In the past 24 hours, optimism surged in the cryptocurrency market as Bitcoin (BTC), often referred to as the "king of cryptos," briefly reclaimed the $61,000 mark. However, this upward trend was short-lived, with the cryptocurrency experiencing a swift price correction. Let’s delve into the factors driving this recent volatility in BTC.
Bitcoin Takes a Bearish Turn
On August 20th, Bitcoin managed to gain bullish momentum, pushing its price above $61,000. However, the bullish trend quickly reversed as bearish sentiment took hold of the market.
According to CoinMarketCap, Bitcoin's price declined by over 2.5% in the last 24 hours. As of the latest data, BTC was trading at $59,378.99, with a market capitalization exceeding $1.17 trillion.
Interestingly, this recent price correction did not come as a surprise to some experts.
Ali, a well-known crypto analyst, tweeted that Bitcoin's TD sequential had flagged a sell signal. "Soon after the signal got revealed, the coin’s price witnessed a correction," Ali noted.
An analysis data from CryptoQuant highlighted several factors that might have contributed to Bitcoin’s decline. One key factor was the rising exchange reserves of BTC, indicating increased selling pressure.
The selling activity was further corroborated by Bitcoin's exchange netflow, which showed an increase. Specifically, BTC’s net deposits on exchanges were higher than the 7-day average, typically interpreted as a sign of heightened selling pressure. Despite this, Bitcoin's Coinbase Premium remained positive, suggesting that buying sentiment was still strong among U.S. investors.
Will the Downtrend Persist?
Glassnode to assess the likelihood of the bearish trend continuing. Notably, Bitcoin’s NVT ratio dropped significantly—a decline in this metric usually suggests that an asset is undervalued, which could indicate a potential price increase. The NVT ratio is calculated by dividing the market cap by the transferred on-chain volume measured in USD.
However, the outlook in the derivatives market appeared less favorable for buyers. For example, Bitcoin's taker buy/sell ratio turned red, signaling that selling sentiment was dominant in the futures market.
The MACD (Moving Average Convergence Divergence) indicator showed a bullish crossover, a potential sign of a price rebound. Additionally, Bitcoin’s Relative Strength Index (RSI) was nearing the neutral mark, which is often seen as a bullish signal.
Despite these positive indicators, the Chaikin Money Flow (CMF) turned bearish, reflecting a downtick in the metric.
As the market continues to fluctuate, the coming days will reveal whether Bitcoin can regain its upward momentum or if the bearish trend will persist.
