higher timeframe and the Daily Timeframe, we remain cautious that Bitcoin will get out of this bearish sentiment anytime soon.

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