Bitcoin (BTC) does not look good for the bulls

One of the most prominent technical analysts in the crypto community believes that Bitcoin is bound for a downward push. But is it realistic? The following technical analysis will attempt to determine the fate of the flagship cryptocurrency

Bitcoin is done for a while

Eric Thies, a cryptocurrency enthusiast and self-taught analyst, recently stated that Bitcoin is “done for a while.” His remarks come after the MarketGod Trading indicator presented a sell signal on BTC’s 1-month chart. This is the first time this technical index gives such a bearish signal since 2018.

According to Thies, the MarketGod Trading indicator eliminates emotions from technical analysis. And, its current estimation about the future of BTC “squashed” some of the bullish sentiment that he had about the pioneer cryptocurrency.

A look at BTC’s 1-month chart shows the effectiveness of this technical index. On Dec. 2013, for instance, the MarketGod Trading indicator presented a sell signal which was succeeded by an 86 percent retracement. Bitcoin went from trading at a high of $1,160 to a low of $164.

This indicator also oversaw the bear market of 2018 presenting a sell signal in January of that year. An 82 percent retracement followed the bearish formation. Bitcoin plunged from $17,200 to $3,150.

Now, the MarketGod Trading indicator is presenting another sell signal estimating that a further retracement is underway from a macro perspective. And, from a short-term viewpoint, BTC could also be looking bearish.

Short-term outlook

Based on its 3-day chart, Bitcoin price action is contained within a descending parallel channel since June 26. Since then, every time BTC hits the bottom of the channel, it bounces off to the middle or the top. But, when it hits the top of the channel, it falls back to the middle or the bottom.

At the moment, the pioneer cryptocurrency is getting rejected by the middle line of the descending parallel channel following a rebound from the bottom. If the selling pressure behind Bitcoin continues to increase, it could plunge to the bottom of the channel once again to look for support.

The Fibonacci retracement indicator prevails that on the downside, there is strong support between the 61.8 and 65 percent Fibonacci retracement zone. This area sits between $7,250 and $6,900. Closing below this support cluster could trigger a spike in sell orders that takes BTC to the next level of support around the 78.6 percent Fibonacci retracement level, which sits at $5,480.

Moreover, the Long Positions on Bitfinex recently broke out to an ascending triangle. This technical pattern developed on the 1-day chart since April as a direct result of Bitcoin’s price action. A horizontal line formed along with the swing highs and a rising trendline along with the swing lows.

By measuring the height of the triangle, at its thickest point, this pattern presents a 33 percent target to the upside. Thus far, the number of long positions behind Bitcoin surged 25 percent. Although there is still room to go up, the massive increase in long positions seen since Nov. 24 is frightening.

The sudden surge could soon ignite a long squeeze. Long squeezes are triggered when the price of Bitcoin drops abruptly, inciting further selling. As a result, long holders are pressured into closing their positions to protect against bigger losses.

Overall sentiment

Like Eric Thies pointed out, Bitcoin does not look good for the bulls at the moment. Not only the MarketGod Trading indicator presented a sell signal for the first time since 2018, but the Long Positions on Bitfinex are getting to a point where a long squeeze seems imminent. A close below $6,900 could open the doors for a further correction down to $5,500.

Nevertheless, a sudden spike in demand could invalidate the bearish outlook. If Bitcoin can close above $9,800, it will increase odds for an upswing to $15,000.

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